[676] in Commercialization & Privatization of the Internet
re: Size of the NREN Market
daemon@ATHENA.MIT.EDU (Craig Partridge)
Fri May 10 03:19:38 1991
To: Ari Ollikainen <ari@mordor.stanford.edu>
Cc: com-priv@psi.com
From: Craig Partridge <craig@sics.se>
Date: Fri, 10 May 91 08:18:15 +0200
> If the size of the "market" for NREN is on the order of a million
> users then I can't see why this isn't enough of a motivator for
> the commercial carriers to rush out and capture the potential
> gross revenue stream of ~$400 million/year or are they thinking
> it looks better if they could make it into a Billion dollar a year
> business?
I had an interesting discussion with some telco folks a few weeks ago
which gave me some insight into why the commercial carriers might not
want to rush in:
(1) one key concern for the telco guys is being able to precisely
state service parameters. this comes from a desire to be able to
write an airtight contract that says "we'll provide this explicitly
defined service and you'll pay us $X." their experience is that
if you provide a publicly available service, you'll inevitably
have people try to rip you off, so you need to be very clear about
what you're providing and then prove to yourself (mathematically)
that you can provide that service (i.e. prove you'll have a revenue
scheme). they concede this maybe an overly conservative approach,
but it appears entrenched.
(2) difficulty in managing the network. one of the biggest costs to
the carriers is the management of their networks -- and creating a
new management center for data traffic is apparently considered
fiendishly expensive. Also, the management problem they'd be getting
is larger than they have experience with -- the number of switching
stations in any of the long-haul telephony network is orders (that's
right 'orders' plural) of magnitude smaller than the number of routers
in the Internet. The NSFNET backbone already has more switching nodes
than the number of long-distance switching nodes in most countries.
Perhaps a simpler summation is that where you see $$, the phone companies
see a very small revenue stream (relative to what they have already) and a lot
of headache. This isn't to say that they're stupid -- they can see the
potential of the data market and they're working hard to make sure they're
players in the future (e.g. ATM) but they're not desperate to jump in with
both feet now.
Craig
