Do you hate your Cable internet (broadband) provider? Wonder why it’s legal for them to have local/regional monopolies? Wonder Why Companies like @charterspectrum and @xfinity (comcast) the only reasonable option (unless you’re lucky enough to have access to fiber)?”

Why doesn’t someone compete with them? Why are they allowed to have such crappy customer service? Here’s a quick, oversimplified thread to help you understand why…

To start, you have understand that certain businesses require HUGE amounts of capital (money) to be invested

upfront in order to build. Let’s take for example the railroad industry (stay with me for a sec). It cost about 2 million dollars USD to lay a mile of railroad (sometimes more if the terrain is especially difficult). In the latter half of the 1800s railroads had a big

boom that saw many companies try to rapidly expand (by building railways that criss crossed the USA). Everyone understood the opportunity being able to ship goods across country represented -> less friction to move economic goods, stimulate the development of

towns and cities all around the US, and basically tie the country together (travel, communications). Recognizing the importance of this development the US government provided land grants and financing to rail companies. Their expansion was largely fueled by crushing amounts of

debt. What’s the problem? Much of this rail capacity, although needed by a rapidly industrailzing nation offered no immediate economic return. It’s a chicken and egg problem -you need railroads to stimulate and justify the investment in heavy industries…

but to pay for laying all those rails you needed reliable revenue generated by freight volumes from those nascent industries. (if you think this sounds familiar with regards to Jeff Bezos’ blue origin and elon musk’s SpaceX then you’re paying attention, one day there maybe

space freight to move, hopefully SpaceX and Blue Origin don’t suffer a similar fate as many of the first railroads). So you have a temporary overcapcity issue in that you’ve built the rails, but now the industries you built them for are just now starting to come online. Thus

the railroads had a financial crises of sorts and many of them went bankrupt. Now a bankruptcy does not mean the tracks cease to exist, just that their ownership changes hands. The new owners (surviving rail companies) get to consolidate (buy out) their hapless former

competitors at fire sale prices.

Just making up numbers here: If you built a railroad for $100 (financed by debt) and it only generates $1 of profit a year, and the interest payment on your debt is 5% or $5 then you go insolvent pretty fast. But

if a new owner can buy out the railroad in financial distress for only $10, then the $1 profit is pretty attractive (to the owner with the lower cost basis, the same 5% interest on $10 is only 50 cents). Don’t you just love capitalism and creative destruction?

Now what does this have to do with your internet?

Well I’ll finish this thread after stream: http://www.twitch.tv/amouranth 

Also check me out as “amouranth” on IG & youtube!