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This is a sub-selection from Spot On...

FactChecker
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join:2008-06-03

4 edits
reply to iansltx

Re: Spot On...

I don't dispute that the last mile of any network is the most expensive. My point was networks are constantly added to and upgraded at a cost. DOCSIS 3 and FTTP provide a structure for future traffic growth, but as usage increases it requires $$ to add more channels or upgrade ONTs to serve fewer customers last mile uplink.

As the usage / subscriber increases there is a ripple effect of upgrading the access routers, metro core rings, backbone cores, peering and transit exchange points, etc. Some data shows Internet traffic levels of the past have grown cores at about 40-50% / year. That is a fair amount of infrastructure. Add to that fork-lift upgrades when routers max out, DWDM fills up and new fiber lighting in metros and backbones are required. Large networks build about a quarter or 1/2 year ahead of demand. No one has the financial luxury of building huge amounts of excess capacity. Some financially strapped carriers build just in time and run their networks over 100% under failure conditions.

40-50% broadband growth has been a manageable number for most broadband network suppliers. The traffic patterns show typically web, mp3, YouTube, Hulu, etc. The jury is still out on what happens in the future when TVs have WiFi and Internet set tops built into them. Add to that the lost revenue of traditional TV. If growth goes over the current path, it changes the cost structure and business model. I don't think this is an emotional "greed" issue. It is a logical business issue that we all need to understand.

Now to address transit prices. The really low transit prices you hear quoted typically come from an ISP that has a spot market on capacity or an imbalance of traffic. Example: ISP X may be heavy on their outbound traffic and able to sell a fixed amount of inbound traffic at a low rate to balance their network. This is not a real cost based price point and is more of a spot market.

The rediculiously cheap prices you hear come from the "backplane transit suppliers" These are ISPs that have a peering connections with a broadband ISPs in various exchange facilities. They in turn undercut transit prices to sell to content suppliers to get to that broadband ISP. The backplane transit suppliers costs are a router interface and 30 meters of fiber. The content supplier now has a major reduction of cost and can double or triple their output of traffic with the same cost. The broadband network then has to carry this growth (with zero incremental revenue) potentially 1000 miles at a much larger end to end cost. This is not a reality price and those ISPs are exploiting peering relationships.

When you calculate the full end to end cost of sustainable Internet traffic growth and include infrastructure, facilities routers, dwdm, more routers, leased peering facilities, etc, etc, the costs is well above $5 / Mb.

That said, I want to address another thing I have read here on BBR. While most CDN company's talk about GB served and your average user thinks about how much they have downloaded, networks are not built that way. Networks are built in Gbps not GB consumed / month. Unfortunately this is very confusing to the consumer, so most broadband providers have used GB/month as a metric. As a network engineer, I cringe every time I hear GBs cost pennies.

Lastly, my point is most of the post on BBR are emotional fear mongering of the future. I think part of this is stirred up by well orchestrated PR camps on both sides of the issue. The reality is bandwidth is not unlimited, bits have costs and it is not as cheap end to end from what you are hearing.