cost of doing business (was:Re: OpenTransit (france telecom) depeers cogent)

Sun Apr 17 08:17:26 UTC 2005

On Sun, 17 Apr 2005, Mike Leber wrote:

> Hmmmm, router and optical gear capabilities are growing faster than the 
> market.  Can you say "permanent state of affairs".

Do you have any facts to back up this statement, as I am of another 
opinion. We're seeing doubling in traffic growth each year and the optics 
seem to quadruple every 3-4 years.

Of course if equipment cost goes up the vendors will have more resources 
to make more expensive gear, but I believe the price per bit has to come 
down rather than the opposite.

> moores law > market growth

Well, speaking of that, the performance increase in harddrives and CPUs 
seem to have degenerated over the past year and the hefty price per bit 
decrease in harddrive space we saw 1999-2003 seem to have stopped in 2004.

> A better (healthier? more sane?) metric is revenue per customer.

Increase in usage is of course driven by the price of bandwidth going 
down.

Let's say for the sake of argument that by 2010 we want to give every 
household 5 megabit/s on average. How could this be done with technology 
today seen on the radar? Remember that the households should want to pay 
for the bandwidth as well, meaning they might be willing to pay $30 per 
month for the bandwidth part (this is kind of high, but let's go with it). 
5 megabit/s at $30 is $6 per meg, with no oversubscription. It also means 
that for a large city with a million households we need to shuffle around 
1M*5M=5Tbit/s in that city alone. We probably need 10Tb national backbone 
to handle it, how do you do that with 40G or 100G links? That's a lot of 
parallell DWDM links :/

So the distributed p2p networks of the future will probably have to wait, 
and instead we'll do regular 1-many broadcasting via these networks and 
we'll be an interactive cable TV distribution instead.

-- 
Mikael Abrahamsson    email: swmike at swm.pp.se