[163912] in North American Network Operators' Group
Re: net neutrality and peering wars continue
daemon@ATHENA.MIT.EDU (Jared Mauch)
Thu Jun 20 22:27:11 2013
From: Jared Mauch <jared@puck.nether.net>
In-Reply-To: <CAEE+rGrTvLCUfyg_YbcWuvXBHLck2y+Dzo-41aLdxRBmfdYXzQ@mail.gmail.com>
Date: Thu, 20 Jun 2013 22:26:39 -0400
To: "Aaron C. de Bruyn" <aaron@heyaaron.com>
Cc: North American Network Operators' Group <nanog@nanog.org>
Errors-To: nanog-bounces+nanog.discuss=bloom-picayune.mit.edu@nanog.org
On Jun 20, 2013, at 9:10 PM, "Aaron C. de Bruyn" <aaron@heyaaron.com> =
wrote:
> Why is there a variable charge for bandwidth anyways?
>=20
> In a very simplistic setup, if I have a router that costs $X and I run =
a $5
> CAT6 cable to someone elses router which cost them $Y, plus a bit of
> maintenance time to set up the connections, tweak ACLs, etc...
>=20
> So now there's an interconnect between two providers at 1 gigabit, and =
the
> only issue I see is the routers needing to be replaced within Z years =
when
> it dies or when it needs to handle a 10 gigabit connection.
Many things aren't as obvious as you state above. Take for example =
routing table growth. There's going to be a big boom in selling routers =
(or turning off full routes) when folks devices melt at 512k routes in =
the coming years. Operating a router takes a lot of things, including =
power, space, people to rack it, swap failing or failed hardware, OPEX =
to the vendor to cover support contract (assuming you have one), fiber =
cleaning kits, new patch cables, optics, etc.
These costs are variable per city and location as space/power can be =
different. This doesn't include telecom costs, which may be up/down =
depending on if you are using leased/dark/IRU or other services.
Building fiber, data centers, can be quite capital expensive. Fiber, =
expect 50-100k per mile (for example). It can be even more depending on =
the market and situation. Much of that cost is in the labor to the =
technicians as well as local permits as opposed to what the fiber =
actually costs.
Many people have fiber they built 10 years ago, or even older. Folks =
like AT&T have been breathing life into their copper plant that was =
built over the past 100 years. Having that existing right-of-way makes =
permit costs lower, or allows you to get a blanket permit for entire =
cities/counties in cases.
Some cable company has a presentation out there (maybe it was at a cable =
labs conference, or otherwise) I saw about average breaks per year. =
This costs splicing crews that you either have to pay to be on call or =
outsource to a contract company for emergency restoration. =20
http://www.southern-telecom.com/AFL%20Reliability.pdf has some details =
about these.
> So it seems I should be able to say "Here's a 1 gigabit connection. =
It
> will cost $Q over Z years or you can pay $Q/Z yearly", etc...
>=20
> And wouldn't the costs go down if I had a bunch of =
dialup/DSL/cable/fiber
> users as they are paying to lower the costs of interconnects so they =
get
> content with less latency and fewer bottlenecks?
There was a presentation by Vijay about the costs of customer support. =
Many states have minimum wages higher than the federal minimum wage, but =
even that being said, you need to pay someone, train them, give them a =
computer, manager, phone and other guidance to provide support for =
billing, customer retention and sales.
I recall Vijay saying that if a customer phoned for support it wiped out =
the entire profit from the customer for the lifetime of them being a =
customer. That may not still be the case, but there are costs each time =
you provide a staff person to answer that phone. Sometimes it's due to =
outage, sometimes it's PBKAC, sometimes you don't know and have to =
further research the issue.
Your overhead costs may be much higher due to the type of other costs =
you bear (pension, union contracts, etc..) vs a competitor that doesn't =
have that same structure. This is often seen in the airline industry.
I for one would like to see more competition in the last mile in the US, =
but I think the only people that will do it will be folks like =
sonic.net, google and other smaller independent telcos.
Take someone like Allband Communications in Michigan. They brought POTS =
service (just recently) to locations that Verizon/AT&T were unwilling to =
build. The person who wanted the phone service ended up having to start =
a telco to get POTS service there. They just went triple-play since it =
was the same cost to trench fiber as to put in the copper.
- Jared=
