Welcome to the Slashdot Beta site -- learn more here. Use the link in the footer or click here to return to the Classic version of Slashdot.

Thank you!

Before you choose to head back to the Classic look of the site, we'd appreciate it if you share your thoughts on the Beta; your feedback is what drives our ongoing development.

Beta is different and we value you taking the time to try it out. Please take a look at the changes we've made in Beta and  learn more about it. Thanks for reading, and for making the site better!

Why Is Connectivity So Cheap In Stockholm?

timothy posted about 5 years ago | from the umlauts-defy-gravity dept.

Networking 443

lpress writes "Symmetric, 100 Mbps service in Stockholm, costs $11/month. Conditions in every city are different, but part of the explanation for the low cost is that the city owns a municipal fiber network reaching every block. They lease network access to anyone who would like to offer service. The ISPs, including incumbent telephone and cable companies, compete on an equal footing."

cancel ×
This is a preview of your comment

No Comment Title Entered

Anonymous Coward 1 minute ago

No Comment Entered


Some crazy conspiracy? (4, Funny)

evolx10 (679412) | about 5 years ago | (#27629145)


Re:Some crazy conspiracy? (5, Insightful)

should_be_linear (779431) | about 5 years ago | (#27629199)

yeah, Sweden is socialist country in many areas and for many decades, but it kinda works so well that free-market evangelists never mention anything about it, they prefer talking about Cuba.

Re:Some crazy conspiracy? (1)

DirtyCanuck (1529753) | about 5 years ago | (#27629321)

10Mbits - 359SEK per month Broadbandsbaloget or 43 bucks u.s not to bad at all. I pay 100 Canadian for 200 gb cap and 10 down :S

Re:Some crazy conspiracy? (2, Informative)

Anonymous Coward | about 5 years ago | (#27629505)

Err, I get 100/10Mbps from BBB for 225 or 275/month (can't remember which) through my homeowner's association. IIRC, normal price is 320/month.
Also worth noting is Bahnhof (of recent datacenter and delete-the-logs fame) do 100/10 for 289/month, 100/100 for 319/month.

My mother living in the boondocks of Stockholm (i.e., no subway, train or tram lines -- bus only) can get 100/100 for 500/month through one of the *private* landlord networks (i.e., not STOKAB), or 100/10 for 250 - 350/month.

Re:Some crazy conspiracy? (0, Troll)

joe545 (871599) | about 5 years ago | (#27629573)

Bredbandbolaget's prices are variable depending on the fastighetsägare and the setup in the local telephone exchange (is it LLUB? Are they selling over someone else's network? If it's Skanova then it won't be cheap). Confessions of a former B2 programmer

Re:Some crazy conspiracy? (4, Interesting)

sopssa (1498795) | about 5 years ago | (#27629529)

Connectivity in Sweden is no cheap at all. You're asking two different things here. Most swedes have fast broadband on the cost of shared bandwidth. They order 100mbit and its usually 4-6MB/s. That being said, its probably a lot better than in USA etc. Premium, guaranteed bandwidth in sweden costs a lot more than for example in usa or france. Even if you order 100mbit you're still limited to like 200GB/month or similar. Go over that and you pay really a premium price for it.

Re:Some crazy conspiracy? (1)

sopssa (1498795) | about 5 years ago | (#27629547)

In the later example I meant in datacenter and business lines. First, crappy and nonguaranteed bandwidth is for customer lines.

Re:Some crazy conspiracy? (-1, Flamebait)

Anonymous Coward | about 5 years ago | (#27629563)

haha nice lies, honestly is it because you're a right wing dingbat ?

Re:Some crazy conspiracy? (0, Flamebait)

Mindjiver (71) | about 5 years ago | (#27629335)

Please explain what socialism has to due to the enormous growth in broadband in Sweden after the de-regulation of the telecom industry?

Also, this is a private company providing the service.

Re:Some crazy conspiracy? (5, Insightful)

Pinky's Brain (1158667) | about 5 years ago | (#27629621)

Stokolab, the last mile operator in question, is communally owned. That's pretty socialist right there.

It just goes to show the importance of moderation in all things. Moderation in regulation. Moderation in privatization.

this is a private company providing the service (4, Informative)

falconwolf (725481) | about 5 years ago | (#27629709)

The company is owned by the city of Stockholm and is not a private business. Stokab [stokab.se] was founded in 1994 and is owned by the company group Stockholms Stadshus AB, which is in turn owned by the City of Stockholm.


Re:Some crazy conspiracy? (1)

Presto Vivace (882157) | about 5 years ago | (#27629391)

We could have the post office do the same thing, but we have an ideological barrier.

Uhhh, yeah... (2, Insightful)

Jane Q. Public (1010737) | about 5 years ago | (#27629711)

like the "idealogical barrier" that prevents the Postal Service from doing an efficient job at anything.

When I was a child, my father often spoke proudly about the U.S. Postal Service, bragging about how a first-class letter could get to just about anywhere in the United States in just 2 days, for the cost of a 7 cent stamp.

Today, it costs 6 times as much, and as often as not takes 6 times as long. What is wrong with this picture?

Re:Some crazy conspiracy? (2, Insightful)

Anonymous Coward | about 5 years ago | (#27629397)

yeah, Sweden is socialist country in many areas and for many decades, but it kinda works so well that free-market evangelists never mention anything about it, they prefer talking about Cuba.

Both Sweden and the US are mixed economies. The word socialism is completely taboo in Sweden as much as it is in the US. Even when you discuss systems where there clearly is socialism, such as the public road system.

Re:Some crazy conspiracy? (5, Insightful)

Anonymous Coward | about 5 years ago | (#27629455)

If you're Swedish, get a fact check, the word that is taboo in Sweden is capitalism.

Say that you're doing anything capitalistic, and people will see you as someone who wants to attack our welfare.

-Socialist liberal Swedish guy.

Re:Some crazy conspiracy? (0)

Anonymous Coward | about 5 years ago | (#27629407)

From your comment I can see that you don't live in Sweden. I do. Yes, there are a few metropolitan networks in Sweden and they all provide access at competitive prices.
And, btw, the quoted cost of $11/month seems to be incorrect. From the source (http://www.stockholm.opennet.se/serviceguide/consumers/internet) it seems 100/100 costs about $38/month.

Re:Some crazy conspiracy? (1)

epiteo (1229176) | about 5 years ago | (#27629645)

Yes, USD 11 seems more like the difference in price between 10/10 and 100/100. I'll be getting 100/100 at SEK 419(approx USD 49) per month.

Re:Some crazy conspiracy? (0)

fR33k.c (181079) | about 5 years ago | (#27629435)

So Sweden's fibre infrastructure keeps the cost of broadband down. Hmm... Who paid for the fibre infrastructure, the Internet fairy? My guess it was the citizens of Stockholm through their incredibly high taxes. Look at the big picture, the deal probably isn't as good as it first seems.

Re:Some crazy conspiracy? (0, Insightful)

Anonymous Coward | about 5 years ago | (#27629465)

lol they've still better conditions than the USA

Oh noes, they paid taxes! (2, Insightful)

Nicolas MONNET (4727) | about 5 years ago | (#27629493)

And they got something for it in return, fuck Rand-bots and that bathtub drowning retard (what's his face again?)

Re:Some crazy conspiracy? (2, Informative)

Anonymous Coward | about 5 years ago | (#27629503)

In Western Europe socialist is not the same as communist. Socialists believe in a government-corrected free-market (e.g. Sweden) in contrast to communists who believe in a government-planned economy (e.g. Cuba).
Personally I think prices for products depend more on the local market situation, the price people are willing and able to pay for goods and services. In Sweden telecom services, house rents and medical services are cheap, but food, alcohol, cars and taxes are expensive.

Sweden vs Cuba (1)

porky_pig_jr (129948) | about 5 years ago | (#27629725)

There is a world of difference between Sweden and Cuba. Cuba is a totalitarian regime with communist economy. Sweden is free market economy and democratic society. The so-called "socialist economy" has never been precisely defined, but *please* don't get confuse what's called "socialist economy" in some western countries with those countries which call themselves "socialist" and whose economy is completely centralized and controlled by the state.

Free market evangelists know what they are talking about. You don't.

Re:Some crazy conspiracy? (0)

Anonymous Coward | about 5 years ago | (#27629205)

I am surprised cities across the US are not ALL over this. A way to build a service many want and 'lease' out the 'work' to others. It is almost something for nothing. Exclusive use of a network does not max out profits from the point of view of a city. It actually minimizes profits to the city as the business on the other end maxes out their profit.

If Tokyo can have bad ass networks why cant the largest cities in the US have this? I am not buying the 'the us is to sparsely populated' theory.

Re:Some crazy conspiracy? (1)

p!ssa (660270) | about 5 years ago | (#27629495)

Many U.S. cities have gone after municipal fiber solutions, the problem is the existing govt. mandated monopolies are blocking them in court with near unlimited legal budgets, lobbying groups and fake 'grass-roots' campaigns. Very few have managed to build out the networks, and many that tried have been tied up in courts for years (still are). I dont have any real stats but judging from news stories over the last few years I would guess 90% of these efforts fail due to the existing corruption in US business and government.

Re:Some crazy conspiracy? (-1, Troll)

Anonymous Coward | about 5 years ago | (#27629253)

America is just jealous of the rest of the world including Europe which is mostly Socialist and it works very well :)

America is a FAIL really.

Re:Some crazy conspiracy? (5, Insightful)

erroneus (253617) | about 5 years ago | (#27629511)

Imagine what would happen if all roads were owned by private companies. Would we ever seen an end to toll roads? Doubt it.

Some things, especially utilities, simply work better when public owned. Electric, water and yes, even telephone. And internet access isn't too far removed from a telephone utility.

I think the next time we hear about a communications company suing a municipality over their intention to install their own fiber in their city, I think the case of Stockholm needs to be cited as the reason why they don't want it and the reason the people should have it.

Re:Some crazy conspiracy? (1)

astrotek (132325) | about 5 years ago | (#27629601)

You could see an end to some toll roads. The toll would be paid for by the business the road benefits. Similar to how Vegas has cheap flights. If you were to build Vegas between LA and Phoenix and cut the time down from 8 hours to 2 hours and half way you could stop at a place of gambling, shopping and debauchery, would you take a plane (3 hours) or your car with a light rail augment(2 hours)?

Because... (2, Insightful)

Jah-Wren Ryel (80510) | about 5 years ago | (#27629147)

Why Is Connectivity So Cheap In Stockholm?

Because their taxes are so high, it had better be cheap!

Re:Because... (2, Insightful)

dogmatixpsych (786818) | about 5 years ago | (#27629383)

That is very true. Just like healthcare there or in Canada, the people are paying for it, just in different ways than we do in America (not that we have internet access that is that fast available to the general public here in America). I'm not saying one method ("socialism" versus "free market") is better than another in this case, that's a different discussion, I'm just supporting what the parent poster said - that they do pay more than $11 a month for it!

Re:Because... (1)

tthomas48 (180798) | about 5 years ago | (#27629467)

Yes, but if you use that rational I pay more than $50/month for my DSL or Cable too. Think of all the lobbyists and laws it takes to keep a virtual monopoly. Think of all the government kick backs and discounts. The consumer is pretty much always going to get a better deal when you restrict the market to put all the competitors on an even footing, rather than restricting the market to provide a monopoly like we do. Under both "capitalism" and "socialism" (I'm assuming in this case we're talking about US vs. Sweden), the market for broadband is heavily controlled by the government.

I'd say we get the worse deal.

Re:Because... (1)

MindlessAutomata (1282944) | about 5 years ago | (#27629593)

So, how do you get off equating THAT with capitalism? I don't think capitalism means what you think it means.

Re:Because... (1)

tthomas48 (180798) | about 5 years ago | (#27629671)

That's my point. Just because the US does it doesn't mean it's capitalism, and doesn't mean it should be defended.

Re:Because... (0)

Anonymous Coward | about 5 years ago | (#27629693)

"Capitalism" does not mean "free market economy". It is the ideology of amassing capital to achieve ones' goals. This is what French and German and Spanish and English kings were doing during the middle ages, what amounts to a centrally planned feudal economy.

Re:Because... (1)

Alef (605149) | about 5 years ago | (#27629395)

IMHO, if there is anything the government should invest in, it is infrastructure. It's just a plain waste of resources having lots of parallel networks unless it is needed for redundancy reasons, for the same reason that you wouldn't build triplicate roads or railways between two cities. Add to that the vendor lock-in which usually follows when they're privately owned.

You can still have private companies build and operate the networks, if you think they will do it more efficiently than the government could. The only difference is that we pay for it once and get a clear and open playing field where competition can flourish.

Re:Because... (0)

Anonymous Coward | about 5 years ago | (#27629447)

"Paying for it once" is specious. Networks require ongoing maintenance, administration and upgrades. It is the gift that keeps on giving.

Re:Because... (1)

Alef (605149) | about 5 years ago | (#27629537)

"Paying for it once" is specious. Networks require ongoing maintenance, administration and upgrades. It is the gift that keeps on giving.

Of course it does, in the same way that water pipes and sewers cost money to maintain. The point is that we don't have to pay for the maintenance of multiple networks/water pipes/sewers where there could be one.

Because I assure you, someone is paying for all those UMTS base stations hanging in groups besides each other where a single would suffice. And as customers, that someone is you and me.

Re:Because... (5, Insightful)

debrain (29228) | about 5 years ago | (#27629559)

Because their taxes are so high, it had better be cheap!

When one factors in the cost of exorbitant privilege (i.e. the eventual realization of the cost of printing money as a reserve currency) to the United States citizens, the ultimate cost to taxpayers in the United States is probably significantly higher than any day-to-day taxes anywhere else in the world.

To put this latent tax in perspective, the United States federal government has well over $52 trillion in outstanding obligations (over $12 trillion to foreign countries). That's $189,000 in present-day value U.S. dollars (i.e. relative to the basket of world currencies) that the federal government has spent on behalf of each citizen in the United States above and beyond what the U.S. federal government was taking in as taxes (i.e. they printed the money). When it comes time to pay this off, the amount will be significantly higher relative to the present-day purchasing power of the dollar, given the near certainty of exceptional inflation of prices or alternatively (or equivalently) depreciation of the value of the dollar inherent to paying off such a volume of debt. The "real cost" of this debt when realized is probably four times the amount I've stated there (based on observable data and projections from the fifty or so other countries that have become insolvent since World War 2).

It's worth noting that AT&T and others were "gifted" $500 billion dollars in the late 1990's to upgrade telecommunications infrastructure, with virtually no results whatsoever, I understand. Why this half-a-trillion didn't result in the same or similar subsidized infrastructure when compared to Sweden boggles the mind.

So to say Sweden has oppressive taxes is folly. Sweden does have day-to-day higher taxes per capita, but they have leaps and bounds better services (cheap and fast internet access among them, but also better, cheaper policing, health care, high speed rail, and education), and they have not burdened future generations with oppressive or odious amounts of debt.

High taxes do not give rise to cheap internet. The United States has exposed its citizens impossibly high obligations, way beyond what Sweden or virtually any other country does, but internet in the U.S. can be described as backwards in price and quality compared to other countries. Following David Lande's hypothesis, I'd say the reason Sweden has cheap, fast internet and the United States does not is culture: Sweden has educated people who elect a progressive government that spends money with accountability and forward-thinking reason; the United States has something different.

Re:Because... (1)

Kjella (173770) | about 5 years ago | (#27629809)

Yeah, my taxes here in Norway (same or worse as Sweden) is high. Then again, I didn't pay a dime in tuition for five years of a Master's degree. I don't have a health insurance, I do have a disability insurance but that's only if I become a cripple. The public transportation I use is subsidized. If you want to do a proper comparison, do it apples to apples after you've paid for equal services in the US. I do talk to people in the US, and the worst examples I've seen have been private companies using their local monopoly to do complete rip-offs. Compared to that I don't feel so bad about living in a social democracy...

This is one place local governments have failed... (5, Insightful)

ducomputergeek (595742) | about 5 years ago | (#27629169)

I'm not a big fan of a huge federal government, but at the local level, cities and towns should have been building out the last mile of service instead of granting local monopolies. If building that infrastructure IS so expensive that no business would do it without the monopoly status, then it probably is something best left to local governments to fund/build and then lease out to whomever wants to offer services to the residents.

My Dad has this problem. He has the choice between the sucky local phone monopoly for DSL or the sucky local cable monopoly for cable.

Re:This is one place local governments have failed (5, Insightful)

arth1 (260657) | about 5 years ago | (#27629227)

Dragging the fiber can't be that expensive. I mean, compared to water or sewer pipes (which they can even be bunded with).
What's wrong here in the US is a strong public distrust of having the government do anything, because the government may screw you over. So instead people prefer to give important tasks to businesses, who will screw you over.

Re:This is one place local governments have failed (1)

im_thatoneguy (819432) | about 5 years ago | (#27629427)

We're being told it costs like $4k-8k per household to wire fiber. Don't ask me where all the money is going.

Re:This is one place local governments have failed (0)

Anonymous Coward | about 5 years ago | (#27629429)

Your confusion is that you assume the government "may" screw us over and that chance is better than a certain monopoly.

When government does something, they WILL screw it up, and it IS a monopoly. Name something governments do well, aside perhaps from national defense.

Sorry, I'm from Chicagoland. I know better than to let government do ANYTHING if you can help it.

Re:This is one place local governments have failed (3, Insightful)

im_thatoneguy (819432) | about 5 years ago | (#27629801)

Name something governments do well, aside perhaps from national defense.

National Defense.
Fire Supression.
National Resource management. (National Parks).
Airspace management.
Worker/Business relations. (When was the last time you heard of employees rioting and fighting in the streets. Used to be common before the government stepped in.)
Airwaves regulation and leasing.
Autmobile safety regulation. (Airbags, Seat belts, Padded stearing columns etc..)
National Highway system.
Bank Deposit Insurance. (FDIC).
Public Libraries.
Driving Regulations. (Standardized safe driving practices and enforcement).
Street Parking Management. (Much cheaper than a parking lot most of the time and super easy).
Science Grant Writing.
Medical Grant Writing.
Drug Testing and Approval.
Food Safety Oversight. (The last few years was a great example of what happens when they lose funding.)
City planning. (Go to Bankok and try getting anywhere. This one is huge.)
Public Transportation.
Baseline Medical Insurance for impoverished children.
A social safety net so that to some degree the poorest in our population can feel free to change jobs and not let the economy completely devolve into a slave/endentured servitude in practice.
Unemployment insurance.
Tobacco taxation. (Reduces smoking use while not banning cigarettes.)
The FBI. If your child is kidnapped or a bank robbed you want these people on your side.
The National Weather Service.
Air Traffic Controllers.
The Public School system. It takes in EVERYBODY unlike a private school. Unlike my school (Private school) they don't expell students who fail a class or get caught with a beer. (shock and amaze, when you expell all the kids who fail classes your overall test scores go up!). They also accept vegetables and make their best effort to get them to an employable state at Burger King or stocking shelves. This saves the government a lot of money from having dependent adults who can't contribute to society.
The US Coast Guard. (If your boat flips you want these people to be well funded.)

I apologize for the other million other government employees who also do a great job every day. I only have so much time to stand up for them.

Re:This is one place local governments have failed (5, Insightful)

Tacvek (948259) | about 5 years ago | (#27629575)

Yes, the fear of government and of Government regulation can be quite misplaced.

It is well known that in some markets regulation is the only thing that keeps the market even remotely resembling a free market, rather than an oligarchy.

Now regulation can have its issues too. N o doubt that some government regulation is actively harmful. Some of it is well intention regulation that goes sour, which is pretty common considering that macro-scale economics is not a science by any means. Other harmful regulation is that which is supported by the major players in the regulated industry. In general that indicates that the regulation dictates what they would be doing anyway, yet makes it more difficult for competitors to enter the market, or compete with the big players.

In a similar way, having the government perform some function may be very helpful, or may be quite harmful.

Look at the United States Postal Service. People complain about them, but they function pretty well all things considered. The pricing on first class mail is definitely very competitive despite the complete lack of competitors. If the market were opened do you really think UPS, FedEx, or DHL could offer first class mail services at a significantly lower price? Probably not. Perhaps a few cents lower, but not much. The USPS does tend to be slightly more expensive than the alternatives when shipping packages, but that does not really matter, because they have competition there.

Overall the USPS works well. Why does it work well? Perhaps the most important thing to notice is that it is well insulated from the elected politicians. They can't continually mess with it, making changes all the time. It is not profit driven. The apparent goal is to net exactly zero profit, with income covering all the expenses, and employee salaries, upkeep etc, thus requiring no treasury funding. It does reasonably well at that, although they almost never actually reach that goal.

That goes to show that a government institution can work effectively. One that owns last mile infrastructure could also work well, if set up well, such that the politicians have little influence over it, it is set up such that it must price fairly (be this some sort of per endpoint, or bandwidth based pricing scheme, the important thing is that Ma Bell gets no better deal than Joe's DSL Shack), and be set up so that the net profit is zero (the all income covers infrastructure, maintenance, and upgrades).

But alas, the average American is to scared of the government to allow such a thing, and don't see the absurd television, phone, and internet pricing as a real issue.

Re:This is one place local governments have failed (1)

kestasjk (933987) | about 5 years ago | (#27629357)

Here in Australia the government owns just about all the last-mile copper, and the only difference is the sucky local phone monopoly is nation-wide, and there is no sucky local cable monopoly.

Re:This is one place local governments have failed (1)

Pinky's Brain (1158667) | about 5 years ago | (#27629757)

Telstra is one of those wonderful privatized monopolies. It's the worst of both worlds.

Re:This is one place local governments have failed (2, Interesting)

fuzzyfuzzyfungus (1223518) | about 5 years ago | (#27629375)

It really comes down to the fact that last mile connectivity is pretty much a natural monopoly(not quite as severe as roads; but pretty much on par with water and power).

For reasons that, I assume, have to do with a mixture of lobbying by incumbents and a strong distrust of "socialism" we've mostly been denying this fact for years.

It is a simple matter of empirical fact that free markets work pretty well. However, when you are dealing with natural monopolies, free markets aren't really an option, so that is irrelevant. The choice is pretty much between (ill) regulated monopoly and municipal ownership. Frankly, municipal ownership is likely the better choice. I know that I have way, way less trouble with my water service than with my phone service or ISP.

Re:This is one place local governments have failed (0)

Anonymous Coward | about 5 years ago | (#27629403)

The US people should own the rails (or the fiber) just as they already own the roads.
Most countries have figured this out - but why not in the US, I dare not imagine.

Re:This is one place local governments have failed (3, Insightful)

Fumus (1258966) | about 5 years ago | (#27629469)

Internet access is slowly becoming another "must have" commodity. And as with water, electricity, telephones (the landline type), mail, public transport, etc. They are simply best left to the government to finance. Or subside.

If running water, electricity, or mail would be left only for big corporations to run, citizens of smaller (sub 10,000 people) cities would barely have running water.

Consider mail. Do you really think the post office wants to deliver mail to everyone? If the recipient lives in an urban area and the postman gets an average of at least 5 letters per mile, then it isn't bad. But when someone lives in the middle of nowhere and the postman needs to travel five miles per letter, then it simply isn't profitable. Yet people would rebel if suddenly half of the country wouldn't be able to receive mail or have electricity.

Re:This is one place local governments have failed (1)

LostCluster (625375) | about 5 years ago | (#27629635)

Companies are building up without the monopoly benefit. Here where I live, Comcast cable is a fiber backbone with coax last mile system, and Verizon fiber to the premises (fiber backbone and last mile, coax and twisted pairs inside the house) is promised to be on the way in less than four years, although it's expected in two.

Verizon's fiber is fast, but as half the customers get off of Comcast, that's more capacity for those who stay. Duopoly here we come.

Re:This is one place local governments have failed (1)

westlake (615356) | about 5 years ago | (#27629827)

but at the local level, cities and towns should have been building out the last mile of service instead of granting local monopolies.

You are a councilman.

In a city where 45% of your population are on Food Stamps.

You can vote to raise sales and property taxes across the board to lay and maintain municipal fiber or you can let Comcast finance the project and collect a franchise fee.

Rough (5, Insightful)

DirtyCanuck (1529753) | about 5 years ago | (#27629175)

Lafayette, LA, Cox Cable $140 5 50

Capitalism working for the consumer as usual.

Re:Rough (1)

Maxhrk (680390) | about 5 years ago | (#27629189)

I don't understand what you just said on the first sentence. mhmm.

Re:Rough (1)

DirtyCanuck (1529753) | about 5 years ago | (#27629271)

"The Cox Cable offering in Lafayette, Louisiana seems to be the worst deal. It is the slowest and only five dollars a month less than the Verizon network."

The chart didn't paste proper. Basically customers are getting screwed.

Re:Rough (1)

maxume (22995) | about 5 years ago | (#27629359)

Poorly regulated capitalism. There isn't really a good way to enter the market without some kind of license; if government doesn't grant the license, what is a company interested in the market to do?

Hmmm (1, Insightful)

steve buttgereit (644315) | about 5 years ago | (#27629181)

How much of the operating expense is subsidized by revenue not generated through subscriber fees?

Any cost element that's not accounted for in the price calculation that subscribers pay directly makes the apparent benefit of such an arrangement apparent only... not real.

I read a study on plasitic recycling that did something similar; they wanted to show how much more economically sound it was to recycle, so they compared costs (including some estimated) of the recycling processes (transport, processing, etc.) with just plain dumping. And part of their rationale was that dumping fees were really high. But they didn't account for artifical elements in the fees (government environmental impact taxes and fees, etc. designed to make dumping more expensive) and the fact that significant portions of those fees went to subsidize recycling activities (a double whammy in terms of the study dollar per dollar there). This made to whole thing silly, but it looked good if you didn't ask the questions.

This low pricing sounds like it could be suffering from the same sorts of distortions.

Re:Hmmm (5, Insightful)

arth1 (260657) | about 5 years ago | (#27629281)

... or it could just be that by preventing companies from having monopolies, the players can't just set an arbitrary take-it-or-leave-it price because the consumer can take his money to someone else.

Re:Hmmm (1)

steve buttgereit (644315) | about 5 years ago | (#27629399)

Name one price set in the economy, outside the price that government charges for it's "services", that isn't ultimately 'take it or leave it'? Even negotiated prices will reach a bottom and top during the course of negotiation. The fact is that if a price for a service is too expensive relative to the value returned, the customer simply won't buy it: even in the case of so-called 'monopolies'.

Unfortunately, there are those that want something for nothing and often times they use the law to intervene on their behalf to take those resources that they haven't earned (otherwise it would be called theft).

Re:Hmmm (2, Informative)

nine-times (778537) | about 5 years ago | (#27629561)

Name one price set in the economy, outside the price that government charges for it's "services", that isn't ultimately 'take it or leave it'?

The problem with monopolies isn't whether a price, once set, is "take it or leave it." It's that they have much more power at the point when they're setting the price, which leaves the customers with the choice to "take it" or simply live without it. Customers don't have other options because there isn't meaningful competition.

People wanting to make laws that restrain the power of a monopoly does not constitute "theft".

Re:Hmmm (1)

steve buttgereit (644315) | about 5 years ago | (#27629821)

But that's nonsense, because if the pricing weren't affordable relative to value customers would 'leave it' and the monopoly would shrink in size. If the prices were high relative to the costs, competitors would start to enter the market and investment would be there for the easy money.

Look at the history of Standard Oil and its pricing. Prices under the Standard Oil monopoly were very cheap relative to the immediate aftermath of it's break up. The breakup of ATT... did that help consumers? I haven't sudied it in quite the same way, but I recall there being more frustration with the baby bells than Ma Bell.

If Microsoft, which most people here will say is a monopoly, charged $700 for Windows Vista Home Basic... take it or leave it, they can do that and be profitable according to your line of reason... wouldn't that be about the best thing for Linux desktop ever? Before long they wouldn't have a monopoly.

Look at the telephone company that had infrastructure to your house. They now face competition from cable providers not because of government fiat, but because technology for communications is reducing the technical (and cost) barriers for making it happen. Power line and wireless technologies will even push that trend.

Re:Hmmm (0)

Anonymous Coward | about 5 years ago | (#27629697)

^--- He was absent in econ when monopolies were explained.

Re:Hmmm (5, Insightful)

Naturalis Philosopho (1160697) | about 5 years ago | (#27629423)

Exactly. By socializing the fiber pull, the gov't was able to give the people a true free-market when it comes to shopping for providers allowing the free market to actually work. This is what gov't is supposed to do when it meddles with business; level the playing field, let competition happen forcing companies to compete (yes, there will be losers), and allow consumers to actually win. It's monopolies that screw up the system, not having some socialist elements. When will people learn that the goal of government should be to improve the lot of the people, not to just to do the cheapest thing.

Re:Hmmm (1)

steve buttgereit (644315) | about 5 years ago | (#27629717)

Just like the community re-investment act and the creation of government backed mortgages to ensure the 'less well off' can get loans housing loans from banks that otherwise wouldn't lend to them. Just like the Federal Reserve Bank keeping interest rates artifically low through much of the 90's and the first half of this decade.

All this was done to 'level the playing field' and make people's lives better. I have no doubt that was by and large the intension in these programs. And it worked for a while... 15 years or so. People that couldn't normally afford houses got houses, banking execs got rich because the government told them that the public would take the risk, and property owners saw their house values soar.

That worked out really well in the end... good thing government was protecting us.

Re:Hmmm (2, Interesting)

Anonymous Coward | about 5 years ago | (#27629301)

Stokab is a municipal owned company that runs most of the cables in the Stockholm area. Fiber is cheap to own and most of the conducts was already built for other utilities. The bedrock of Stockholm is solid granite and easy to tunnel.

There is no subsidized on the cable costs. The difference is the pay back time on the cable. Stokab probably have calculated a payback time equally the life time of the cable (20 years or more). And because they regularly have to replace there other cable infrastructure adding a few new cables isn't that expensive when the crew is in place.

Another factor that reduce the cost is that most of Stockholm have district heating with concrete ducts that run all over the city. In those conducts there is easy to have an RC robot laying cable besides the existing pipes.

By selling the fiber and black fiber telcos and other are renting fiber from Stokab instead of putting there own in the ground. That is also an factor that reduces the costs for the ISP.

My ISP (Bahnhof.se , of late ./ fame) runs part of there subscriber network in Stokab fibers.

Re:Hmmm (1)

steve buttgereit (644315) | about 5 years ago | (#27629663)

When you say that there was no subsidy on the cable costs, the initial build out (the initial investment) sounds like it was subsidized. The issue if that was the case and they are getting a lesser payback than if that money where otherwise invested is that their act would have, perhaps in only some small way, depressed the effciency of the economy... that's not to say finacial disaster or maybe even anything noticable, but the growth on capital is a reflection of the efficiency of the use of that captial. I take less issue with community investments of this kind, very locally decided public commitments can be responsive enough and have enough information to work well... its when you start to expand this out beyond small groups of people that the errors in judgment by government officials will get more pronounced.

Based on your description, the infrastructure sounds quite nice there and it also sounds like they very wisely used it to their advantage.

Re:Hmmm (1)

nine-times (778537) | about 5 years ago | (#27629327)

This made to whole thing silly, but it looked good if you didn't ask the questions.

Or, from a different point of view, the study showed that the system of putting fees on dumping and subsidizing recycling was working. What's wrong with government trying to arrange things such that generally beneficial behavior is also economically sound?

Re:Hmmm (1)

steve buttgereit (644315) | about 5 years ago | (#27629487)

What's wrong is that the process of arbitraily influencing costs and prices via government fiat can actually mask not just real economic benefits and costs, but also the environmental impacts as well: indeed, if the economics, outside of the artifical fees imposed by government were actually compared, you might find that it is less -environmentally- sound to recycle than to landfill.

The report implicity was trying to demonstrate this point and doing so via economic means. In all the free market cost elements of an activity, resource/raw materials utilization is a major component. If the free market costs of dumping are less than the free market costs of recycling, then dumping may well use fewer resources, consume less enegry and be overall more sound than recycling in the case of plastic. Government fees can hide the effects of resource consumption in costing (and by extension pricing)... and thus hide any real outcome of the environmental effecacy of recycling on that basis.

The interesting thing to note is that the individuals paid to conduct such studies have, themselves, a vested interest in the outcome. I'm not accusing the study authors that I read of fraud, but they see the world wanting one side to win in that debate.

Re:Hmmm (1)

bjourne (1034822) | about 5 years ago | (#27629481)

Well, of course almost all of it is subsidized. Stockholm has about 800000 households so even if 25% of those sign up, at 11$/month that's only a measly 2,2 million revenue/month. Obviously, there's not enough profit there to recoup the investments needed for building all that fiber that is probably counted in billions.

Instead, what is happening is that tax payers pay for the government to lay the fiber. Then the government leases the bandwith to ISP:s at a much lower rate than it cost to build who can then take out a low price and still maintain a high profit margin. In effect, my tax money is subsidizing fast internet which I approve of and subsidizing profits to companies who doesn't deserve it which I do not approve of.

I guess it's still better than the American model because I have fast and "cheap" internet access. But I'm still paying for it twice. There's no "road service providers" so why does the government feel that private Internet service providers are needed?

Interesting... (5, Interesting)

SkuzBuket (820246) | about 5 years ago | (#27629185)

My first thought was that because the city owns the entire network, much of the reason for the low cost is self-explanatory. But then I imagined if a similar arrangement were formed in the US, I would be extremely surprised if the same prices were attained. Local governments would likely see this as a source of income and either charge a similar rate to competitors, or possibly undercut their neighbors by a narrow margin in order to appear generous and possibly gain a few extra votes for the incumbents. Does anybody know more particulars of this arrangement and local laws in the area? Is the portion of the Stockholm government that runs this program have any sort of "no-profit" legislation?

Re:Interesting... (2, Interesting)

j. andrew rogers (774820) | about 5 years ago | (#27629597)

My first thought was that because the city owns the entire network, much of the reason for the low cost is self-explanatory. But then I imagined if a similar arrangement were formed in the US, I would be extremely surprised if the same prices were attained. Local governments would likely see this as a source of income and either charge a similar rate to competitors, or possibly undercut their neighbors by a narrow margin in order to appear generous and possibly gain a few extra votes for the incumbents.

This is exactly what happens in the places I am familiar with where the city owns the fiber network. At first it is leased out as a low-cost non-profit utility for anyone that wants to use the fiber but over time they begin to view it as a profit center, jacking up the prices as much as they can get away with to put more money in the government's coffers. The finale is when the city decides to compete with the companies who are leasing the fiber to capture even more revenue. Eventually you end up with the rough equivalent of a telco monopoly in both services and prices.

In my experience with a couple municipal-owned fiber networks, it is about providing a low-cost public utility in the same way speeding tickets are about public safety. It becomes a revenue source to the de facto exclusion of the nominal purpose, but with the power of government to prevent outside competitors. Naturally, these all started out as noble forward-thinking projects.

Re:Interesting... (0)

Anonymous Coward | about 5 years ago | (#27629695)

Most collectively owned companies in sweden have a strict for profit policy. The city pays their wholly owned subcontractor (http://www.stokab.se/templates/StandardPage.aspx?id=306) a one-time sum to build the net or whatever, and then they are expected to keep it running.

Communism (0)

Anonymous Coward | about 5 years ago | (#27629201)

But, but, communism! It axiomatically cannot work!

So what's the real cost? (0)

TheRaven64 (641858) | about 5 years ago | (#27629223)

Does the money they get from leasing it cover the cost of laying it and maintaining it, or is the network subsidised by other taxes? I can get Internet access for free here - I just have to pay for a really expensive phone contract...

Yes, I'm aware that other, private, networks are government-subsidised in many parts of the world. I'm also aware that, when done well, government-run infrastructure projects can be cheaper than private equivalents. That doesn't mean it's not intellectually dishonest to only count the price the end-user pays if a larger fraction is paid out of their taxes. We can compare healthcare in the USA and countries with socialised schemes by comparing the amount that is paid, in total by individual and state, in both cases, but comparing them by just contrasting the amount the individual pays is misleading.

Re:So what's the real cost? (1)

Trepidity (597) | about 5 years ago | (#27629303)

It doesn't necessarily require a lot of subsidies. A large proportion of the fees paid for American internet access go to profits of the oligopolies who provide it; if it were provided on an at-cost basis, it would be considerably cheaper.

Re:So what's the real cost? (1)

arth1 (260657) | about 5 years ago | (#27629441)

That doesn't mean it's not intellectually dishonest to only count the price the end-user pays if a larger fraction is paid out of their taxes.

The question is whether it's more dishonest than corporations bribing their ways to monopolies, lying to the legislature, and cheating the consumers.

I can't think of a single example where infrastructure didn't become more expensive through privatization. Thus I don't mind subsidising a little, because even if I lose that money, I will still end up paying far less than when the vultures run the show.

More like 80/20 (5, Informative)

Anonymous Coward | about 5 years ago | (#27629229)

I'm on the Stockholm network mentioned in the summary, and it's more like 80Mbps downlink and 20Mbps uplink in actual usable bandwidth. But I can live with it.

Re:More like 80/20 (2, Funny)

cyber-vandal (148830) | about 5 years ago | (#27629285)

I could live with that too instead of 8Mbps/448Kbps I have here. Sweden has beautiful women and superfast porn pipes - truly it is paradise on earth.

Re:More like 80/20 (1)

powerslave12r (1389937) | about 5 years ago | (#27629365)

Not to mention the death metal.

Re:More like 80/20 (3, Interesting)

arth1 (260657) | about 5 years ago | (#27629527)

No, that's Norway.
Finland has the world's best Punk bands.
Germany provides the best Heavy Metal artists.
In all three cases, I think the native languages lend themselves well to the success of these genres.

Sweden has.... choir singing and ABBA.

Re:More like 80/20 (1)

im_thatoneguy (819432) | about 5 years ago | (#27629583)

Finland has the world's best Punk bands

I think Seattle would be forced to disagree.

Re:More like 80/20 (1)

arth1 (260657) | about 5 years ago | (#27629685)

They can disagree all they want, but comparing Seattle "punk" to European punk in general or Finnish punk in particular is like comparing Colonel Sanders to Paul Bocuse.

Your honor, I bring you . [punkinfinland.net]

Lack of profiteering (5, Insightful)

topham (32406) | about 5 years ago | (#27629231)

It's the lack of profiteering that keeps the price down.

If you see communications as a service to be provided to your community; rather than something to be exploited for profit then the dynamics change drastically.

Well another thing (1)

Sycraft-fu (314770) | about 5 years ago | (#27629607)

What is the upstream like? Something that seems popular in various contries is selling more or less a WAN type connection. What I mean is you sell a very fast conneciton to the person's home, however there isn't the kind of bandwidth to back that up at higher levels.

Net effect is it ends up working kind of like a campus WAN. If you are on campus, you'll have probably 100mbit, maybe even gigabit to your desktop. You of course get those speeds to others in your building. However the building itself then has only a 100mbit or maybe gigabit uplink. The whole campus then has perhaps a few hundred megabits. So the net effect is that while your connection is quick, provided others aren't being greedy, it isn't nearly as quick as the end rate might suggest. You don't get gigabit Internet speeds.

I encountered this some years ago with a service somewhere in Europe that had the initials BBB (I don't know what it stood for). The BBB users claimed to have 10mbit VDSL lines. This was back when such a thing was rare. However, I never got more than something in the 200-400kbps rate to them. I was on a high bandwidth connection, and actually worked for network operations so I could check and make sure the problem wasn't on my end. A bit of research revealed that they had 10mbit links, but not so much upstream. So to other BBB members it was generally pretty fast. To the rest of the net, not so much.

So, things like that could potentially be part of the reason the price is so low. When you provide a big WAN, more or less, that is much cheaper than trying to provide that kind of bandwidth through and through. It is oversubscription to a much larger degree than you see on most US ISPs.

If that's the case, then it isn't so impressive to me. I pay a lot for a 10mbit line, but the upside of it is that there is low oversubscription so I basically get that bandwidth all the time to anywhere. It isn't fast just to people that live in my city, or my area, it is fast to any site on the net that also has good bandwidth.

I'm not saying this is necessarily the reason, or that it is the only reason, but it could be part of it.

Not so cheap.. (0)

Anonymous Coward | about 5 years ago | (#27629289)

Ok, this is not quit so. Fiber connections are not so widespread as people imagine, and in fact most of the people I know use ADSL 24/1. At my place it costs me around 700Kr (~U$87) for 100/100 with Telia. Some people can get it for around 300Kr, but it depends very much where you live.

Let's stop this nonsense, please.

Re:Not so cheap.. (1)

im_thatoneguy (819432) | about 5 years ago | (#27629625)

Ok, this is not quit so. Fiber connections are not so widespread as people imagine, and in fact most of the people I know use ADSL 24/1. At my place it costs me around 700Kr (~U$87) for 100/100 with Telia. Some people can get it for around 300Kr, but it depends very much where you live.

Let's stop this nonsense, please.

Nonsense? Most people in the US would have to pay ~$100 for 24/1 ADSL (if it's even available which is EXTREMELY unlikely).

Most people pay ~$45 for 8/1 cable. To get 100/100 we're talking thousands of dollars in 99.999% of american cities.

Why's it so expensive everywhere else? (4, Insightful)

Weedhopper (168515) | about 5 years ago | (#27629311)

This is a prime example of the mistake people of any nation state thinking that any company, particularly one that's granted a local monopoly will in any way, shape or form act in the consumer's best interest.

Re:Why's it so expensive everywhere else? (1)

Dunbal (464142) | about 5 years ago | (#27629611)

This is a prime example of the mistake people of any nation state thinking that any company, particularly one that's granted a local monopoly will in any way, shape or form act in the consumer's best interest.

      It's not usually a mistake made by the people, but rather it's what gets voted for by political shills at every level of government, be it municipal or federal. They are bribed or coerced into thinking that the "free" market is the best system in the world, and they lack the intelligence to realize that a monopoly/oligopoly situation is anything BUT a free market. It's in fact quite the opposite.

      So America is fed lines like "free market capitalism" in the media every day, and told this is a Good Thing(tm), but when things go wrong then you bump into "Too Big To Fail", extra fees added to your telephone or cable bill (or your savings in your bank account devalued when the currency loses value), because the companies that have this monopoly are faced with a "crumbling infrastructure".

      Mind you, they can afford to pay some of their employees to sleep in their pickup trucks (as I caught one Time-Warner employee doing when he was supposed to actually be installing my cable modem. I woke him up and made him work, poor thing). They certainly can afford lobbyists and politicians. But ohhhhh, actually re-investing and maintaining their infrastructure - for SHAME, if we do THAT then how can we ask the "regulatory committees" for fee increases next round?


Must be nice (2, Interesting)

code4fun (739014) | about 5 years ago | (#27629331)

I don't think we'll see this in US. I work for a network equipment provider and we do xDSL and FTTH. Even when our customers deploy fiber technology, they still limit the pipe. With video becoming more prominent, they'll have to increase the bandwidth. However, the only advancement we'll see is if there were more players as opposed to only one or two choices.

City Grid (0)

Anonymous Coward | about 5 years ago | (#27629369)

There is something called "statsnät" (City Grid) in the inner city. Government has a recent ruling about pricing regarding this network. Anything not connected to this grid or even just 1 mile outside of the city and you'll pay at least $30.00 a month for basic DSL.

I live in Stockholm (1)

Bromskloss (750445) | about 5 years ago | (#27629433)

Where do I turn to get this cheap connection?

Re:I live in Stockholm (0)

Anonymous Coward | about 5 years ago | (#27629665)

Bredband2 and Bahnhof (yes, the james bond data center owning one) are the cheaper ones, and they are in a furious price war in some places.

"compete on an equal footing" (1)

gringofrijolero (1489395) | about 5 years ago | (#27629437)

Do I speak for more than myself when I say, *That's all that we really ask.*? We should apply this to every major industry, and probably more than a few "minor" ones.

Fiber in gas pipes? (3, Interesting)

doronbc (1434117) | about 5 years ago | (#27629485)

The U.S. should use an infrastructure already in place. Pipe fiber through residential gas lines. It's only light traveling across the line so it shouldn't ignite the fuel.

Wireless: moot point (1)

NineNine (235196) | about 5 years ago | (#27629515)

I think the US is completely backwards the way we do things as far as telecomm. However, I think it's going to eventually be a moot point as wireless technologies get better and better. I can get slow broadband right now through several different wireless carriers. Once this technology improves and is ubiquitous, the debate will be largely over. I can't wait!

Load More Comments
Slashdot Account

Need an Account?

Forgot your password?

Don't worry, we never post anything without your permission.

Submission Text Formatting Tips

We support a small subset of HTML, namely these tags:

  • b
  • i
  • p
  • br
  • a
  • ol
  • ul
  • li
  • dl
  • dt
  • dd
  • em
  • strong
  • tt
  • blockquote
  • div
  • quote
  • ecode

"ecode" can be used for code snippets, for example:

<ecode>    while(1) { do_something(); } </ecode>
Sign up for Slashdot Newsletters
Create a Slashdot Account