 LinklistPremium
join:2002-03-03
Longport, NJ
kudos:5 | reply to bbeesley
Re: Only part of the network costs said by bbeesley:IP transit costs are only a small portion of the total cost of delivering service to a group of subscribers and saying these have gone down is akin to saying "gas prices are cheaper so the cost of a car is going down"
bandwidth consumption continues to necessitate investment in Long-Haul and Metro network capacity at rate that appears to be accelerating (100G interfaces are not cheap) and increasing speeds to subscribers requires investment in local delivery infrastructure
It could be argued that revenues are increasing and this should be included as well
A study on bandwidth costs really needs to include all the above to get a clear picture of whether it is getting cheaper or more expensive to run these networks
+1
People can keep posting these news items about backbone bandwidth prices dropping. But they ALWAYS neglect to mention that isn't where the majority of the costs are. These backbone costs could drop to ZERO and it wouldn't appreciably change the cost of delivering broadband to the home.
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»www.mittromney.com/s/repeal-and-···bamacare
»www.mittromney.com/issues/health-care |
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 BF69Premium
join:2004-07-28
Camden, TN | said by Linklist:said by bbeesley:IP transit costs are only a small portion of the total cost of delivering service to a group of subscribers and saying these have gone down is akin to saying "gas prices are cheaper so the cost of a car is going down"
bandwidth consumption continues to necessitate investment in Long-Haul and Metro network capacity at rate that appears to be accelerating (100G interfaces are not cheap) and increasing speeds to subscribers requires investment in local delivery infrastructure
It could be argued that revenues are increasing and this should be included as well
A study on bandwidth costs really needs to include all the above to get a clear picture of whether it is getting cheaper or more expensive to run these networks
+1 People can keep posting these news items about backbone bandwidth prices dropping. But they ALWAYS neglect to mention that isn't where the majority of the costs are. These backbone costs could drop to ZERO and it wouldn't appreciably change the cost of delivering broadband to the home. Then how come they charge $10 for 50 GB then if the cost for bandwidth is practically zero? |
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 skeechanAi OtsukaholicPremium
join:2012-01-26
AA169|170
kudos:2 | Because they can. How can they justify it? They can't. It's a scam to defend their VOD revenues.
There is ZERO justification for overage fees. |
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skeechanAi OtsukaholicPremium
join:2012-01-26
AA169|170
kudos:2 | reply to Linklist
Then as a triple play customer I'm paying for the infrastructure 3X over. Enough with my neighbors with only 1 service getting cable welfare from me. With your logic my HSI service should be free. |
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LinklistPremium
join:2002-03-03
Longport, NJ
kudos:5 | reply to BF69
said by BF69:Then how come they charge $10 for 50 GB then if the cost for bandwidth is practically zero?
I said BACKBONE bandwidth is practically zero. You didn't leave out that qualifier on purpose did you, to make your point?  But as bandwidth growth occurs in local last mile locations, the costs of heavier and heavier bandwidth use results in more hardware at the local level(splitting nodes and such) and that results in higher costs. Now should that higher cost be borne by all users in that local area? Or should it be borne by those causing the local infrastructure to be upgraded? I know where my vote comes down on that question.
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»www.mittromney.com/s/repeal-and-···bamacare
»www.mittromney.com/issues/health-care |
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 espaethDigital PlumberPremium,MVM
join:2001-04-21
Minneapolis, MN
kudos:2
 ·Vitelity VOIP
| reply to BF69
said by BF69:Then how come they charge $10 for 50 GB then if the cost for bandwidth is practically zero? The *BACKBONE* bandwidth is practically zero.
To augment the capacity on a shared connection between two cities like New York and LA, you buy new optical interfaces for the device on each side of the connection and with that purchase alone you have augmented bandwidth. That's why bandwidth is getting cheaper for transit -- replace 100mbps optics with GigE, replace GigE with 10GigE, replace 10GigE with 40GigE/100GigE. Lather, rinse, repeat.
Last mile bandwidth is not commodity point-to-point Ethernet. The typologies are different, the increments of expansion are different, the technology is different, and there are several orders of magnitude more labor required to deploy bandwidth upgrades at the edge.
The economies of scale couldn't possibly be more different. |
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BF69Premium
join:2004-07-28
Camden, TN | reply to Linklist
said by Linklist:said by BF69:Then how come they charge $10 for 50 GB then if the cost for bandwidth is practically zero?
I said BACKBONE bandwidth is practically zero. You didn't leave out that qualifier on purpose did you, to make your point? But as bandwidth growth occurs in local last mile locations, the costs of heavier and heavier bandwidth use results in more hardware at the local level(splitting nodes and such) and that results in higher costs. Now should that higher cost be borne by all users in that local area? Or should it be borne by those causing the local infrastructure to be upgraded? I know where my vote comes down on that question. Does it cost them $10 to provide 50 extra GB? Um no. That's part of the problem. If there is an extra cost to provide more than 300 GB then fine charge that cost. Don't make it a money grab. That's what irks people. When companies have to raise prices because their expenses are higher most people understand that. When you raise prices several times higher than the extra expenses then people not only get mad they stop believing you. Worse thing a company can do is lose the customers trust. |
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skeechanAi OtsukaholicPremium
join:2012-01-26
AA169|170
kudos:2 | reply to Linklist
Then they should be charging for all VOD since it is taking up precious channel-space in the last mile. But alas, there is no last mile capacity problem. Overage fees are about protecting video revenues by pricing competitors out of the market. |
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kaila
join:2000-10-11
Lincolnshire, IL | reply to Linklist
Point well taken on the big difference between backbone & last mile delivery. But after Comcast's (my ISP) stunning 85% gross profit margin in Q1, they have absolutely no room to either complain about or charge more for last mile upgrades and associated costs. Seriously.
»www.wikinvest.com/stock/Comcast_···ef=chart
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Jeff Howe
Jeff's Blog - »www.ostjournal.net |
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skeechanAi OtsukaholicPremium
join:2012-01-26
AA169|170
kudos:2 | Hey someone has to pay for those glass stairs and hundred million in furniture in Comcast's new ivory tower for Brian Roberts. |
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espaethDigital PlumberPremium,MVM
join:2001-04-21
Minneapolis, MN
kudos:2 Reviews:
·Vitelity VOIP
| reply to kaila
said by kaila:Point well taken on the big difference between backbone & last mile delivery. But after Comcast's (my ISP) stunning 85% gross profit margin in Q1, they have absolutely no room to either complain about or charge more for last mile upgrades and associated costs. Seriously.
»www.wikinvest.com/stock/Comcast_···ef=chart
That isn't telling you what you think it is.
Gross profit margin relates product-specific revenue to direct costs and excludes indirect costs.
Say you were a bakery. If you had a chef preparing doughnuts, pastries, and bread, the direct cost would be the ingredients required to produce each doughnut, pastry, or bread loaf independently. The cost of the chef, building, energy, kitchen utensils, ovens, etc would be indirect costs because they aren't directly attributed to the production of only a single product.
In the case of Comcast, the only direct costs are going to be things like programming fees. They generate revenue selling a video product line, and they pay content producers for said video.
The field techs are indirect costs, because they service the video, data, and telephone products and aren't directly related to product revenue. Likewise the cable plant is used for all 3 products, and you can purchase any of the 3 offerings independently so the entire cable plant structure is an indirect cost.
Net profit margin, which factors in indirect costs, has been hovering around 8% for the last few quarters. See: »ycharts.com/companies/CMCSA/profit_margin |
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Kamus
join:2011-01-27
El Paso, TX | reply to Linklist
Re: Only part of the network costs said by Linklist:+1
People can keep posting these news items about backbone bandwidth prices dropping. But they ALWAYS neglect to mention that isn't where the majority of the costs are. These backbone costs could drop to ZERO and it wouldn't appreciably change the cost of delivering broadband to the home.
Thank you for pointing out that our telecom infrastructure is obsolete due to lack of investment. Because as we all know. To keep up with this surge in backbone capacity we would need FTTH.
This is what happens when you have shareholders interest ahead of long term company interests and their clients.
So you're right, the problem is the last mile! |
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brad
join:2007-09-06
Etobicoke, ON | reply to Linklist
said by Linklist:Now should that higher cost be borne by all users in that local area? Or should it be borne by those causing the local infrastructure to be upgraded? I know where my vote comes down on that question.
By everyone. It's everyone as a group that are the cause for the upgrades. |
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elray
join:2000-12-16
Santa Monica, CA | reply to Kamus
said by Kamus:said by Linklist:+1
People can keep posting these news items about backbone bandwidth prices dropping. But they ALWAYS neglect to mention that isn't where the majority of the costs are. These backbone costs could drop to ZERO and it wouldn't appreciably change the cost of delivering broadband to the home.
Thank you for pointing out that our telecom infrastructure is obsolete due to lack of investment. Because as we all know. To keep up with this surge in backbone capacity we would need FTTH. This is what happens when you have shareholders interest ahead of long term company interests and their clients. So you're right, the problem is the last mile! The problem is that the clients aren't willing to pay enough, in sufficient numbers, to make upgrading the last mile to FTTH a profitable venture.
That's why you see the same drumbeat here every day: greedy consumers who want to force all of us to pay, no matter what the cost, in order to subsidize their personal fiber desires. |
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| What the hell are you talking about? We, the consumers dont need to pay any more for it than we already do. We have put in and continue to put in plenty of money for them to make FTTH a reality.
All the major players make BILLIONS per quarter. Comcast last quarter made 1.35 billion in PROFIT, AT&T made 3.9 billion and Verizon 1.82 billion. Not a single one of those companies could roll out FTTH fast enough to eat all that profit (even Verizon didnt WHILE rolling it out). They would have a hard time using 2 quarters to eat up a single quarters profit.
How much do you think it cost them to roll out copper 50/100 years ago? Do you think the per house cost is more now than it was then (inflation adjusted)?
Regardless, once installed the cost of maintenance is much lower AND the potential for bandwidth is increased astronomically over the current infrastructure so their company is in a much better position. |
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elray
join:2000-12-16
Santa Monica, CA | You need to work on your math.
Current industry cost for FTTH is $4K/address passed - that's for the existing deployment, not the harder low-density rural setting. VZ continues to indicate that they never make that $4K back, and they have the highest rates in the country.
Assuming you could actually do FTTH to every non-fiber household (~90 million) at the $4K rate, you're talking about $300-500 Billion in capex.
Please, tell us where these hundreds of billions in profits lie, and how the shareholders would be convinced that reinvesting them would actually yield anything?
If it made sense, it would have already happened. |
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| Please provide your fact sheet for $4k per address passed. If I recall correctly, I believe Google said it was $600 for them. Regardless, Verizon has been given billions of dollars to invest in their network, add that to your flawed $4k and that brings down even more.
As far as their money, I pulled that straight of their filings. Go look it up and convincing shareholders of anything that includes spending money in this day and age of stock jockeys means nothing. Ultimately, they core executives need to do what is best for the FUTURE of the company and milking copper is not it. |
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 bbeesleyVIP
join:2003-08-07
Richardson, TX
kudos:5 | said by Skippy25:Please provide your fact sheet for $4k per address passed.
A NY Times blogger estimated the cost per address at $2,473 but since the take rate for services was not 100%, Verizon ended up paying $3,897 per customer in capital costs
»bits.blogs.nytimes.com/2008/08/1···pay-off/
Google's costs are artificially low because they obtained very lucrative government incentives to build in that area. The costs are probably less to build in rural Kansas but I doubt they are really that low and more likely the taxpayers in that area are picking up the remainder - not that I am arguing that is a bad or good thing, that is a different discussion, I am just offering that I don't think that what Google is stating is the whole cost |
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elray
join:2000-12-16
Santa Monica, CA | reply to Skippy25
said by Skippy25:Please provide your fact sheet for $4k per address passed. If I recall correctly, I believe Google said it was $600 for them. Regardless, Verizon has been given billions of dollars to invest in their network, add that to your flawed $4k and that brings down even more.
As far as their money, I pulled that straight of their filings. Go look it up and convincing shareholders of anything that includes spending money in this day and age of stock jockeys means nothing. Ultimately, they core executives need to do what is best for the FUTURE of the company and milking copper is not it.
$4K is Verizon's stated cost for the past six years.
Considering that they are the ONLY company that has actually put up the cash and built out FTTH, I use their number.
When Google (and Sonic and Surewest) demonstrate the ability to wire at $600/address-passed, on an even playing field, I'll gladly cite it. I don't disagree with attempting the shortcuts they're undertaking which negate much of the typical cost, but unless those are replicable and scalable for every locale, its just another form of cream-skimming, something that is usually assailed here.
Shareholders expect the company to profit, pay dividends, and grow.
Paying out 10 years' profits to build a fiber network that customers won't pay for, when LTE service looms at a much lower cost, is NOT in the best interest of the company. |
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