What I meant to say in the last paragraph was:
that $2,000 becomes $500 or $300 or whatever the case may be **per household**
What I meant to say in the last paragraph was:
that $2,000 becomes $500 or $300 or whatever the case may be **per household**
Remember this thread started with a conversation about the cost of going to 1gbs. Customers that are having to move from say 30-200mbs to 1gbs+ are going to want more than 1-2mbs dedicated. They are going to want much more than 300gb / month total. Your numbers are way too low for connections that fast. For example residential traffic in the USA is becoming much more steady because of things like Netflix. Netflix needs about 7mbs and that's not including other traffic in the household. And that's all running comfortably on today's 50mbs type connections not for near future when Netflix is using 8x as much and people are pulling down multiple streams.
You're quite right, but even then the increase in usage per subscriber doesn't necessarily correlate with the increase in speed, that is to say, a 50mbps customer going to 100mbps doesn't necessarily double their usage - it may go up by 20-50% or it may even stay near the same as it was before. A much larger jump, say, going from 2 or 4mbps to 100mbps might have that effect though.
We know that home providers right now are underprovisioned. 7pm to 11pm they are only able to deliver 4mbs per home on average, while at times like 4:00 am they can do 18mbs / household and customers express satisfaction. And again that's with many customers buying as little as 10mbs. We know that 2mbs dedicated is less than 1/2 what customers are getting now in the worst markets.
That's why my numbers are padded to account for 10mbps dedicated which is what I'm working from - that works out to a contention ratio of 100:1 for gigabit connections (a stupid metric, IMO) and comfortably allows 1.5TB per month per subscriber if you're assuming an average of 50% utilization on your trunks with some room for burst/peak.
Individual providers would of course tweak numbers according to their customers habits and availability of capacity to other networks, route costs and so forth, but again, what we're talking about here is large ISPs have cores in several separate areas of the country, so what we're talking about is 130tb/s of core routing and interconnecting bandwidth spread across *all* the major ISPs (let's call it 20tb/s and some change each), divided by region (say 5tb/s per region) which is very doable - if I'm in California, I don't expect my ISP to be trying to deliver say Netflix from their Atlanta core unless said ISP is terrible at routing, I'd expect it to come from San Jose or whereever.
Then you're looking at distributing bandwidth from those large areas to any given point over trunks which get progressively smaller as you get to smaller towns - n*100gb turns to 100gb which becomes n*10gb which becomes a single 10gb link for a small town because obviously a town with 1,000 households doesn't need 100gb or indeed 13tb/s to it - and that 10gb link would contended by say 1,000 households (100:1) which roughly works out.
As for my house. I have about 8 copper lines running to my house. I have a switch box which connect the outlets to up to 3 of those incoming lines. I also have an older system using lead wires inside glass. 2 of those lines were setup for DSL. 0 of them are supported by the phone company today. All of that is abandoned infrastructure.
Alright, but how long were those lines in service?
I would suppose that *IF* the ROI on that wiring was 5 years, it's because back in the day, Ma Bell charged a fortune for everything because they could - telephones were somewhat of a luxury, long distance was expensive as hell and so on and so they basically had huge margins.
However, margins are a lot thinner these days but that doesn't change the fact that they're installing infrastructure assuming it's going to be there for 2 to 5 decades, not 5 years. As it was with copper in the 70s and 80s so it is with fiber today and it is still such that in order to upgrade a network all you really need to do is change out the equipment on the other end of the line which (on a per subscriber basis) really isn't all that expensive.
As for ROI... Remember where I started. 5 years to pay off the original investment (no profit) then Y years of profit. The goal of infrastructure is not to break even,. not to have an ROI of 0. Your $120 box is a perfect example. You are renting it at $5/mo which means a 24 mo breakeven point not 25 years. A 25 year payoff would be you renting the box for $.40 / mo, a 50 year payoff $.20/mo.
Yes, and my numbers reflect that. The amounts I'm talking about are for the modem and port at the DSLAM *only*, whereas you're kind of bundling the wiring and modem in to a single ROI timeframe which doesn't really work because it doesn't account for the advances in technology which inevitably occur without having to change out any of the wires.
So yes, you have a $120 modem which has an expected lifespan of 5 years = average cost per month of $2. At $5 rental per month it's getting paid off in 24 months and the rest is profit.
I guess what I'm trying to say here is that yes, a 12 year ROI on modems/equipment would be unacceptable, but on wiring it's probably about right (depending on your market and all that) and these things have to be counted separately, which is what my numbers were trying to reflect.
BUT what I'm also trying to explain is that when you have $2,000 worth of wiring which has an expected lifespan of 25 years, the average cost per month of just under $7. Assuming this worst case scenario, the amount of the customer bill attributed to that is probably at least $15, so that would make the break-even time would be 12 years (not counting finance and interest costs but that gets too complicated to go in to here) and anything past that point is profit. However, as we know if we're wiring high-density it's much less because a single feed is reaching multiple households and that $2,000 becomes $500 or $300 or whatever the case may be, and when that happens as it would in the case of the project in question, we're looking at maybe a couple of dollars per month as the cost for the infrastructure, not the $33/month you mentioned.
A 5 year ROI is basically unheard of in an infrastructure build - 20-25 is about where it's at, because it's expected to last 50 (or more)
No it isn't. 25 years ago the home internet infrastructure didn't even exist. A few years later it would have been extra capacity at LECs since people were using the cooper phone lines more hours per day. A few years after that it would have been DSL and coax connections capable of 5mbs or less. All of which are totally worthless now. Payoff in 60 months was on the high end, the company needs to make some profit on their infrastructure spend. If people start demanding faster relative speeds that means faster upgrades the spend goes from 60 months down to 36 or so. I'm not picturing 300 months for decades if not a century.
You say that 5 years is about the maximum but here's the thing though: most of the copper in use for the DSL and cable networks is a decade or more old. Sure, it wasn't designed or installed with even an inkling of what was to come, but your twisted pairs are probably nearly as old as your house - which could be 20, 30 or even 50 years.
I can't speak for you, but my house in the US was built in the 1930s, and the internal telephone cabling looks like it was installed in about the 70s or early 80s - and many of the pedastals in the town say either GTE or Verizon on them, so I would speculate that the cables from the CO or pedestal are well over a decade old, possibly nearing 2 decades, and certainly have not been replaced in the last 5. So the ROI timeframe was almost certainly more than 5 years and I would personally be surprised if it were that short, and that is the expensive part of building a network.
The less-expensive bit (the DSLAMS) "only" runs at around $100 per port for VDSL gear (that's Alcatel Lucent pricing, YMMV according to your vendor, FTTH pricing isn't too far off - 100mb modems can be had for about $53 each in quantities as low as 1,000 for stuff with 100mb ports and anywhere from $115 to $350 for gigabit stuff depending on the vendor) - and that amount of money even over 5 years amounts to a fairly trivial amount per month.
Other than that, you'll have some OPEX for powering and maintenance along the way but to make DSL happen it's not really *that* expensive if the lines are already in place. It's all the legal stuff, permitting, digging, labour (and in some countries, bribes) that really run up the bill when building a last-mile network. Or also, in some case, if you're not allowed to trench or build your own poles, paying the monthly or yearly fees for pole access can also end up pretty expensive, but with a high enough penetration rate the amount per end user isn't terribly significant if you're paying $50-100 or more per month.
we don't need to care about the 500 miles in between towns - the middle mile is already done (for the most part)
100 towns * 5000 residential homes each * 2 gb/s *
Your numbers are a bit off by a couple of orders of magnitude because ISPs tend to contend traffic - by what ratio will vary by provider but very few of them will have 100% of the bandwidth they sell on the middle mile (I'm fairly certain almost none do, I know bengie's ISP in rural where-ever-he-is does as he has mentioned this in many discussions on similar topics, but his ISP is probably the exception which proves the rule).
I know that up until recently (late last year), the local ILEC had 2gb/s for a town of 30,000 people (about 10,000 households) and several surrounding smaller towns (for a total population of maybe 75k) - while offering DSL speeds ranging from 3 to 40mb. Sure, it was not always great during peak hours, but those links have been upgraded to a couple of 10gb/s links (in part because as of about 2 months ago, said ILEC has a pilot gigabit FTTH program on, but also to alleviate congestion). I don't have exact numbers on what the local cableco had but IIRC it was in the vicinity of 10gb/s although they too have upgraded - they currently offer speeds up to 150mb/s and from what I've seen, that is near enough to achievable most of the time.
But joy of joys, all they needed to upgrade was the equipment at either end (and possibly some intermediary repeaters), not the entire fiber infrastructure between A & B. Again, at a fairly insignificant cost when spread out over the customer base in the area.
So what we are actually talking about is not 200k gigabits, it would be more like 200 to 500gbits all up - and of course, in a country like this one we're spreading that over between 4 and 8 regions with their individual cores/hubs in each. The current middle mile absolutely does have capacity to support traffic increases but that may vary by area and may also depend on who owns the fiber: some middle mile providers will only sell rated amounts rather than wavelengths or dark fiber, some are prohibitively expensive while others are not, and as we know, not all areas are built with redundancy.
Or since we are talking nationwide. America has 130m residences.
130m* 2gb/sec *
We don't even have the technology to support a middle mile that large even if we were willing to spend a fortune. Now of course your point about delivering fiber capable of doing say 10gbs and only delivering 100mbs now is true. Any new infrastructure being put in in 2015 should be able to go faster than 1gbs. We agree there.
Again, calculations are still off by an order or two of magnitude. To be on the safe side, we'd need committed bitrate of about 1 and 2mb/s per subscriber (~300gb per month), irrespective of the actual speed provided (actually, while some users do use more than this, obviously, most users use well less than 300gb - but it's a nice round figure so I'm running with it). Given this information, we're looking at around 13tb/s.
But even if we multiply that amount by 10 so we can be sure that links are running well below capacity, you're only looking at about 13 million megabits or 130,000 gigabits or 130 terabits nationwide - and again, you don't need that 130 terabits all in one place, it can be spread out over several regions, so all this combined with core upgrades barely even make a dent when spread out over millions of subscribers as the larger players tend to have. That too assumes that the ISP doesn't take advantage of peering, caching/CDNs.
But going back to the original figure of 13tb/s, this actually sounds pretty reasonable given the scale of the networks of the larger providers, especially when spread across multiple regions of the country. To give you an example, Comcast announces traffic levels (non-specifically) of 1+ terabits (which suggests 1-2 - presumably this is border traffic since it's a BGP announcement and likely has an order of magnitude higher than that amount being routed around the internal network). Comcast offers plans in many markets of 100mb/s, so, I would suggest that Comcast is contending border traffic at somewhere between 100:1 and 1000:1 not counting private peers and whatnot.
Now, when upgrading bandwidth to the end user, what does Comcast need to do? It needs upgrade the middle mile to that market, maybe upgrade the CMTS, and maybe ship a new modem to the user. All of which are (fairly) trivial costs compared to running new cable, which it's unlikely to do unless it decides to change course.
The same cannot necessarily be said for the telco/DSL providers - to get much more out of them they *do* need to change to FTTx but again, the major cost is in the laying of last mile fiber - a once off piece of infrastructure, the capacity of which can be upgraded by changing the equipment at either end. They will not need to lay new fiber in 5 years to handle a speed increase from 100mb/s to 1gb/s or 1gb/s to 10gb/s and so they are surely looking at RoI of a decade or more. Even then, telcos in some areas are still trying to squeeze whatever they can by offering VDSL as a sort of stepping stone because it's cheaper for them and what *may* end up happening in some of these "FTTx" deployments for the lower income people is exactly that: fiber-fed VDSL equipment goes in the basement of the multi-tenant building supplying services up to 100mbit/s at a (relatively) low cost compared to putting fiber throughout.
Then there's G.FAST, which may or may not be a thing in the US - it remains to be seen.
I'm having trouble with your pronouns who is us? You seem to be shifting from a NZ perspective to a USA perspective.
I'm a New Zealander with interests in India (where I technically reside) and the USA (where my S/O is and I currently am). Hope that clarifies a little bit.
Anyway... that's the economics. If American towns think they can get 50 years out of a fiber buy then they can certainly pay for it. But they don't so they won't. And that's the point of my posts. People think internet is cheap to provide while the reality is it is very expensive to provide and they are paying a fair estimate for what it costs given a reasonable payoff matrix. If you think the matrix is grossly mispriced then invest in telcos because they are sitting on a goldmine or own your own fiber / become an ISP. Which it appears you have.
Absolutely. As mentioned, the major cost is all about digging and labour - upgrading equipment every few years at a cost of around $120 per port, it really isn't as big of an ask as you're making out - over 60 months it's around $2 per month. Then there's modem rental which even at $5/mo (which is below what most providers charge) could well pay for both those upgrades *and* the modem without adding meaningfully increasing the customers bill (and certainly not by the amounts you mentioned in earlier posts).
Make sense? (Sorry about the rambling/long winded reply)
It's a combination of more than just stupidity and corruption - many other things are at play, in my view.
A 5 year ROI is basically unheard of in an infrastructure build - 20-25 is about where it's at, because it's expected to last 50 (or more). Besides, it's fiber - the infrastructure required to put in 1gig vs 10gig is basically no different - you replace a device on either end when it comes time to upgrade, no extra building required.
One thing we also have to remember (which is often not cited or taken in to account by the naysayers) is that we only really need to concentrate on the last mile when thinking about a build like this - we don't need to care about the 500 miles in between towns - the middle mile is already done (for the most part) and has reasonably healthy competition (unless Zayo keeps buying everyone, then that might disappear), so in the vast majority of cases there's probably already fiber that can easily supply n*10gig or better to a CO/fiber hut/cabinet/etc.
Population density on a nationwide scale is a BS argument and personally I've never found a good argument other than FUD from incumbents and lobbyists as to why *any* built-up area of nearly any size can't have reasonably priced 100-meg or even gigabit Internet if they'd just build that last mile fiber.
Hell, why not start in smaller towns? No doubt there would be fewer issues with building and permitting, not to mention less resistance than there is in a place like NYC (landlords, city council etc). These are often the towns [incumbent] forgot, and by the time they realize, it'll be too late for them to do anything.
By comparison, NZ's fiber build is has a CPPP of about US$2k - the cities are generally low density and the entire thing is on a fault-line so in many respects they face some similar problems to the US, except on a smaller scale (fraction of the size, fraction of the population). More to the point, you have towns even with populations under 1,000 being wired with fiber. Last I checked, some parts of the build are even ahead of schedule and at the end of last year they had a competition to find the town most wanting of gigabit service - and the town that won got it along with the privilege of saying first in the southern hemisphere and so on. No additional build was required to jump from what started out as a 100mbit/s service to reach a 1gbit/s service over and above what was already being put in.
So what's different between us and the US? We as a nation are generally enthusiastic about fiber and most of the country is all for it, in part because it was sold to us as an investment in the future - to beyond 2020. Unlike here where the concern is for this year and next, at best. Which is probably why Frontier expects nearly $300 for gigabit service which allegedly became available where I am just a couple of months ago (though I've never seen a truck-roll for it, I had been waiting for it to be announced for nearly 2 years already, as the deal was struck in Q3 2013). FWIW, they only wanted about $150 for 100mb service - which is 2.5x more expensive than the cableco and about 1/3 what I can get a 100mb dedicated fiber circuit (complete with 4-hour SLA) for.
That doesn't excuse poor access in places like NYC, LA, Seattle, Chicago (you name it) - the conditions in those localities are similar enough to places like HK, Singapore or Tokyo that there's not a sufficiently significant difference in the actual technical ability or financial outlay for companies (or municipalities) to install properly high speed Internet and charge what users pay in a place like HK.
Yeah. Okay. And how many companies are sitting on vast blocks that are only partially tapped?
Almost every university, for starters... Several of them that I know have
The backbone is less of a problem than the last mile.
The backbone situation is reasonably healthy and competitive in the US (although, at some point they might have to step in and stop Zayo from buying everybody else out).
The last mile... well, that dictates who you can get based on where you live. So I'd say: open and regulated last mile, any retail ISP can offer their service to any subscriber on any last mile infrastructure they like. I may be biased but I like how New Zealand's model has become over the last few years.
The amount of money it costs to add more capacity at a peering exchange or carrier hotel is laughingly negligible. Even more so when compared to profit margins or total costs for CAPEX and OPEX.
It's a terrible excuse.
As far as AT&T "throttling" GTT because GTT doesn't pay them... well, that's one of the things that's not supposed to be a thing now, isn't it? Besides which, what does AT&T expect when probably 98% of their services are asymmetrical? (A technology problem, obviously, but their policy needs to reflect that).
There are only a small number of ISPs in the US offering symmetrical connections to all or most of their customers.
That sounds more like it... although Newroads themselves are probably getting reamed too, based on their upstream.
Buffets set a time limit on the table (usually 90 minutes or so, else people actually come in there and can sit all day).
I can't speak for other providers, but in our case while we never used "Unlimited", we recently changed our wording from "flat-rate" to "all you can eat" to make explaining the policies easier. I always felt that "Flat Rate" was talking about flat-rate pricing rather than usage, but we changed it to "All You Can Eat" because it relates more directly to usage - in the specs for the plan we make a comparison to being "like a buffet restaurant, but you can't feed the whole neighbourhood" or something. Granted, this is for wired service, not wireless, and I can quite understand the need for some limitation on wireless services.
The same paragraph also mentions that we expect usage of between 1 and 2 TB on that particular plan (but that the limits are still soft, as they always were - chances are if we ever got anyone using 77TB of data like that guy on Verizon FiOS did we might not be too happy about it though). At the same time 2TB equates to about 6mbit/s 24x7 and is - for most households - plenty and for most intents and purposes "practically unlimited", even on a 100mbit/s connection (and as bandwidth prices fall, that threshold will undoubtedly increase).
Even so, most people buy a usage-based plan which offers data topups at fairly reasonable prices.
What you mean the "exclusive" franchising that's already illegal? (Franchises are non-exclusive these days, but there are other - mostly artificial - barriers)
2-3gbps? Dream on.
4G was *supposed* to be 1gbit/s and average speeds are 20-40mbit/s if you're lucky.
Using similar math, I'd expect maybe 1gbit/s by the time marketing gets done with it and 500mbit/s in real life.
$7k for 500mbit/s? That sounds a bit expensive, even in a rural-ish area. I can get over 1 gbps (with SLA) for a little less than that in a town with under 30k people in the midwest.
Your ISP is probably getting ripped off possibly by a term contract that doesn't account for automatic bandwidth upgrades for the same amount of money.
IMHO this is the wrong type of thinking. Setting minimums doesn't give anything to aspire to, it doesn't give anyone any incentive to push the technology to what it can do.
Instead providers focus on providing "good enough to meet the minimum".
And this doesn't just apply to the US.
This is mostly an America-centric problem, unless you're flying a budget airline, in which case you're probably paying 1/4 to 1/10 the price of the ticket on a normal airline, so extra baggage fees are (in some way) justified.
If I fly Jetstar (a budget airline) Auckland to Singapore for $99 I expect to pay extra for baggage. If I fly Air New Zealand or Singapore (full service airlines) from Auckland to Singapore, I don't expect to pay extra for baggage.
But in the US, it doesn't matter who I fly with, I'm going to be charged for baggage, and that is annoying.
At these prices, I lose money -- but I make it up in volume. -- Peter G. Alaquon