[nanog] Re: Microsoft offering xDSL access

Karl Denninger karl at mcs.net
Fri Jan 23 18:12:49 UTC 1998

On Fri, Jan 23, 1998 at 11:56:44AM -0600, Paul J. Zawada wrote:
> At 09:19 AM 1/23/98 -0800, Jim Shankland wrote:
> >
> >Of course, this is orthogonal to xDSL; the same economies of scale would
> >apply with T-1 local loops.
> >
> >Seems to me that for the RBOCs, the big disadvantage of xDSL is losing
> >all those fat, high-margin T-1 local loop fees.  
> Two problems with this...  
> 1) If the RBOCs try to keep status quo with the T1 situation, the cable
> companies may eventually eat the RBOCs' lunch.
> 2) The RBOCs can deploy fewer HDSL-based T1s due to Near-End cross-Talk
> (NEXT) concerns...  ADSL doesn't have a NEXT problem so they can deploy
> many more ADSL loops than HDSL loops in the same cable sheath...   In this
> case, volume will win over keeping prices high...
> --zawada
> Paul J. Zawada, RCDD     | Senior Network Engineer
> zawada at ncsa.uiuc.edu     | National Center for Supercomputing Applications
> +1 630 686 7825          | http://www.ncsa.uiuc.edu/People/zawada

The problem isn't the local loop.  Its how you get the data anywhere ELSE
after the local loop has provided its piece.

A T1 from us, for example, is $600 a month - WITHOUT the circuit.

Its $600 regardless of whether you use tin cans and string, a HDSL DS1, a
traditional DS1, a wireless DS1 using whatever, or genies flying around with
the bits.

The reason is that the local loop cost is not included in the price!  

Now, ADSL can affect local loop prices (downward).  What it can't do is
change the basics of how data is transported on a national and international
scale, and THAT is where the cost components that go into the $600 fee come

Anyone claiming they can deliver T1 speeds for $30-40 a month is lying given
the current state of interconnection expense across real distances.  Quest
and others laying fiber will not lower these costs by 95%, which is
PRECISELY what has to happen to hit those targets.

Now, if you want to *CLAIM* DS1 speeds but actually deliver something that
looks more like an ISDN connection, then its possible.  But where I come
from advertising something you can't deliver is commonly known as fraud.

Karl Denninger (karl at MCS.Net)| MCSNet - Serving Chicagoland and Wisconsin
http://www.mcs.net/          | T1's from $600 monthly to FULL DS-3 Service
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