Begin forwarded message:
From: Jason Weisberger <[EMAIL PROTECTED]>
Date: June 2, 2006 1:31:49 PM EDT
To: [EMAIL PROTECTED]
Cc: [email protected]
Subject: Re: [IP] more on Another Net Neutrality question...
Gentlemen,
This is no new idea, it has already been done in the past and the
whole net neutrality thing seems to just be a neat way for Big
Content and Big Telecom to fight and hand money to politicians. I
speak from a background of having been a telecommunications and
internet networking executive and having worked on some of the
largest IP networks out there. I was VP of Network Engineering for
Digital Island, a company that built and "overlay" network, like you
are discussing and I did stints as VP of Product Management and VP of
Commercial Strategy at Cable & Wireless in the US. I spent a lot of
time trying to explain to a large number of people how to pull that
company out of the toilet and largely being ignored. I've seen first
hand what it is that drags down the telecom infrastructure players
that are providing backbone and longhaul internet transport to
Microsoft, Ebay, Google, Yahoo and many others. I'm no fan of big
telecom but I think they are getting a really unfair image cast over
them in this net-neutrality show.
First: No one is talking about taking the core IP-based internet
service away from Big Content sites and making them pay unfair rates.
Right now Yahoo, Google, Ebay and others pay unfair rates now, but
I'm pretty willing to bet its too late there and telecom will never
get them paying anything close to cost.
Here is what happened: The big providers over built. Then there was a
scramble to grab marketshare, regardless of cost. That led to MSFT,
Y!, Amazone, Ebay and others getting artificially depressed prices
for volume; at or below cost. Then the market started to dump and
prices were dropping like a rock to try and bring in ANY revenue as
dotcom groups imploded and all the marginal revenue they were
generating in the marketshare race went away. Big Content took this
opportunity to really drive prices down on the telecoms.
At the time I left C&W we had situation that looked something like
this:
Total Capacity of the Backbone Network: 70Gbps
Tier One Tax: 35Gbps (we can talk about how the roots of the internet
as a research and educations platform have created some bad habits if
you like, but basically bilateral peering is a mistake because it
isn't bilateral, its 2:1 or worse for the backbones who cater to
content as opposed to the guys who cater to eyeballs)
Theoretical Salable Network Capacity: 35Gbps (in reality you can
never sell 100% because you have to expand between 70 and 85% before
you hit the ceiling.)
Cost to run this network (US Only) $8MM month
Average Price/Mbps = $150
150X35000 = $5.25MM
So, even running in a perfect world with 100% capacity sold, that pig
was never gonna grow wings and fly. I've heard of prices well below
$75/Mbps now.
Now - "Net Neutrality" is just saying that Big Content doesn't want
to pay more than Big Telecom would charge itself to use the same
network AND that Big Telecom can't develop new services and charge a
fair price for them, they need the same artificially depressed rates
they are getting now. So with all the management who got Big Telecom
into these problems gone and new management in and trying to fix them
- we're told that it'd be bad to fix them and let the telecoms find a
way to run a healthy business.
I think Big Telecom is resigned that basic internet service, sort of
the Tier One world we're used to is going to be a loss leader. Prices
aren't likely to come back up because most of their volume is bought
up by Big Content who won't let the prices increase much. I clearly
remember a Big Content manager telling a product manager that they
didn't care if they killed one of our product lines at C&W, we had to
reduce their price. Not very sensical..
Why shouldn't telecom develop a QoS overlay network to the bulk rate
internet? Its akin to FedEx and the Post Office. If there are
applications/services that need better QoS why would we not want to
have them? If AT&T invested the capex into the network, Shouldn't it
cost Yahoo more per unit to ship QoS than AT&T? How does AT&T recover
their investment and make margin on the capacity Yahoo uses if they
don't get to charge them more? Why shouldn't AT&T seen an advantage
from investing the tons of cash it'll take to roll this out? So what
the fiber is in the ground? Everything above that layer costs money
too...
Maybe Cisco and Lucent should have to sell all this kit below cost,
so AT&T can build it to sell it below cost. Then Big Content can show
awesome profitbability numbers while Telecoms AND hardware file CH11
again and again.
Claims that Big Telecom is holding innovation back by wanting to
create an overlay and charge appropriately for it are nuts. New
software applications will in part be based off newly available
infrastructure. When QoS is widely available a whole raft of
applications taking advantage of it will arise. Impacting Big
Content's margins a bit isn't going to slow down technology
innovation. Its not like they are really innovating any more, any
how. They buy people who innovate.
I do not understand how this net neutrality thing has even come so
into the spotlight. What happened to letting the markets set the price?
On Jun 1, 2006, at 12:03 PM, David Farber wrote:
Begin forwarded message:
From: Gerry Faulhaber <[EMAIL PROTECTED]>
Date: June 1, 2006 2:00:47 PM EDT
To: [EMAIL PROTECTED]
Subject: Re: [IP] Another Net Neutrality question...
[for IP, if you wish]
Good job spotting this trend, Hiawatha. We have seen the future
and it is private networks?
Remember that old maxim that the Internet sees censorship as a
network outage and routes around it? Well, how about a new maxim:
network operators will see legal constraints on the traditional
Internet as a flaw and they will build around it?
Let's call it the Othernet. And will somebody please tell me how
we got here?
Professor Gerald R. Faulhaber
Business and Public Policy Dept.
Wharton School, University of Pennsylvania
Philadelphia, PA 19104
Professor of Law
University of Pennsylvania Law School
----- Original Message ----- From: "David Farber" <[EMAIL PROTECTED]>
To: <[email protected]>
Sent: Thursday, June 01, 2006 11:38 AM
Subject: [IP] Another Net Neutrality question...
Begin forwarded message:
From: [EMAIL PROTECTED]
Date: June 1, 2006 11:15:37 AM EDT
To: [EMAIL PROTECTED]
Subject: Another Net Neutrality question...
...this one asked in my role as tech reporter. I'm doing a story
on the
matter. It'll be straight down the middle, no sides taken. But
there's an
aspecr of this issue that I haven't seen addressed, and I'm hoping
the
hypersmart people on the list can tidy it up for me.
We keep talking about a two-tiered Internet. I may have helped
establish
that meme with a story I did on this issue a couple months ago.
But is
that really what's happening? Can't one just as easily argue that
the
"premium" broadband tier isn't really the Internet at all?
Imagine that Verizon, without using the "I" word, had decided to
build a
new high-speed private data network to millions of homes. They'd
use this
network to carry TV signals, as well as a variety of computer data
services. The network would use TCP/IP technology, but would run
entirely
over Verizon's prvately owned hardware.
If Verizon had done such a thing, would anyone argue that the
company was
obligated to share this network with others, without charging them
usage
fees? Wouldn't we shrug and say that since Verizon spent the
billions
needed to build the network, they could do with it as they pleased?
But this is pretty much what's happening now, isn't it? This
second tier
of Internet service is really more like a private network. It's
not so
much a bifurcation of the Internet, but a complete departure from it.
Looked at that way, why shouldn't the broadband providers charge
use fees
to other data services?
Hiawatha Bray
Technology Reporter
Boston Globe
135 Morrissey Blvd.
P.O. Box 55819
Boston, MA 02205-5819 USA
617-929-3119 voice
617-929-3183 fax
617-233-9419 cell
[EMAIL PROTECTED]
[EMAIL PROTECTED]
Recent writings: www.boston.com/business/technology/bray
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