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rolande
Certifiable
Premium,Mod
join:2002-05-24
Powell, OH
clubs:
Host:
Linksys
AT&T Midwest
| Re: You smell that? It is simple economics and has nothing to do with fiber capacity. For X amount of bandwidth you still need X amount of silicon hardware to route and push the bits out interfaces. That hardware requires large amounts of capital investment.
The problem has more to do with the state of broadband price warfare. Carriers keep lowering their broadband prices while the cost/Mbps of data is not lowering at the same rate. The margins become so thin and non-existent that the providers cry poor. You'd think that the motto they are all living by is "He who dies with the most subscribers wins".
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Ignorance is temporary...stupidity lasts forever! | |
|  | | RayW
Premium
join:2001-09-01
Layton, UT
clubs:
 ·XMission
| Re: You smell that? said by KrK  :If at&t pulls this crap, maybe some politicians will grow some balls and start proceedings to break up at&t again Not this congress, they for some reason are for big business (must have something to do with fewer points of contact to have to hit up for bribes).
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I am not lost, I find myself every time. | |
| Kearnstd
Elf Wizard
Premium
join:2002-01-22
Mullica Hill, NJ
| said by rolande :It is simple economics and has nothing to do with fiber capacity. For X amount of bandwidth you still need X amount of silicon hardware to route and push the bits out interfaces. That hardware requires large amounts of capital investment. The problem has more to do with the state of broadband price warfare. Carriers keep lowering their broadband prices while the cost/Mbps of data is not lowering at the same rate. The margins become so thin and non-existent that the providers cry poor. You'd think that the motto they are all living by is "He who dies with the most subscribers wins". and this is partly caused by lack of competition in the carrier level hardware market. Cisco can charge what they want because how many other contenders are there? something tells me that big fat fiber router isnt really worth the 500 grand they charge for it.
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[65 Arcanist]Filan(High Elf) Zone: Broadband Reports | |
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rolande
Certifiable
Premium,Mod
join:2002-05-24
Powell, OH
clubs:
Host:
Linksys
AT&T Midwest
| Re: You smell that? Juniper wins many of the carrier deals these days because they can be competitive on price. But you also have Marconi/FORE Systems, Force 10 networks, Nortel, Alcatel, Lucent, Riverstone, Tellabs, Laurel Networks, and Redback. There are a lot of price competitive carrier class routing solutions out there today. Cisco has by no means cornered this market at all.
In any case, though, the cost of hardware must be capitalized by the telcos and it is still a big hit on their bottom line depending on how many years they depreciate the gear. If they don't charge the subscriber base enough, there is not enough left over in the end for the future investments required to scale the network to meet the growing demands. Business models that do not price higher than the base "supplier" costs in a commodity market may win all the customers up front but will have nothing to show for it in the end.
Providers are either going to have to start taking a more conservative price approach for the tiered "unlimited" bandwidth model or they will have to stop the all you can eat price plans altogether. Something will have to give. In general, consumers are extremely fickle and will go for the best price in a commodity market like broadband. As each provider's average network performance gets worse over time, customers will jump to the best price/performance combo. Unfortunately, the consumer will still pay for this situation in one way or another. The prices will eventually move back upwards when consumers realize "they get what they pay for". 
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Ignorance is temporary...stupidity lasts forever! | |
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