Price-capped broadband on hold for New York State after judge rules telcos would 'suffer unrecoverable losses'

A new law due to come into force tomorrow that would force broadband providers in New York State to provide net access to low-income households for $15 a month has been put on hold. A preliminary injunction [PDF] was granted by United States District Judge Denis R Hurley on Friday after a string of trade bodies – including the …

[Swarthy]

What they actually meant:

"The broadband industry is committed to appearing to be working with state and federal policymakers on sustainable solutions that will serve the needs of all low-income Americans. While well-intended, the state's law ignored the $50 monthly broadband discount subsidy Congress enacted already gives us, as well as the many commitments, programs and offerings that broadband providers have made promised for low-income consumers."

[martinusher]

Re: What they actually meant:

When these subsidies were announced users found that the only plans that qualified for the subsidies were more expensive than the plans they were on anyway. These reports didn't make much of a splash because everyone just assumes that cable companies and telcos are rip off artists, they all exist to sell you a $200+ a month bill regardless of the actual service that you're getting.

There are signs that they may need to revise their operating practices. Wireless competitors are becoming viable -- TMobile has a plan that's a flat $60 a month amd S[aceX is causing enough disruption that some ISPs are trying to find legal grounds for them to be held back because of unfair competition.

[Dan 55]

Not okay for ISPs to "suffer unrecoverable losses increasing with time"

... but it's okay for low income households to suffer that paying for expensive monopoly broadband.

Good to see our priorities are straight.

[Anonymous Coward]

Re: Not okay for ISPs to "suffer unrecoverable losses increasing with time"

If poor people really cared they'd have spent millions on high priced lawyers to fight the telcos.

[rcxb]

Arbitrary number

How did the state come with the $15 as the magic number? Would $20/mo have bankrupted low-income families? $25? Did the state make any attempt to determine the costs of providing the service, before naming a figure?

[Kev99]

"suffer unrecoverable losses increasing with time" and that the "bulk of these losses will stem from lost income." BOVINE EXCREMENT! The internet is the closest thing to a perpetual motion machine in existence. Most of those supposed "losses" would be in the form of fictitious book entries and not real cash gone. Once a line is laid, it doesn't cost any more in cash or manpower to squirt a signal down the pipe. Slow internet speed are less the result of equipment limitation than they are of the ISPs purposely throttling the speeds. And since most of the signals sent and received are still over copper that can't be used as an excuse.

[Jellied Eel]

Once a line is laid, it doesn't cost any more in cash or manpower to squirt a signal down the pipe. Slow internet speed are less the result of equipment limitation than they are of the ISPs purposely throttling the speeds.

Err.. Incorrect. But it's the Internet. So it costs money to lay cable. Ok, so a lot of those costs are front-loaded, but civils to dig up roads, pavements etc costs a lot of money. Far more than the cost of the cable. Then it may need digging up again for maintenance to fix faults, self-inflicted or due to backhoe fade. Some of those costs might be recoverable, ie if you dig up my cable, I could sue you. Others can't. Like paying for permits, traffic management, properly unionised.. I mean trained labor etc.

Then there's staff needed to support and maintain the network. So someone to record a message asking you to try reporting 'the Internet is down' via their handy online self-service portal. Or ideally answer the phone. Or drive for a few hours to do some line tests, write 'NFF', and drive home again. All at agreed rates. Especially in somewhere like NY with it's unions preventing Uber drivers from becoming self-employed wiremen

Then there's a bunch of other overheads. It does cost cash to squirt a signal down a pipe, whether that's photons or electrons. So someone has to pay the electricity bills, even if some of those costs have been shifted to the consumer, ie a NID with a battery plugged into a consumer supply vs power supplied by headend kit. Of course if consumer power is.. questionable, then it'll be costs to replace those NIDs.

Or there's boring stuff like rent & rates, which may include fun tasks like trying to locate a building owner to get consent to run or fix cable. Or negotiate rent or wayleave price increases because building owners want to sweat their assets. Or there's regulatory costs, ranging from lobbying (this is a bad idea, that's a really bad idea) to taxes, costs of policy compliance for law enforcement, 911/e911, data retention, FCC form-filling or just blocking pron. Cuomo's not proposed that one I don't think. Or taxes like USO, where big Telcos pay into a universal fund to support small telcos, or rural broadband.

But like the article sorta says.. It's those small operators that would be at most risk because they don't have the scale to cross-subsidise, especially if they're in economically disadvantaged areas. Especially as those areas would probably also be the ones to benefit most from affordable broadband. But that's what USO is supposedly for, but that money's adminstered by a political outfit, not the telcos who have to pay into it.

And then of course there are the other usual suspects. Like Amazon, Google, Facepalm, Netflix, Disney etc who all make collosal sums of money from online activities, but don't really contribute much towards the costs. But that's the thorny subject behind most of the 'Net Neutrality' debate, ie ISPs pay for everything, content providers should be allowed to enjoy their free ride.

[doublelayer]

"And then of course there are the other usual suspects. Like Amazon, Google, Facepalm, Netflix, Disney etc who all make collosal sums of money from online activities, but don't really contribute much towards the costs. But that's the thorny subject behind most of the 'Net Neutrality' debate, ie ISPs pay for everything, content providers should be allowed to enjoy their free ride."

Let's take this part, because it's rubbish. The people who send the data pay for the lines and bandwidth they're using to move data out of their servers. The users pay for the lines and bandwidth they use to get the data into their equipment. Both prices are set by ISPs, and the decisions on whether and how much to charge between ISPs as data moves are also decided by those ISPs. So, despite the fact that the ISPs set all the prices and are paid by everybody involved, somehow the people sending data are getting a free ride? Since everybody is paying, the ISPs have the choice to change their prices, which they do often and the direction is always up. Why do they need even more ability to rent-seek on that monopoly?

[Jellied Eel]

Let's take this part, because it's rubbish.

The people who send the data pay for the lines and bandwidth they're using to move data out of their servers. The users pay for the lines and bandwidth they use to get the data into their equipment. Both prices are set by ISPs, and the decisions on whether and how much to charge between ISPs as data moves are also decided by those ISPs.

Slight snag. There are multiple ISPs involved, and very different cost considerations. Which is really the whole technical and economic argument behind 'Net Neutrality. Often confused, but then millions have been spent to confuse the issue.. Which is unsuprising because it's a big issue, and pretty much explains why content is on the pro-'neutrality', broadband ISPs on the anti.. Which isn't anti-consumer at all.

So say I'm FANGoogle. I'm going to dominate the content and advertising markets. All your data are belong to us! So I build a bunch of large datacentres in strategic locations, fill those with servers and load'em up with content.

Then I need a network. So I lease a bunch of fibre, ideally dark, which gives me a few Tbps to shunt data between my sites. Then I need to lease fibre from datacentres to Internet exchange points to reach my customers. That's done via peering, or via transit from an ISP. So far, so cheap (in relative terms).

Then there's the broadband ISPs. They may have invested a few billion running fibre to their customers so they can offer Internet services. A large ISP like Verizon may have a few million broadband customers or connections by virtue of the break up (and reformation of) Ma Bell.

So now broadband customers might pay say, $50/month to their ISP. They then may spend another $50/month for Netflix, Prime, Disney etc subscriptions, or just want to watch all the cat videos on YouTube. The ISP doesn't get any of that subscription revenue, but their customers expect their streaming to be perfect. If it isn't, they'll call their ISP and complain.

Which has been the problem. The cost model is highly asymmetric, and not reflected in the revenue model. If an ISP's customers get degraded Netflix service, the ISP has to do something, which generally means buying more transit bandwidth, or having to install some very expensive tin to peer with content providers. Basically it's waaaay cheaper to have BFPs (Big Fat Pipes) at exchange locations than it is to deliver those say, 100Gbps aggregated catflix streams to a million broadband customers.

Both sides of the industry know this problem, and both obviously have vested interests. Companies like Netflix certainly don't want (and probably can't afford) to give a share of their $10/month subscription to the ISP that delivers their service.

[doublelayer]

Hence this part from the comment you quoted:

"[T]he decisions on whether and how much to charge between ISPs as data moves are also decided by those ISPs."

Are you an ISP who wants more money from Google? Refuse to peer with their ISP. Require a paid contract to exchange bandwidth. It's been done before and it's your choice. Just one problem: they will reciprocate. Your data won't be peering to them either. The companies have already done this to most of their contracts and figured out what costs them least, and they employ people whose job is to continue to check those things. If they don't get a contract at all, then that's either Google's problem (users can't reach them, stop paying) or the user's problem (ponder doing something nasty to the ISP management, think better of it, look to see how far they have to move to get another option).

The ISP establishes a contract to the users which states how much data or bandwidth the user can pull down. The user pays the ISP for that in order that the ISP can pay its bills, among which are the equipment they need to pass bandwidth through their network. You're expecting the ISP to be paid twice for the same service when ISPs already have a lot of market power due to their being little or no competition. It's unreasonable.

[RLWatkins]

In the town where my mom lives, someone proposed community broadband WiFi.

Part of the rationale was that if everyone had access to the Internet, they could eliminate a lot of paperwork and personal contact with town employees.

They did a hard estimate of how much it would cost per subscriber, to wit about half of what their two "competing" ISPs were charging, even taking into account that some people too poor to pay taxes would also be using it.

Then someone, whose identity remains obscure to this day, launched a public relations campaign designed to outrage the citizens that poor people would get, for free, what they were paying for with their taxes.

It worked. Council shelved the plan.

Over the next two years, broadband charges roughly doubled.

[Anonymous Coward]

Re: In the town where my mom lives, someone proposed community broadband WiFi.

campaign designed to outrage the citizens that poor people would get, for free, what they were paying for with their taxes

This, to me as a left-pondian, seems to be at the root of much of what goes 'wrong' in the US. Lip service to 'everyone has an equal chance' while making damn sure you pull up the ladder behind you.

And while a lot of the blame does lie with big corporations, a large number of right-leaning, socialism-hating, 'red under the bed' paranoid citizens makes sure the status quo is maintained.

Or am I just being cynical?

[Jellied Eel]

Re: In the town where my mom lives, someone proposed community broadband WiFi.

And while a lot of the blame does lie with big corporations, a large number of right-leaning, socialism-hating, 'red under the bed' paranoid citizens makes sure the status quo is maintained.

Or am I just being cynical?

Nope, it's just business. Telecomms has long been a natural monopoly, often burgered up by attempts to create 'competition', or just award franchises/licences to entities that end up being a monopoly. So a small, rural ISP that could be happy living off USO money and it's subscriptions. Naturally they'd not want competition either. And it's also incredibly expensive and inefficient to duplicate infrastructure, especially if it's duplicate technology. Customer ends up being able to chose a provider because they've got 2 lines to their house. But that means one line is idle, generating costs but no revenues.

But being a natural monopoly, that means towns should in theory be able to provide a better service given they already own/control a lot of the assets needed. So when roads get resurfaced, run ducts and fibre. But then the muni-net becomes a competitor, and competitors complain.

But such is business, and politics. I'm a big fan of muni-networks, and competitors should be pacified if they're built from standards-based services like Ethernet. Munis can then lease VLANs to other ISPs, who don't then have to build out their own infrastructure and maintain it.

But WiFi isn't the answer, and generally sucks given range limitations, interference and congestion or just the need to provide, power and maintain enough AP's to generate coverage. Fibre is waaaay better, and cheaper in the long run.

[Cuddles]

Losses stemming from lost income

Isn't that, you know, kind of the point? If price caps wouldn't reduce how much customers pay, they wouldn't be needed.