Mr I Forrester wrote:
http://www.theregister.co.uk/2008/04/03/bbc_highfield_isp_threat/
"Relationships between the BBC and internet industry have plunged to an
all-time low, after the BBC's internet chief Ashley Highfield used a
blog post yesterday to tell ISPs to get stuffed - and even threatened to
name and shame them."
Might as well point it out before someone else does, surely this is good
for net neutrality?
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I would like to express my support for the BBC's position. If anything
it is not explicit enough. The costs of bandwidth continually fall
The Register article is completely wrong, and reflects a incorrect view
held by many.
The real questions are why are we been deprived of the fruits of
technological progress and why is is bandwidth usage flat in the UK,
when it is growing at 40%pa in the rest of developed the world
facilitated by technological progress.
Why are the ISP's bleating about their costs when they are just
competing to be the lowest cost retailer of the BT wholesale product,
rather than been a competitor to BT. While BT uses it's monopoly status
to keep wholesale prices from falling in line increases in capacity.
This alternative model (compete with the incumbent) has worked in Japan
for Yahoo/Softbank and France for Free.fr. In the US we have incumbent
Verizon deploying FTTH.
It seems to me, the senior management of BT and ISP's in the UK do not
understand the fundamental technologies and processes, behind their
products. Which is about as damming and indictment of management as you
can get.
Virgin are about to demonstrate the potential of their HFC network with
their 50Mb/s download product, and BSkyB may dramatically increase or
abolish usage caps in the near future, as they have optical fiber to the
Tier 1 exchanges which cover 70% of the UK population. Upto five more
ISP's could eventually join BSkyB (Fiber to Tier 1 MSAN) setting the
potential for competition in providing both low cost, and full ADSL2+
bandwidth (12-20Mb/s).
You can read in detail the breakdown of costs for an ISP, posted by
another David Tomlinson who works for Plusnet (owned by BT), but this is
all based upon the costs of using BT's IPstream product. He doesn't
really address the costs of LLU networks, or address the charges on BT's
monopoly IPstream product.
http://community.plus.net/blog/2008/02/28/how-uk-isps-are-charged-for-broadband-the-cost-of-ipstream/
An earlier posting by the same David Tomlinson (who works for PlusNet)
reproduces a Telebusillis post.
"However, it is almost impossible to make money on ipstream in retail
given current pricing and churn rates and therefore the only player with
any margin is BT through its wholesale revenues or the relatively small
number of ISPs who charge a premium for SME products."
This is the thrust of the later article (above), which leaves the only
viable alternative infrastructure competition.
"Roughly speaking, most serious nationwide unbundlers (Carphone, Sky,
Tiscali, O2 and Orange) will eventually unbundle down to the Tier 1 MSAN
level at a minimum which is around 1200 exchanges and covers around 70%
or 17.7m of the 25.3m UK homes. Again roughly speaking, most of them
will backhaul using BT Ethernet products to the MetroPOPs where they
will offload traffic onto their own backbones. In other words because of
the BT network architecture most of the unbundlers will be using a
blueprint which will be very, very similar."
http://community.plus.net/blog/2007/10/01/21cn-and-regional-pricing/
http://telebusillis.blogspot.com/2007/08/21cn-bands-and-regional-pricing.html
Seven companies providing competition for 47% of the population, and Six
of the Seven for a further 23% (70% total) leaving BT with exclusive
access to and increased charges for the remaining 30%.
Another Telebusillis post shows how far we have to go, you may not want
to be using BT for MetroEthernet, you really need the Tier 1 MSANs.
http://telebusillis.blogspot.com/2007/10/bt-regulated-accounts-for-20067-scary.html
"Here the breakdown of connections in 2006/7 is revealing:
* 100 meg – 1,854 connections
* 1 gig – 833 connections
* Other – 117 connections
It doesn’t take a PhD in maths to figure out that in busy hour, it won’t
take many punters browsing, streaming and p2p’ing to fill up a 100-meg
backhaul pipe. I think once someone solves the problem of unbundlers
misleading advertising with “up-to x-meg” claims, it is time to move
onto forcing unbundlers to publish their backhaul capacity from each
exchange. It is just too easy for some companies to blame poor peak hour
speeds on excessive p2p’ers when in fact it is a feature of their
failed-GCSE maths driven network design."
No wonder Tiscali are selling their Broadband service in the UK.
http://www.portal.itproportal.com/articles/2008/04/04/british-isps-eyeing-tiscali-broadband-arm/
http://uk.reuters.com/article/hotStocksNews/idUKL0483288320080404
However this could have more to do with the credit crunch, if you grow
by acquisition (pipex,etc) you may have large debts.
You may have concluded from the Plusnet and other articles that the ISP
business is cut-throat with wafer thin profit margins and hopelessly
oversubscribed bandwidth. This is true, but you also need to look at the
fundamentals.
You can go to www.DSLprime.com and read, that demand is in line with or
below the increases in capacity produced by technological progress
(Moores or Butters Law) and the all in cost of per Mb is 50p against the
£12-20 pcm charged for the (Upto 8Mb) service.
http://www.dslprime.com/News_Articles/news_articles.htm
"40 gigabytes at seven cents is less than three dollars per month. Time
Warner charges over $40. That's like Starbucks drastically raising the
price if you put sugar in your coffee. Any large carrier with a cap
below 100 gigabytes and a price above $30 is abusing market power. Their
bandwidth costs are less than the marketing budget, and teh customer is
profitable."
You look at Japan, or France or even the USA (see above) and ask why has
such low bandwidth, while UK ISP's plead poverty (of both Money and
Bandwidth).
There is only one answer; two letters, first is B, last is T.
FTTH is a whole new can of worms, but BT should not be allowed to extend
or maintain it's monopoly at public expense.
Reference to Moores law is perfectly justified as indicated in the
Wikipedia article. http://en.wikipedia.org/wiki/Moore's_law
It has a more colloquial use "Moore's Law describes this driving force
of technological and social change in the late 20th and early 21st
centuries." but even in a more strict sense, the slowest components in
an optical network are the electronics, the modems, routers and
switches, used for modulation of the signal and interconnection. The
performance of which are directly influenced by the performance of the
silicon chips, this performance is often influenced by the size and
number of transistors and the complexity of the chips.
Perhaps people would be more comfortable with the more obscure Butter's
Law of Photonics (see the Wikepedia article on Moores Law).
If you have managed to get here, You could have read much of this on
DSLprime (not written by me I have no association with DSLprime). I have
been watching the credit crunch rather than telecoms or intellectual
property except when provoked to comment. Sorry about the length of the
post.
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