Re: IP: The real bandwidth numbers.

[David Farber <dfarber () earthlink net>]

-----Original Message-----
From: Aditya <aditya () mighty grot org>
Date: Thu, 11 Apr 2002 10:43:21 
To: farber () cis upenn edu
Subject: Re: IP: The real bandwidth numbers.

For IP, if you want.

Dave, although ISP margins haven't ever been great (unless you happen to own
your own rights-of-way *and* got reciprocal-comp without spending huge amounts
on buildout), they've been enough to make a profit on if you don't strive to
be the low-price leader. In a past business (we were the second ISP in
California to offer DSL) we charged $65/mo for unlimited bw residential DSL
(384/128, loop plus IP transit) based on an average of 10kbps per user usage
at *peak*.  The telcos (PacBell and Covad) charged us around $35/month for the
loop. We made a profit and would have continued to do so. We sold the business
because it was time to do something new.

Adi

On Thu, Apr 11, 2002 at 05:05:54AM -0400, Dave Farber wrote:
> ------ Forwarded Message
> From: "Adam L. Beberg" <beberg () mithral com>
> Date: Wed, 10 Apr 2002 21:43:28 -0700 (PDT)
> To: <farber () cis upenn edu>
> Subject: The real bandwidth numbers.
>
> Since you posted about what it costs to be a wireless ISP, It might also be
> interesting to look at an old writeup I did of wired costs back in January,
> since you still have to plug the wireless into the net somewhere. Some
> people pointed out I seem to be off by by 2x, and I pointed out you need to
> buy enough to handle use at 5pm or people go elsewhere.
>
> - Adam L. "Duncan" Beberg
>   http://www.mithral.com/~beberg/
>   beberg () mithral com
>
> ------------
>
> So, I've been pushing some numbers back and forth with a friend who runs a
> fairly large ISP. The job of an ISP is to move bits. They do lots of
> colocation, dialup, and DSL, so they have the economies of scale going for
> them with a good mix of customers. They have been around over 10 years, so
> it's not some dot-com run by dot-idiots either.
>
> Also important to keep in mind is that this is in a city with flatrate
> (cheap) phone lines, also "one hop" from the main trans-US backbone, thus
> cheap bits. Anywhere outside North America and you are talking _seriously_
> higher numbers - add a zero.
>
> So here's how it boils down (in US dollars):
>
> $1.75/GB for the bandwidth coming in and out of the cables to the
> backbone companies - the wholesalers, Sprint, MCI, Qwest, etc.
>
> Now, once you add employees, routers, power, AC, phones, etc etc...
>
> $12.88/GB.
>
> ...
>
> $7.75 for a 600MB CD image (41 hours modem, 2 hours DSL).
> $2.83 for a 220MB MPEG of your favorite 30 min TV show (commercials removed)
> $0.06 for a 5 minute MP3 file (20 min modem, 1 min DSL).
>
> Compare this to $1.00 postage included, for a logo encrusted CD via US
> postal service - which is still cheaper then if you use the "just for a
> cable in the wall" cost above. And video tapes are really cheap too.
> Shipping alot of bits over the internet is not cost effective at all.
>
> A modem can move about 7GB/month. 768kb DSL can move about 150GB/month even
> with those really slow hours during the day.
>
> I leave for the reader to calculate how many DSL customers you need at
> $40/month running gnutella to make a profit :)
>
> Enduser per-GB rates are coming.
>
>
>
> ------ End of Forwarded Message
>
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