High Speed Internet costs (was: Email hosting)

[bscott at ntisys.com]

On Wed, 22 Jan 2003, at 9:00pm, travis at scootz.net wrote:
> The exsiting ISP, be it Vitts, MV, Joe Blow local ISP, they should already
> have ISP backbone equipment in place for their dialups.

  Just because a business is already in possession of something doesn't mean
you can call it "free".  Even if they aren't in-debt to pay it off, it has
maintenance and depreciation costs.  We all know how fact computers
depreciate...

> At the most they'll have to upgrade their pipe or get an aditional T ...

  "At the most"?

  100 customers @ 56 kbps  =  5600 kbps = 3.6 T1's
  100 customers @ 768 kbps = 76800 kbps =  50 T1's

  Obviously, since consumer services can be oversubscribed, the math doesn't
really work out like that, but you should see my point.  We're talking an
increase in capacity of more than 1000%!

>>   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.
> 
> Yah, and Verizon was already rolling out Cos for their DSL service, and
> there's all the other ISPs out there. There is no reason for one ISP to
> eat the cost of an entire CO

  No offense, Travis, but you obviously have no idea how DSL works.  :-)

  Dialup is a simple service.  You run a modulated signal over the existing
voice network.  When it goes into the switch at the CO, you use a digital
carrier to bring it to the ISP, and their equipment demodulates it there.  
You can push up to 56 kilobits through a single voice channel this way.  
Why 56 kbps?  Because a voice line is an 8-bit sample taken 8000 times a
second, and they rob some of the high bits for line control.  It's been that
way since the T-carrier was intended in the 1960s.

  DSL does not use the PSTN *at all*.  At most, the digital signal is
piggybacked over an existing local loop, but it is separated out from the
voice signal at both ends.  At the subscriber end, you use those little
filter widgets they give you.  They use a bigger, multi-line version at the
CO to split the voice and digital signals.

  The digital signal is hooked into a completely new piece of equipment.  
No existing voice switch here.  We call this a DSLAM (DSL Access
Multiplexer).  Basically, think of it as a really big Ethernet switch and
router, but for DSL.

  Oh, and BTW, none of the various DSL technologies, standards, and vendors
work with the other guy's stuff, so you need to buy new equipment for SDSL,
HDSL, VDSL, ADSL, DSL.lite, DSLwhatever, and so on.

  Now you need to build a data network between each CO to carry the data
traffic between the DSLAMs and your NAPs.  This isn't like the PSTN, where
you can just use all these nice, existing voice lines.  You have to pay for
this infrastructure.  You can't share it, like you can the PSTN, because
this isn't a government-enforced monopoly, like the PSTN.

  So, basically, to be a DSL CLEC, you have to build your own local network.

  You also have CO rental costs.  A CO isn't some two-bit ISP's machine
room, with a handful of PCs and $500 UPS from APC.  The telcos do things
*right* when it comes to infrastructure.  Redundant power throughout the
entire building; massive battery banks; generators; secured access; onsite
staff; the list goes on and on.  It isn't cheap.

  The average annualized fixed cost for a DSL circuit is something like
$2000, IIRC.  That's $167 per month, for those of you keeping score at home.  
Before bandwidth charges.  Before profit.

> The way cable modems work is TOTALLY different the DSL ... 

  I know that, but I imagine they still need equipment.

> [Cable] is "shared" bandwidth ...

  *Everything* on the Internet is shared bandwidth.  It isn't like your 768
kbps DSL line is a 768 kbps CIR right to whatever web server you're talking
to.  DSL goes into a DSLAM at the CO, and then you're on the same
packet-switched network that everyone else is.  You might have 768 kbps to
the DSLAM, but you sure as hell don't have a dedicated 768 slice of the T1
feeding it.

> You know that Verizon has been getting ready for DSL stuff for years and
> probably would have been rolled out sooner if the cable modems came out
> sooner. The only reason they didn't start rolling it out was because they
> didn't have to and they could still milk people for second phone lines for
> dial-up modems.

  That may be true.  I suspect it is.  But it doesn't make DSL cheaper to
operate.

-- 
Ben Scott <bscott at ntisys.com>
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