[171821] in North American Network Operators' Group
Re: Observations of an Internet Middleman (Level3) (was: RIP Network
daemon@ATHENA.MIT.EDU (Owen DeLong)
Thu May 15 10:20:06 2014
X-Original-To: nanog@nanog.org
From: Owen DeLong <owen@delong.com>
In-Reply-To: <2B92D9D4-A4CA-4683-833F-9ADADA2EADF4@cable.comcast.com>
Date: Thu, 15 May 2014 07:13:20 -0700
To: "McElearney, Kevin" <Kevin_McElearney@cable.comcast.com>
Cc: "nanog@nanog.org" <nanog@nanog.org>
Errors-To: nanog-bounces@nanog.org
Oh, please do explicate on how this is inaccurate=85
Owen
On May 14, 2014, at 2:14 PM, McElearney, Kevin =
<Kevin_McElearney@cable.comcast.com> wrote:
> Respectfully, this is a highly inaccurate "sound bite"
>=20
> - Kevin
>=20
> 215-313-1083
>=20
>> On May 14, 2014, at 3:05 PM, "Owen DeLong" <owen@delong.com> wrote:
>>=20
>> 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.
>>=20
>> Owen
>>=20
>> On May 14, 2014, at 8:02 AM, Hugo Slabbert <hugo@slabnet.com> wrote:
>>=20
>>>>=20
>>>> So they seek new sources of revenues, and/or attempt to thwart
>>>>> competition any way they can.
>>> 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
>>> 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
>>>>> There is the issue of control over the market. But also the =
pressure
>>>>> from shareholders for continued growth.
>>>>=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
>>>> 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
>>>> 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
>>>> 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.
>>>> 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
>>>> So how is the content delivered? Is it over the internet? Or is it =
over
>>>> the cable plant, from cable headends?
>>=20
