Comment Re:You couldn't make this up! (Score 1) 1071
Well this is more or less what I wrote, that the top 10 control 66% of the market.
"The ISP business is a very specific business for the broadband access. Why? Because it has very high set up costs: the lines themselves, the line equipement. So no, you cannot decide randomly: "hey, this month I will join Cablevision - hey this month I will join Comcast!" - each ISP is limited by geographical area."
It was the same when Dial-Up ISPs were in their infancy. The set up costs were high, and the service and equipment were expensive. Prices go down.
No. You missed the fundamental problem of and the fundemental cost of broadband: the lines. The physical lines. They cost a premium and they are worth a fortune. Most of the cost is physical digging, laying out the cables, and fill the holes back, all this on the property of others, or of the municipality. This is a low-tech job.
Actually, in my area, I have several choices for ISPs, including [to the best of my knowledge] at least three sources for broadband. ProLog/Service Electric, Shen-Heights, Verizon, all offer broadband. There are several ISPs in the area that offer Dial-Up, and since Dial-Up has new subscribers every day, and is still a significant portion of the market, they still count.
This looked strange to me: are you claiming that right now in your home, you have one wire going to ProLog, one wire going to Shen-Heights, and one wire going to Verizon? So I checked, and I saw the reason why there is competition at all is that the governement (the FCC) forced the cable/telco companies to let their competitors use the previous line to the customer. So your quote of a marvellous thousands of ISPs is only due to regulation. Besides that regulation was slashed in 2002, so the hundreds of ISP were poised to disappear (except the deregulation was overruled by some courts, so that's why your ISPs are not here).
People regularly buy up businesses across the country, or across the world. Your basic premise seems to be that new businesses are bought out when a particular company is looking to form an oligopoly. Explain then, how businesses, including ISPs, regularly open up shops or buy out businesses far away from their main office, including in other countries?
First, I know absolutly no small ISP (say 10,000 customer), who has business in both say, New Delhi, and San Francisco. It makes no sense - it is still possible if there is an economic reason for that. You have to have a pretty good reason to go abroad, and small international companies are the exception. If you are not in the top 10 market leaders going abroad is a question mark. Again, I stand that exactly what I said: if you are a small ISP, it makes no sense to buy another ISP at the other end of the country, because there is no business logic there, you are not creating any business synergy or nothing. You're not increasing the shareholder value. You may as well buy a bakery in St Petersburg instead. It may make sense, however, to create an "association of small ISPs". It may make sense to buy an ISP in the town next to yours - because then you can share backbone access. Different businesses have different business logic.
Second, monopolies or oligopolies make more profit than competitive markets. It's a smart CEO move, to buy his competitors to create a monopoly, or an oligopoly, all things being equal. It's just one possibility, not a necessity. Sometimes it's smarter to expand the market, or invest in innovation or whatever.
Being bought out is a safety net, no matter how much you try to convolute the issue.
Well, yes it is a safety net. But only part of the equation, in a technological market you can easily become irrelevant. Are you sure people still want to pay for a dial-up ISP? Likewise, cybercafés have been disappearing, partly due to the advent of broadband, and of wireless access. An unreliable safety net.
It is virtually impossible for one company to dominate the others without government assistance
Of course, it is. 1) be the first 2) be extremely innovative 3) ask for more shareholders investment to buy your competitors. Think about it: Bill Gates may well be able to establish a monopoly in many areas, just buy buying all the companies of a given industry. Then, it is completly dependant on the industry, to see whether or not, the barrier of entry for newcomers is too high. For a semiconductors factory, you need on the order of $20 billions, plus thousands of patents. Good luck, you'll need it. For an wide ISP (owning the physical lines, not a call center), you need a huge investment too. It fully depends. In any industry, innovation and know-how is not freely fully available to anyone, so you have at least this barrier, in addition to the investement barriers.
I never said that the business being bought out would be making a profit, I simply stated that the risks would be lower.
I'm ok with this.
"For the record the broadband ISP is one of the less "free markets" in the world, because the hypothesis of free entry is plain wrong: you cannot set up a broadband ISP, without huge investments."
Um. Starting any business takes risks, and as Broadband ISP demand is on the rise, the investment is not as big of a risk, so your little argument here is already falling down.
Huh? ISP demand is on the rise but competitiveness. Since there is little differentiation between the "ISP" products (either you are connected to the Internet or you are not - add the small package of email, and web servers, and that's it). As I said, if you are not broadband now, your future does not look bright at all. If you are broadband but don't own the cables, it's the same, as your cable service sellers is technically authorized to compete with you (and probably to refuse to sell access to customers now, unless your contract said explicitly so).
www, how cute. Comparing ISPs to the robber barons. Unfortunately for you, the analogy is quite weak.
Sorry but "Bandwidth Baron" is a frequent term for naming the major BACKBONE network companies. You can use the name "Tier 1" if you prefer. This is not your local ISP. They have a worldwide infrastructure. Good luck competiting in that market, against a company having layed cables and fiber between more than 80 countries.
That depends on whether or not the free market is allowed to act, or whether the government will continue to interfere causing more problems. In twenty years, you'll be blaiming the free market, but I'll be shaking my head at your ignorance
Well obviously due to the current deregulation, lots of ISPs will disappear, resulting in concentration of companies, and probable oligopoly (maybe monopoly). And then you'll blame the governement.
