best effort has economic problems

Edward B. Dreger eddy+public+spam at
Sat May 29 22:44:15 UTC 2004

GC> Date: Sat, 29 May 2004 16:53:17 -0400
GC> From: Gordon Cook

GC> The point I am making in my report is NOT that the best
GC> effort network has technology problems but rather that it has
GC> ECONOMIC PROBLEMS.  That it might support 2 or 3 players not
GC> 2 or 3 HUNDRED.

Best effort is cheaper to provide.  Cheaper sells.  Is there
enough of a market to sustain premium services?  IP-based VPNs
haven't replaced FR and PtP WAN links, but FR and PtP haven't
thwarted IP-based VPNs.

GC> That until companies begin to go chapter seven and vanish,
GC> the best effort net will be a black hole that burns up
GC> capital because, for many players, the OPERATIONAL expense is
GC> more than they get for bandwidth never mind cap-ex.

Definitely true about opex and capex... but I'm not convinced
that QoS is the magic bullet that will make the marketplace big
enough and profitable enough.  I don't see service offerings
fixing the woes of screwball pricing.

GC> best effort won't go away.  many best effort players will.

If all best effort players provided QoS/guaranteed services,
would the survival rate be significantly higher as a result?

GC> for the time being, best effort bandwidth prices as an
GC> absolute commodity cannot sustain networks over the long
GC> haul.  A network that can deliver QoS the report hypothesizes
GC> may be able to attract enough revenue to become profitable.

That's where I'm not convinced.  Current IP delineates the lower
reliability boundary and a benchmark price point.  Premium
services won't have a lower cost than best-effort, so they must
sell for more.  Would the incremental service improvements be
high enough to draw customers away from cheap BE _and_ support
"sufficient" margins?

First class hasn't stopped the cycle of airline bankruptcies and
government bailouts.  I don't see "first class data" as much

GC> How to to this my group is still discussing.  We don't
GC> pretend that QoS is easy or any kind of mature collection of
GC> technologies, but increasingly it looks as though the
GC> industry, if it is ever going to be self sustaining, really
GC> needs to look at QoS services and solutions.

Perhaps, but only if the price is right.  DSL sells better than
Internet T1 lines, which sell better than end-to-end private
lines and packet clouds.  There's a reason for that.

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