[gizbot]

Strangly, this was the business model of cable companies for the longest time. They never turned a profit. When they expanded, they could use the increased income stream to go deeper into debt. The profits and extra capital went into more expansion. Eventually, they ran out of room to expand, and where are they now?

Someday, Amazon will need to face the brutal reality of profit.

[ericd]

They ran out of room to expand and now they're regional monopolies, and can gouge their customers with impunity. Was that your point?

[yuhong]

So I wonder what led the cable companies to try this.

[pmarca]

They are enormously profitable, is where they are now. Same with mobile carriers who ran the same play.

[PeterisP]

The whole point of this business model is that once you stop expanding, you don't need to make huge investments anymore and suddenly the same prices&revenue bring in huge amounts of cash.

[MaysonL]

So, which cable companies, having run out of room to expand, have started going broke?

[brisance]

Interesting that the other replies to your question are so assured of the dominance of the cable companies. In other words, the perfect industry to disrupt. Before Apple came along, Nokia, RIM and Windows Mobile were poised to rule the mobile world, and could not imagine being relegated to niche marketshare in merely 7 years…

[philwelch]

The cable companies are pretty terrifying to mess with. In Seattle, the city wants to provide gigabit fiber to residents, with a pilot project in many neighborhoods. Unfortunately, the champion of that effort, Mayor McGinn, is probably not going to win reelection and Comcast has already bought his challenger.

[Zombieball]

How did cable companies run out of room to expand?

[vidarh]

There are very few areas in the developed world that are not covered, and few competitors left to buy out (in the UK, we're down to one major cable provider), so the easy gains where they'd roll into a new area and find a substantial proportion of residents waiting eagerly to be able to get cable service, are gone. Now they have to compete for customers that already have some other service they have actively chosen despite the availability of cable, and similarly face losing customers to those same services, both of which makes continued growth much more difficult.