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JohnBarnes
JohnBarnes
3/24/2016 10:58:34 PM
User Rank
Platinum
This really seems like a natural monopoly...
... using the term "natural monopoly" the way economists do: something where the economies of scale are such a big factor that it doesn't really make sense to have more than one of them.  Of course they said that about the phone company at one time, too, so perhaps I'm over-pessimistic, but it just seems to me that two processes can come of this:

1) Super-broad-band demand proves unexpectedly high, and the small companies offering it grow into giants because the big ones can't adapt fast enough,

or

2) Super-broad-band demand proves unexpectedly high, and the big companies do adapt fast enough, and get much bigger.

Either way you end up with a mature market of just a few giant super-broad-band providers.

 

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afwriter
afwriter
3/24/2016 11:47:49 PM
User Rank
Platinum
Re: This really seems like a natural monopoly...
@JohnBarnes I understand what you are getting at, but that is not much different than what goes on in today's environment?  I would guess that there would not be a total monopoly as at least two companies would vie for the crown Google Vs. Apple for example. 

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JohnBarnes
JohnBarnes
3/25/2016 7:24:17 AM
User Rank
Platinum
Re: This really seems like a natural monopoly...
afwriter, yes, yes, absolutely. In fact a very large range of behaviors by tech companies are driven by the need to avoid US and European antitrust laws; after a certain ill-defined point in market concentration, it doesn't pay for the big ones to swallow the small ones since that only invites being broken up. (Classic example in US is that when Nash went broke in the 1950s and closed their doors, none of the Big 3 automakers acquired the pieces because they feared antitrust; instead, they limped through various maneuvers (splitting off Rambler, creating American Motors, splitting off Jeep, etc) to try to maintain the idea of competition. Some folks will argue that Microsoft (and DEC before it) arose in part from IBM's need not to dominate new fields of computing, and that Microsoft in turn avoided going in for the kill against Apple, all to avoid the appearance of antitrust liability.  You can see similar maneuvers in the slow, careful consolidation of aerospace companies as well.

It may be that the "natural" configuration in an antitrust-regulated market is N giants (where 1<N<5) and M non-giant off brands (0<M<3) that exist mainly to keep the Big N out of trouble with the Federal Trade Commission.  In which case, superbroadband is on its way there, and today's small superbroadband companies are just the nuclei from which the Little M will grow.

 

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Writeran69258
Writeran69258
3/25/2016 9:35:21 AM
User Rank
Steel
Re: This really seems like a natural monopoly...
Interestingly, Wave Broadband is overbuilding its Wave G product in markets that already have broadband competition. Not sure how many of those competitors offer Gigabit services, but the potential is there.

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Joe Stanganelli
Joe Stanganelli
3/27/2016 6:27:27 PM
User Rank
Author
Re: This really seems like a natural monopoly...
@JohnBarnes: It wouldn't be the first time your #1 has happened regarding a nascent technology.  Just look at how Google ousted Yahoo.

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elizabethv
elizabethv
3/25/2016 6:48:03 AM
User Rank
Platinum
Streaming
There are two very valid points here, that broadband is an important product for businesses, and to focus on the sales to business seems not only logical, but also imperative to the viability of broadband. The business sales of broadband make up a large percentage of income for internet companies, as such, the relationship between them and businesses is symbiotic. 

The other valid point brought up is that so long as customers keep streaming, they'll be reliant on broadband technology. This will likely only increase as more and more cable companies find customers leaving them to stick with watching movies and television shows on the internet instead of paying high prices for cable, whose biggest benefit is the use of DVR. 

With these two factors, it's easy to see what smaller service providers would want to focus on broadband versus any newer technology, or even diversifying services. When you have limited resources you need to focus on what is going to make you the most money. 

 

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ms.akkineni
ms.akkineni
3/27/2016 6:55:24 PM
User Rank
Platinum
Re: Streaming
@elizabethv:

You highlighted the two valid points very well.

When you have limited resources you need to focus on what is going to make you the most money. 

What a valid and practical fact in the context of smaller companies. And this in turn is the winning factor in my opinion. Upcoming companies that have their own limitations have to really think where the focus must be, what brings the money in and what should be the roadmap and right strategy / approach to make that possible. Adapting agility if not there already could be a good move.

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Joe Stanganelli
Joe Stanganelli
3/27/2016 6:26:04 PM
User Rank
Author
The chicken or the egg?
Jennifer, do you have any insights/information on the history here regarding gigabit service.  Were small providers beginning to offer gigabit fiber, leading Google to swing its weight around and rush into that market to push out the little guys?  Or did it largely start with Google, but the little guys are able to compete because of their agility?

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Writeran69258
Writeran69258
3/28/2016 5:43:29 PM
User Rank
Steel
Re: The chicken or the egg?
In the case of Wave Broadband, Steve Weed founded the company with the goal of offering high speed broadband. That's the driver behind the company's business model. With Comporium, it's a small telco interested in developing the local community as well as providing phone, video, and data service. Economic development was a key motivator, and Comporium led the effort to get businesses interested in the gigabit Internet service. I'm not sure how much Influence Google had in these two instances.

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clrmoney
clrmoney
3/27/2016 11:09:17 PM
User Rank
Platinum
small services
They should provide small services for many customers aand many companies so that should me.mandatory.

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