Why do any internet providers ask you to sign a contract to subscribe to their service?

There’s a few reasons.

Firstly, maybe the ISP has to do some work to get service to you. This is especially true in the case of services like Verizon FiOS. If they have a term contract, they can recover the cost of those engineering works.

Secondly, in some cases they’re loaning you equipment such as ONT’s, Docsis modems, routers and so on, and there’s cost recovery there too.

Third, a contract allows them to have a legal document agreeing to the terms and conditions of service and verifying your identity.

Fourth, to defray and limit the admin cost of onboarding a new customer and offboarding one who cancels.

Fifth (you didn’t specify but I assume you mean a term contract) to make money - because if they didn’t make money they wouldn’t invest in the infrastructure needed to provide service to you - which is substantial - and you wouldn’t have any Internet providers at all. Having a term contract gives predictable recurring revenue for a period which helps the ISP financially.

 

​Why do ISP monopolies exist?

​(answer assumes you live in the USA) 

Because most ISP’s originally started out as cable companies (way before the Internet was a thing) and cable companies had/have legal monopolies called Franchises which were established in 1984, way before they were ISP’s. This is why you only see one cable company in any one area - if you live in a Cox franchise area, you can’t get Comcast service, as an example.

​So, basically an outdated principle from long before domestic broadband internet service is limiting your service provider choice.

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If the Internet service provider advertised super good speed and failed to provide that, can I pull them in consumer court?

​Answer: Probably not. Look at the advertisement again. Somewhere, probably in small letters, or in the referenced terms and conditions of service, it will say ‘up to’, such as ‘up to 250 Mbps download’. This is common to almost all Internet providers. Up to clearly includes any lesser bandwidth.

​They have to do this because there are so many variables at play, not least how you test it, whether you’re using WiFi (you are? you just halved your effective performance) and what the network path is between you and your destination.

​One caveat: we're not lawyers. This answer does not constitute legal advice. You should consult a lawyer if you need a legal opinion.

 

How do I become my own ISP for personal business so I don't have to depend on other ISPs?

Becoming as ISP is technically fairly straightforward. You need a DIA connection to a Tier 1 wholesale provider (in the USA the likes of Cogent, Zayo, AT&T etc). This would be provisioned on fiber with either a 1GbE or 10GbE handoff, so you’ll need a Layer 3 Ethernet switch that can handle an SFP or SFP+ as needed. You can pick these up used on eBay for as little as $500.

The cost of the DIA connection, again in the USA, will cost you anywhere between approximately $2000 and $5000 per month for a Gigabit with a 3 year term contract. The price is dependent on where you are geographically (cheaper in large metro areas, becoming more expensive as you go outwards). You may have a one-time charge associated with building out the circuit (probably $0 in a metro area).

The Tier 1 provider you’re contracting with will in most cases tunnel through a local exchange carrier in the last mile to reach your location, but that process is transparent to you.

Bear in mind you won’t receive any support, you’ll need to know exactly what you are doing.

So - if you’re in a good location, you can ditch your local cable company for a few hundred dollars worth of hardware and $2K a month.

Almost nobody would want to do that as an individual - but there are certain circumstances where it can make sense, for instance an apartment building or a closed community.

Our company, Campus Technologies Inc does exactly this for Student housing communities.

 

​​Can I sue my apartment if they’re blocking me from using a certain internet provider?

​(Assuming you’re talking about the USA) this is not completely straightforward. Some states are designated MFA or Mandatory Free Access. This means that you have, theoretically, the right to have any provider you choose.

​However, if you live in an apartment, you can’t just call an ISP that doesn’t already service the property and expect the apartment owner to allow them to start drilling holes and running wires through the building. With several ISP’s in an area, this could get messy and chaotic very quickly.

​So the answer is, maybe, depending on your state. It could be expensive though, we’d suggest taking legal advice.

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What measures are cable companies taking to stay competitive against streaming services?

​It’s an interesting technical quandry, because coaxial cable and hybrid fiber coax networks are good at delivering TV programming, and not that great at delivering IP (Internet Protocol) services, and IP streaming is not that great at delivering video programming.

​{Let us qualify: some astonishing technical tricks have been invented to try and deliver IP via cable company infrastructure, and it is acceptable - just not as good as a non-cable delivery system. IP streaming is not great at delivering video content because it’s unicast and it uses the TCP protocol.}

​Customers want streaming because they want their content on-demand, a la carte, and non-linear, in many cases to free them from the high cost bundle tyranny of cable companies. They also want to consume it on devices other than TV’s.

​This leaves the cable companies with a real problem, they have to deliver IP on their coax networks, and then stream content on IP - both aspects that are not optimal. In addition, they still derive a lot of revenue from the dwindling pool of traditional video subscribers, so they can’t afford to aggravate the content owners by providing a la carted streaming services. Other answers have covered this aspect.

​So what’s the strategy? Try and position the cable company as an ISP, and tray and be that streaming provider? I don’t see many choices. Maybe, just maybe, one cable company - probably Comcast - will get big enough to break ranks and dictate terms to the content owners and providers. There’s no sign of that any time soon.

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Why can’t the US compete with other Asian countries in internet speed and price?

​A lot of reasons for this. we’ll try and summarize:

1. High bandwidth connections (e.g. over 100 Mbps) are largely useless to most people. It’s sold and desired on the basis that bandwidth is speed, and it isn’t. Bandwidth is capacity, latency is the ‘speed’ that makes a difference. (See What Is Latency? | Student Housing Internet Network Design | Campus Technologies Inc to save me typing it all again) So - the Internet ‘speeds’ (sic) in Asian countries are mainly marketing ploys.

2. Technically, ISP’s can (and do) deliver real Gigabit ISP connections. My company does, for example, we’ve just lit up a new apartment building in Philadelphia called Apartments in Philadelphia For Rent | The Simon at Founder's Row that has a full gigabit to every jack.

3. Geography: It’s a lot easier to deliver a high capacity delivery network in say, South Korea than in the USA simply because of the size of the population and the number of miles of fiber optics you’d need to install. It would take a long time and cost a lot of money. This largely affects the price. Yes, a 100 Mbit/sec low latency connection *should* be $25 a month or so, but someone has to invest in the infrastructure to get it to you, and nobody is going to do that for no return on investment.

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​How much money does it actually cost the cable/internet companies to put 200 channels and Internet with 150 mbps bandwidth in the average suburban home for one month?

​Of course, it depends.

​For the video, it depends on which channels. Cable companies (and satellite companies) negotiate agreements with each content provider, and then put a margin on top of that. Channel by channel it’s not too bad, they make money on the bundles of channels (as most of them are very low cost). Don’t forget they also have to support and maintain the networks.

​On Internet, it depends on their hardware and labor costs to install and support the connection, with an added uplift for cost of customer service. If you’ve had the connection more than 12–18 months the sunk cost is paid for so it’s probably 80% gross profit. Note they’ll need to reinvest every few years, so a portion will need to go to that.

​The *real* gravy is when you buy a bandwidth upgrade, that additional revenue is almost all profit.

If you look at public filings x profit made on y revenue you can come up with a good estimate of the exact percentage.

​Why are internet service providers allowed to sell broadband deals on the bases of maximum achievable speeds, when it is clear that these are seldom achieved in peak times? Surely, a speed performance figure based on an agreed formula would be best.

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Most ISP’s claim ‘up to’ bandwidths and categorically exclude themselves from being liable if they don’t meet any kind of performance threshold in any way. Very unusual for any consumer connection to have any guarantee.

​This isn’t a cost-of-bandwidth issue, it’s usually more of a technology limitation. Cable modem technology is inherently flawed when trying to deliver consistent performance to a large population, and GPON has similar (although smaller) challenges on the upstream side.

Although over-subscription is commonly used, it’s a technical design issue rather than anything to do with bandwidth costs. Here’s a little known secret, and nobody ever talks about this: Bandwidth doesn’t cost anything. If you’re a peering ISP (think Verizon, AT&T, Comcast etc), you do not pay anything for bandwidth. In most cases, if you, the customer, upgrade a 100 Mbit service to 250 Mbit, that upgrade revenue is pure profit (yes there may be some equipment costs, but they are one-off).

​Also not talked about much, bandwidth is not speed. Latency is speed. Bandwidth is capacity. ISP’s love to call it ‘speed’ because it tempts people to upgrade even when the upgrade makes no significant difference to the user.

​If you’re interested, this is explains a lot on bandwidth vs speed: VIDEO

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Can my ISP prevent copyrited material from being viewed?

No - and in most cases, ISP’s will neither know nor care what you are doing on the Internet. The only time they will care is if you are causing some kind of damage to their network, or if they receive a complaint from a rights holder or law enforcement.

​Bear in mind that if the rights holder (owner of the protected material) is on the ball and enforcing their rights, then they can, and do, track you down. So, your ISP won’t prevent it, but you may well have to deal with the consequences afterwards.

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​What is the most costly upkeep expense for a ISP?

​As you’ve said upkeep, we’ll assume operating expense: the biggest single expense is staff and related costs. Everything else comes in lower than that: Premises, bandwidth, software etc.

​If you have a serious amount of facilities based infrastructure, then it’s possible debt service could be pretty high as well.

 

How can I know if my ISP is throttling my connection?

Most ISP’s will set an upstream/downstream limit on each user endpoint, which is the level at which you subscribe. So, if you subscribe to a 50/10 connection, then there will be a hard rate limit configured of 50/10.

If you use a test such as Ookla and it shows you’re receiving mush less than that, you must first make sure you are testing with a direct wired connection to the ISP equipment, bypassing any WiFi or router that you may have. If that test shows significantly lower throughput, then call the ISP. However, it’s not likely they are throttling it, it is more likely that they are ‘oversubscribed’ in your area.

An ISP (such as a cable company) delivers a certain amount of bandwidth to be shared between a number of subscribers, geographically. They oversell that bandwidth, on the basis that not everybody uses it at once, and they can get away with it. So, for example, 250 Mbit may serve 10–15 people with 50 Mbit connections.

You can usually get a hint as to whether oversubscription is the issue - if everything works fine at 4am but slows down between 5pm and midnight, it’s usually oversubscription. This is typically seen with Cable modem technology more than others.