Comment by cpeterso | Hacker News Reader

Comment by cpeterso | Hacker News Reader

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I'm reminded of Fake Steve Jobs' dig at AT&T's short-term thinking:

http://www.fakesteve.net/2009/12/a-not-so-brief-chat-with-ra...

"Now there was a lot of demand for [the "Meet the Beatles"] record — so much that the plant that printed the records could not keep up. Now here’s the lesson. Do you think the guys who were running Capitol Records said, Gee whiz, the kids are buying up this record at such a crazy pace that our printing plant can’t keep up — we’d better find a way to slow things down. Maybe we can create an incentive that would discourage people from buying the record. Do you think they said that? No, they did not. What they did was, they went out and found another printing plant. And another one and another one, until they could make as many records as people wanted.

[AT&T CEO] Randall is like, Okay, I get your point. I’m like, You know what, I don’t think you do, because if you did, we wouldn’t be sitting here having this conversation, would we?"

I don't think the analogy works, because you're already an AT&T customer. AT&T building out capacity, doesn't necessarily lead to more sales; the price/GB drops, they don't necessarily make more money, whereas building more printing plants does lead to more sales. Unless of coarse their offering gets better than Verizon's, and people start switching.

A better analogy is airplanes and air travel. We have the technology to build supersonic passenger jets, but the economics don't work: leisure travelers are unable/unwilling to pay more for their ticket to get at their destination two times as fast. Their time isn't valuable enough to justify the added expense. Yet, business executives are willing to pay for supersonic business jets because their time is that valuable. Supersonic private jets are already under development.

Consumers would love faster broadband, but they can't afford to pay more for it. Businesses can, and they have a variety of options available.

Isn't Google Fiber showing us that the cost isn't as extreme as the providers would have us believe?

Yes. That's the point. Google has already stated that they're fiber program is NOT a loss leader, as many have speculated.

Google Fiber is a disruption play in a limited market. While not a loss leader, this type of roll out isn't cheap, especially for existing plants.

That being said, I'm jealous, so very jealous of Kansas right now.

If Google's roll-out significantly more expensive than any other type of facilities-based build-out?

In fact Google's product is rational: If you are going to bother to build out in a competitor's territory, you want to get all of your competitor's customers to switch, so you need a disruptive product.

My understanding is that the new build out is cheaper than traditional HFC builds. The difference here is incumbent providers would need to abandon large swaths of their infrastructure to compete with a disruption play in Kansas.

Google is spot on to roll out FTTH, but existing plants aren't going to disappear any time soon, and likely will not react to the disruption play at large.

A better analogy is airplanes and air travel.

An even better analogy is that the companies that build airplanes also build cars. They have a decent margin on cars but a much lower margin on airplanes. So, even if they could make planes that were larger and faster, they profit more from keeping people driving their cars.

Actually, the Concord was operated profitability for several years mostly though a dramatic increase in ticket prices which there customers did not really care about.

Market research had revealed that many customers thought Concorde was more expensive than it actually was; thus ticket prices were progressively raised to match these perceptions.[36] It is reported that British Airways then ran Concorde at a profit, unlike their French counterpart.[127][128] http://en.wikipedia.org/wiki/Concorde

As to network capacity, it's actually fairly cheap, prices are based around perceived value not cost just look at text messaging plans. That and cable competing with hulu/netflix.

I see what you mean, that AT&T's income does not scale with customer usage, though AT&T did lose (existing and potential) customers due to their network problems.

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