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Comment by natnat | Hacker News Reader

When all you do is provide a dumb pipe, you're a commodity. When you're selling a commodity, and there is any competition at all, your margins will race down to virtually nothing pretty damn quickly. No one wants to invest billions of dollars to build up the infrastructure for a barely profitable ISP.

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Does it matter? If consumers want the commodity won't someone step forth to take the small margins? So is it ultimately that consumers don't want this particular commodity badly enough to force the market to exist?

Selling a commodity is not automatically a bad idea. Chilean miners have been doing very well for the last ten years by selling copper, moly, silver, gold, at huge margins. (Before 2003 they merely did OK).

There is plenty of room for premium ISPs (such as bethere) as long as they aren't locked out by the cost of running cables. The pipe might be dumb but latency, bandwidth caps, traffic shaping, filtering and blocking/censoring all contribute to quality. I'm totally happy to pay an extra $10 a month for a solid connection. I suspect gamers would be a big market for bethere if they had any advertising at all.

It's a Cournot game, and it does work - you invest in infrasx up front that will get you a fixed capacity (bandwidth). The airline industry is the same way- an airline buys a number of airplanes up front which get them a fixed # of seats to sell.

http://en.wikipedia.org/wiki/Oligopoly#Cournot-Nash_model

>No one wants to invest billions of dollars to build up the infrastructure for a barely profitable ISP.

Google does.

Providing internet access is not Google's only business.

But Google isn't an ISP and an ISP only. They make a ton of money as a direct result of you having an internet connection.

Huh? Last time I checked Google was a advertising giant who collects data on people's data/details (be it internet usage or whatever and be it "anonymised" or not). Google is not a charity.

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