High Speed Internet costs (was: Email hosting)

bscott at ntisys.com bscott at ntisys.com
Wed Jan 22 20:43:41 EST 2003


On Wed, 22 Jan 2003, at 7:26pm, hewitt_tech at attbi.com wrote:
> What *does* it cost to deliver high speed?

  Do you really want an answer to that?

  For the small DSL CLEC case, you have: Local loop charges.  CO facilities
rental.  CO equipment.  Data link between CO and ISP NOC (T1, multiple T1s,
or even T3 or other *REALLY* high-speed stuff).  ISP backbone equipment.  
ISP servers (DNS, mail, etc.).  ISP NOC facilities charges.  Test equipment.
Support/service/administrative overhead.  Upstream feed.

  When we resold Vitts Networks (before the went under) back in 2001, their
up-front cost to open a CO was between $200,000 and $300,000.  Each.

  I'm not familiar enough with CATV infrastructure to speak accurately, but I
imagine the situation is similar, if not quite as bad.

> For that matter, I think copper/fibre is passé.  It should be possible to
> use wireless and it ought to be dirt cheap.

  Dirt cheap?  Why?  Because "nobody owns the airwaves"?

  First off, the government owns the airwaves, and charges high prices to
purchase rights to them.  Or, if you prefer, you can have everyone operate
in an unlicensed band (like the 802.11b stuff), and deal with the inevitable
chaos that will result once serious usage picks up.

  Next, you've got to hang your equipment off local towers.  Rental fees for
such things are typically thousands of dollars per month.

  For most wireless data network equipment available for deployment today,
you need line-of-sight or close to it.  That's a hard problem in hilly New
England.  So you need more towers.  See above.

  Finally, you've got all the NOC/backbone costs you have for any ISP.  
Wireless only gets you so far, and then you have to jump back onto the
existing landline networks.

  I will say that I think fixed-wireless has the best potential to provide
reasonably reliable, generally available, high-speed Internet access.  But
dirt cheap?  Not if you want ISP to stay in business.

> When Mediaone delivered cable-modem service in our area they thought
> they'd be doing well if they got a 3% penetration.

  Pets.com thought they could make money selling pet supplies online.

  They were both wrong.

> I know there has been a big improvement in the speed of connections over
> the last few years but we're not exactly using 110 baud modems anymore are
> we?

  No, we're not.  But other than the local loop, everybody's using the same
kind of equipment they were using five years ago.  As for the local loop,
DSL and cable both require significant new equipment to be placed in the CO,
completely outside the traditional infrastructure.

  How much would it cost to build the entire PSTN from the ground up
overnight?  How about the various CATV networks?

  As for dialup, margins on that are already razor thin.  The only reason
dialup is so cheap is that it takes advantage of existing voice telephone
infrastructure, which was built over decades, and limits you to an absolute
ceiling of 64 kbps per circuit.

> ... some Canadians were relating the cost of DSL and cable-modem in their
> areas.  They were paying about 1/3 of what we pay.

  I don't know anything about Internet in Canada, so I really can't say one
way or the other.  But you might ask them what their tax rate is.

> Verizon hasn't exactly pushed DSL and most of the companies that depended
> on them to provide the lines were driven out of business.

  They went out of business because their estimates were it would take ten
years, minimum, for them to become profitable.  When that finally sank in,
the people funding the whole thing got scared and ran.  Suddenly, all these
companies had huge debts and no cash flow.

  Verizon sure as hell hasn't made it any easier (believe me, I've got a
special place in my *** reserved for them), but let's not be so quick to
blame everything on the big bad phone company.

-- 
Ben Scott <bscott at ntisys.com>
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