[171810] in North American Network Operators' Group
Re: Observations of an Internet Middleman (Level3) (was: RIP Network
daemon@ATHENA.MIT.EDU (Owen DeLong)
Wed May 14 15:04:32 2014
X-Original-To: nanog@nanog.org
From: Owen DeLong <owen@delong.com>
In-Reply-To: <CABTdvP+RUFhNVJgCGw5K2kZ3p3WfP070bniJmVBGT+7pgJfdZg@mail.gmail.com>
Date: Wed, 14 May 2014 12:02:28 -0700
To: Hugo Slabbert <hugo@slabnet.com>
Cc: nanog@nanog.org
Errors-To: nanog-bounces@nanog.org
Yes, the more accurate statement would be aggressively seeking new
ways to monetize the existing infrastructure without investing in =
upgrades
or additional buildout any more than absolutely necessary.
Owen
On May 14, 2014, at 8:02 AM, Hugo Slabbert <hugo@slabnet.com> wrote:
>>=20
>> So they seek new sources of revenues, and/or attempt to thwart
>>> competition any way they can.
>>>=20
>>=20
> No to the first. Yes to the second. If they were seeking new sources =
of
>> revenue, they'd be massively expanding into un/der served markets and
>> aggressively growing over the top services (which are fat margin).
>>=20
>=20
> Sure they are (seeking new sources of revenue). They're not =
necessarily
> creating new products or services, i.e. actually adding any value, but =
they
> are finding ways to extract additional revenue from the same pipes, =
e.g.
> through paid peering with content providers.
>=20
> I'm not endorsing this; just pointing out that you two are actually in
> agreement here.
>=20
> --
> Hugo
>=20
>=20
> On Wed, May 14, 2014 at 7:23 AM, <charles@thefnf.org> wrote:
>=20
>> On 2014-05-14 02:04, Jean-Francois Mezei wrote:
>>=20
>>> On 14-05-13 22:50, Daniel Staal wrote:
>>>=20
>>> They have the money. They have the ability to get more money. =
*They see
>>>> no reason to spend money making customers happy.* They can make =
more
>>>> profit without it.
>>>>=20
>>>=20
>>> There is the issue of control over the market. But also the pressure
>>> from shareholders for continued growth.
>>>=20
>>=20
>>=20
>> Yes. That is true. Except that it's not.
>>=20
>> How do service providers grow? Let's explore that:
>>=20
>> What is growth for a transit provider?
>>=20
>> More (new) access network(s) (connections).
>> More bandwidth across backbone pipes.
>>=20
>>=20
>> What is growth for access network?
>> More subscribers.
>>=20
>> Except that the incumbent carriers have shown they have no interest =
in
>> providing decent bandwidth to anywhere but the most profitable rate
>> centers. I'd say about 2/3 of the USA is served with quite terrible =
access.
>>=20
>>=20
>>=20
>>=20
>>> The problem with the internet is that while it had promises of wild
>>> growth in the 90s and 00s, once penetration reaches a certain level,
>>> growth stabilizes.
>>>=20
>>=20
>> Penetration is ABYSMAL sir. Huge swaths of underserved americans =
exist.
>>=20
>>=20
>>=20
>>> When you combine this with threath to large incumbents's media and =
media
>>> distribution endeavours by the likes of Netflix (and cat videos on
>>> Youtube), large incumbents start thinking about how they will be =
able to
>>> continue to grow revenus/profits when customers will shift spending =
to
>>> vspecialty channels/cableTV to Netflix and customer growth will not
>>> compensate.
>>>=20
>>=20
>> Except they aren't. Even in the most profitable rate centers, they've
>> declined to really invest in the networks. They aren't a real =
business. You
>> have to remember that. They have regulatory capture, natural/defacto
>> monopoly etc etc. They don't operate in the real world of
>> risk/reward/profit/loss/uncertainty like any other real business has =
to.
>>=20
>>=20
>>=20
>>> So they seek new sources of revenues, and/or attempt to thwart
>>> competition any way they can.
>>>=20
>>=20
>> No to the first. Yes to the second. If they were seeking new sources =
of
>> revenue, they'd be massively expanding into un/der served markets and
>> aggressively growing over the top services (which are fat margin). =
They did
>> a bit of an advertising campaign of "smart home" offerings, but that =
seems
>> to have never grown beyond a pilot.
>>=20
>>=20
>>=20
>>> The current trend is to "if you can't fight them, jon them" where
>>> cablecos start to include the Netflix app into their proprietary =
set-top
>>> boxes. The idea is that you at least make the customer continue to =
use
>>> your box and your remote control which makes it easier for them to
>>> switch between netflix and legacy TV.
>>>=20
>>>=20
>> True. I don't know why one of the cablecos hasn't licensed roku, =
added
>> cable card and made that available as a "hip/cool" set top box =
offering and
>> charge another 10.00 a month on top of the standard dvr rental.
>>=20
>>=20
>>=20
>> Would be interesting to see if those cable companies that are =
agreeing
>>> to add the Netflix app onto their proprietary STBs also play =
peering
>>> capacity games to degrade the service or not.
>>>=20
>>=20
>> So how is the content delivered? Is it over the internet? Or is it =
over
>> the cable plant, from cable headends?
>>=20
