Re: There is no business case for broadband Interent [Was re: Interconnect Scaling]

[David Farber <dave () farber net>]

Begin forwarded message:

From: Max Tulyev <president () ukraine su>
Date: March 25, 2007 10:53:13 AM EDT
To: dave () farber net, dewayne () warpspeed com
Subject: Re: [IP] There is no business case for broadband Interent  
[Was re: Interconnect Scaling]

Dewayne,

Sorry, but you are wrong about it. I'm doing my small business in Kiev,
Ukraine. There is very popular some kind of broadband connection called
"Home network". It is an huge (up to 20000 users in some companies)
Ethernet-based network. The most close to this is FTTH technology.

This is a stable and working business. Average client payment varying
from $15 to $20 from company to company. There is no need in high rate
investments - network can connect neighbor houses for its cost as few as
$500 and lower. Costs for connecting a user inside building is less than
$20, including the cost of switch port and a new cable to his flat.

Now I'll explain why there is (and especially won't be) no real
competition between homenets and others. Let's see:

WiFi. It is oriented.mostly to mobile users, roaming and moving. That's
why there is relatively high prices. You need to spend ~$200 to make s
connected sphere 50m in diameter. Please, don't say me about "free"
connection. There is nothing free in this world. Somebody should pay,
and he will get his money back from you any case, sure. You will need to
buy radio frequency. You have to be aware of interference. The highest
speed of such connection is SHARED to all cell users 300mbit now and up
to may be a gigabit in future. WiFi have well-known problems with packet
losses, jitter and other unstabilities.

CaTV. Good if you have a legacy TV cable. It is more stable than WiFi,
but still have problems with jitter (i.e. VoIP, games, etc durig high
load). It have 2-3 STMs (i.e. less than 300-450mbit) SHARED to ALL (not
an one cell) users and  1 SHARED STM (155mbit) from them. As there is
free and wider frequency resource, it might be up to 1-2 SHARED gbits in
the future.

xDSL. Things are more happy. Now is up to 54Mbit PRIVATE connectivity to
the client, 1-2mbit PRIVATE from the client, but no more than 100Mbit in
the future due to frequency limitation and real cable length to the
client. Nowdays it is not more than 7/1 PRIVATE mbit.

So... Home ethernet network. It is 100Mbit BOTH SIDES (upstream and
downstream) PRIVATE connectivity nowdays and up to 1Gbit PRIVATE
connectivity to the client without changing cable infrastructure. More
than enough? Take a look back, there is minimal comfort speed of the
Internet access became ten times more every five years. This kind of
network capable to high-quality videophones, IPTV, VoIP (as it is good
controlled we implementing QoS well), video-on-demand, application
leasing and so on.

Also home network is a resource itself. People share information each
other, play together, etc. So there is a very little number of people
choose much cheaper xDSL or CaTV connection!

And most of that, there IS money. Even for growing without investments
at all.

David Farber wrote:
> Begin forwarded message:
>
> From: Dewayne Hendricks <dewayne () warpspeed com>
> Date: December 15, 2006 11:36:14 PM JST
> To: Dewayne-Net Technology List <dewayne-net () warpspeed com>
> Subject: [Dewayne-Net] There is no business case for broadband  
> Interent
> [Was re: Interconnect Scaling]
> Reply-To: dewayne () warpspeed com
>
> [Note:  This item comes from reader Bill St. Arnaud.  DLH]
>
> From: "Bill St.Arnaud" <bill.st.arnaud () canarie ca>
> Date: December 14, 2006 5:06:58 AM PST
> To: <dewayne () warpspeed com>, "'Dewayne-Net Technology List'"
> <dewayne-net () warpspeed com>
> Subject: There is no business case for broadband Interent [Was re:
> Interconnect Scaling
>
> I would argue that it is not a question of capacity but whether  
> there is a
> sustainable business case - either in the core, or in the last mile.
>
> The reality is that broadband Internet is a brutal business with  
> razor thin
> margins.  With the advent of free Wifi Internet services, and now free
> broadband services that we are seeing deployed in Europe - Inuk,  
> SkyB, etc,
> you would be insane to enter the broadband business either as a  
> public good
> community open access facility, or a commercial enterprise.  Cable  
> TV is
> far
> more lucrative (and frankly has higher demand) than broadband  
> Internet.
>
> As a side note I am in Sweden at the moment where there are many  
> community
> open access fiber and wireless networks. It is interesting to see  
> Telia (
> the incumbent) is slowly taking over the management of many of  
> these open
> access community networks.  The electrical companies and  
> communities are
> desperate to unload them because they can't make a decent return  
> and scared
> of their future prospects. We have seen the same problem in my home  
> town
> Ottawa - where the city owned open access and fiber network is being
> sold to
> Bell Canada, for the same reasons that the city is losing money and  
> are not
> even able to cover their costs.   Of course the incumbents are  
> making the
> usual warm fuzzy statements about maintaining the open access  
> policy etc
> etc. We will see how long that lasts.
>
> In Canada it is the cablecos that are cleaning up and even giving the
> telcos
> a hard time.  But the telcos are discovering that buying the  
> management of
> open access fiber/wifi networks is far cheaper than building your own
> network
>
> Bill
>
>
>
> -----Original Message-----
> From: dewayne-net () warpspeed com [mailto:dewayne-net () warpspeed com] On
> Behalf Of Dewayne Hendricks
> Sent: Wednesday, December 13, 2006 1:19 PM
> To: Dewayne-Net Technology List
> Subject: [Dewayne-Net] re: Interconnect Scaling
>
> [Note:  This comment comes from reader Thomas Leavitt.  DLH]
>
> From: Thomas Leavitt <thomas () thomasleavitt org>
> Date: December 12, 2006 8:06:47 PM PST
> To: dewayne () warpspeed com
> Subject: Re: [Dewayne-Net] Interconnect Scaling
>
> Dewayne,
>
> Despite all the back and forth... it still isn't clear to me whether
> the Internet backbone, as most of the mainstream carriers / service
> providers have structured their portions of it or are capable of
> adapting, is capable of handling the vastly greater traffic load that
> the advent of P2P based HD video distribution networks will
> precipitate. This seems to be a matter of:
>
> a) whether the interconnects between the various carrier / provider
> network backbones are diversified and distributed enough to prevent
> chokepoints from developing
> b) whether the architectural optimizations of your average P2P
> network mean that vastly smaller amounts of traffic will actually run
> over the backbone and through any potential chokepoints than might
> otherwise be the case... which also seems to be a dependent on what
> percentage of the traffic generated will consist of widely popular
> (and thus widely served) content versus specialized content that is
> less likely to be available from a nearby peer (within a network
> backbone boundary)
>
> I suppose that, given the rapid and relatively painless (at least,
> apparently so) emergence of Internet video over the past year and the
> (apparent) ease with which the additional traffic was accommodated,
> we shouldn't worry too much... does anyone have year over year
> figures on the total volume of Internet traffic and the percentage
> increase year over year? I tried hunting this information down in
> Google, but wasn't successful....
>
> Regards,
> Thomas Leavitt
>
>
> Dewayne Hendricks wrote:
> [Note:  This item comes from reader Mike O'Dell.  DLH]
>
> From: mo () ccr org (Mike O'Dell)
> Date: December 12, 2006 9:23:38 AM PST
> To: dewayne () warpspeed com
> Subject: interconnect scaling
>
>
> the mystical powers of "large peering points" still lives, i see
>
> for the better part of a decade, large ISPs have used multiple
> point-to-point interconnects between their networks, situated
> by the demands of network engineering, not the location of
> "peering points".
>
> the *only* magic in MAE-EAST (or MAE-WEST) was that once upon
> a time, when the total traffic to exchange was a couple of T1s
> worth with 4-5 other ISPs, there was an economy of scale in
> buying those T1s as a cross-town DS3 (or later, metro ethernet.)
> everybody got their DS3 to the same place and a switch was put
> there to connect the dots.  once the traffic between pairs of
> ISPs got big enough, the economic optimization that was MAE-EAST
> and MAE-WEST fell apart.
>
> that's all they ever were - a policy-neutral economic optimization.
>
> and one that went deeply sub-optimal many, many years ago
> (at least for large ISPs - they still get used by smaller
> players whose traffic exchange needs can still take advantage
> of that particular economy of scale.)
>
> -mo
>
>
>
>
>
>
>
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--
WBR,
Max Tulyev (MT6561-RIPE, 2:463/253@FIDO)


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