[1st-mile-nm] Bandwidth - How Much is Enough?

[Steve Ross]

Qwest, AT&T and all large cable companies have to be in 
haggle mode. The "all you can eat for a fixed price" model 
doesn't work if your network can't handle the demand -- a 
demand that Verizon and 600 small companies that 
collectively serve a quarter of the fiber in the US have 
helped create. A $10 French fry will sell if there is a 
shortage of French fries.

This is not entirely obvious, but the academics and network 
builders seem to be coming to the conclusion that to make 
the most money, you allow a multiplicity of specialized 
services -- meaning services only perhaps 1 to 5 percent (or 
less) of the customers connected might want -- to "ride your 
network," and that no one company can maximize profits with 
a walled garden. The garden's owner will do well by handling 
billing and QoS issues, and taking 30-50% of the gross. Even 
Verizon can't think of everything, and originators of things 
like the I-See-Pet and remote piano teaching software find 
pure web marketing too costly.

The "triple play" services become increasingly commoditized, 
  so although everyone will eventually take them, there's 
not going to be much margin. If you insist on keeping the 
price high without delivering better/more services, sooner 
or later someone will overbuild you, or (perhaps worse) 
re-regulate you.

Also, companies like Verizon are already talking about 
renting access on muni nets, and the nets of smaller ILECs 
and CLECs. People will want reciprocity over time.

Hard to imagine in "Qwest country," but Verizon last month 
started overbuilding three AT&T U-verse communities in Texas 
with FiOS -- 60,000 homes to be passed. They only need to 
sign up 12,000 to make money.

Mark Gaynor, a Boston University prof, has a book on this 
that is particularly accessible to non-geeks 
(Addison-Wesley). we had him write for us in December (see 
www.broadbandproperties.com/2007issues/december07/Dec_EcoDevopment.pdf)



Steven S. Ross
Editor-in-Chief
Broadband Properties
steve at broadbandproperties.com
www.bbpmag.com
SKYPE: editorsteve
+1 781-284-8810
+1 646-216-8030 fax
+1 201-456-5933 mobile

peter wrote:
> Bluntly i think the whole question is disingenuous and just another how 
> can we charge more for XX mantra without doing diddly except change the 
> calculations
> 
> 10 years ago we called this the French fry question
> 
> Extract here :::  
> 
> /The next component that you add to make CONNECTIVITY work is TRUST. /
> 
> /Those of you who stopped at McDonalds this morning trusted that you 
> could get breakfast including coffee for about $4. That’s how McDonalds 
> makes money: anticipating customers’ needs and meeting them. What would 
> you do if one morning the same McDonalds offered you a single French fry 
> for $10 and when you complained they haggled the price down to $7.50? I 
> know this sounds silly but bear with me. You would think that they had 
> gone nuts! And you would be right. Trust would have broken down and you 
> would go elsewhere for your breakfast. /
> 
> /This is what has happened in the connectivity market. The basic 
> infrastructure vendors, whom you trusted to anticipate your most basic 
> business need (CONNECTIVITY), are now in haggle mode. They are focused 
> on how many French fries you want instead of looking for the right price 
> and quality of your breakfast. This is what US West and their partner in 
> crime, AT&T, are doing with connectivity. /
> 
> /One thing I hear all the time is “How much connectivity do you really 
> need?” I call this “the French fry question.” 1 megabit (1 fry)? 10 
> megabit (fries)? How much are you prepared to pay? Or even worse with 
> DSL/ISDN, “How much of a piece of a French fry do you want?” People keep 
> trying to set a ceiling on an unknown need and then work backwards. If 
> you stick a “this is a large box of French fries” label on one French 
> fry, what do you have? Still one French fry! If you stick a Ferrari 
> label on a tortoise you do not get a faster, or more valuable, tortoise.
> /
> 
> Full text here http://www.ideapete.com/leapfrog.html
> 
> DT in their Qwest US West endeavor calculated that they would need to 
> supply the following and this was in 2000
> 
> Extract here:
> 
>    1. /Homes want video on demand.  So, calculate the number of NM homes
>       X 35 meg (that's megaBYTE, not megaBIT) per second (streaming
>       video speed). /
>    2. /Business will need approximately 300% more than homes. That’s 100
>       meg per second X the number of New Mexico businesses. /
>    3. /Government and research labs and are ultra high speed users that
>       require 1 gig per second. Multiply the number X 1 gig. /
> 
> /All these speeds are basic inside buildings, so why not between 
> buildings? Therefore the infrastructure demand map of NM is a 
> representation of the above calculations and where the different 
> categories of users are. SIMPLE! But apparently the major incumbent 
> telecom and consultants want excess millions of dollars to work this out.
> /
> 
> I don't know of anyone who uses an electronic system for speed, what 
> they use are services which are mostly hampered by the lack of it and 
> thats piss poor engineering.
> 
> We run bandwidth monitors on all our systems and although we pay for 6 
> meg a second down ( really .75 megabytes ) but rarely see 60% even on 
> forced traffic that collapses at the weekends and after 6. . We recently 
> had the snake oil salesmen trying to sell us 10 meg services ( really 
> 1.25 megabyte ) and we said fine lets see your SLA and he was 
> dumbfounded that anyone would want one after we explained what it as
> 
> Whats happening here is that some nice political promises are being made 
> to raise taxes without really doing anything but frustrate the user.
> 
> Anyone in IT knows is you supply a meg a meg will be used same with a 
> gig and onward up to pet and those are bytes not bits
> 
>  Service application  need always drives components and speed not vice versa
> 
> Use goes up cost goes down EXCEPT with bandwidth
> 
> ( : ( : pete
> 
> Peter Baston
> 
> *IDEAS*
> 
> /www.ideapete.com/ <http://www.ideapete.com/>
> 
> 
>  
> 
>  
> 
> 
> 
> John Brown wrote:
>> two ways of improving the balance sheet.
>>
>> increase revenue
>>
>> decrease costs
>>
>> I hate to say it but, IMHO, many of the providers out there today like
>> to quote inflated costs to the regulatory world to help support rates.
>> Maybe I just don't get it and will learn someday that its the right way
>> to do it ;)
>>
>> much of the inflated costs could also be attrib'd to sloppier practices
>> and not running as tight of a ship as possible......
>>
>>
>> John Brown, CTO
>> CityLink Fiber Holdings, Inc.
>> Albuquerque's first FTTH provider
>>   
>>
> 
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