iansltx
join:2007-02-19
Golden, CO
kudos:2 Reviews:
 ·Comcast
| reply to patcat88
Re: typical graft Uhh, guess you missed the point. In most cases L3 and AT&T don't HAVE backbone in these areas, or aren't willing to sell it to anyone at a decent price (less than $100 per megabit for a reasonable commit, i.e. less than 100 Mbps).
If these middle-mile projects are successful, they'll link cities (and thus last-mile ISPs) with cheap bandwidth. If a provider right now has to pay $5000 for a T3 and, as a result of this project, can get a 100 Mbps fiber port for $3000 per month, the bandwidth costs are decreased by about 70% per megabit and supply is increased by a factor of more than two. Let's say the ISP was selling 1.5 Mbps service for $50 per month. Now they can offer maybe 8 Mbps for $40... |
|
| Exactly. The whole point is to shore up gaps, not overlap existing infrastructure. |
|
patcat88
join:2002-04-05
Jamaica, NY
kudos:1 | reply to iansltx
said by iansltx:If these middle-mile projects are successful, they'll link cities (and thus last-mile ISPs) with cheap bandwidth. If a provider right now has to pay $5000 for a T3 and, as a result of this project, can get a 100 Mbps fiber port for $3000 per month, the bandwidth costs are decreased by about 70% per megabit and supply is increased by a factor of more than two. Let's say the ISP was selling 1.5 Mbps service for $50 per month. Now they can offer maybe 8 Mbps for $40... And what part of capitalism will increase the speed? The indy ISP will just swallow the lower backbone cost as profit for investors, unless they are a charity. |
|
iansltx
join:2007-02-19
Golden, CO
kudos:2 Reviews:
·Comcast
| If the ISP has a 100 Mbit pipe when it had 45Mbit before, maybe it can introduce a 20 Mbit tier for $70 where their previous fatest tier was $60. Additionally, lower startup costs for bandwidth may lure competition into the area, which will either compete on price, features (speed) or customer service. If the ISP just pockets the profits (and they usually don't, because they have to live with their own internet nine times out of ten) then the profit margin for their service is higher than the norm. Economic theory (and practice) dictates that economic (above average) profit tends toward zero as barriers to entry tend toward zero. Lower bandwidth costs represent a lower barrier to entry; people are more likely to start a WISP if they can get a resellable 50/20 FiOS connection for $200 than if they have to pay $300 for a T1.
Alternately, the ISP can preempt competition by...wait for it...lowering prices or raising speeds so a potential competitor wouldn't have a leg up by default.
For example, when Texas Lone Star Network came online (really online) recently, a nearby telephone cooperative switched to it and doubled DSL speeds for the same price, adding a low-end tier for those who needed it. |
|
