Did Internet Founders Actually Anticipate Paid,

JC Dill jcdill.lists at gmail.com
Mon Sep 20 11:55:19 CDT 2010


Joe Greco wrote:
> In the last ~10 years, wholesale bandwidth costs have fallen, what, from
> maybe $100/mbit to $1/mbit?  I don't even know or care just how accurate
> that is, but roughly speaking it's true.
>
> In the last ~10 years, DSL and cable prices have stayed pretty much
> consistent.  Our local cable connections have maybe doubled in speed in
> that time.  DSL speeds haven't changed, except for Uverse, which is a
> bit of an exception for a number of reasons.
>
> Now obviously building the network costs something, but fifteen years
> after they started providing service, I'm guessing that's been paid for.
> They don't seem to be dumping lots of funds into increasing their network
> speeds.  That suggests profit.  Do you have an alternative explanation?

Physics.  The reason consumer connection speeds haven't increased is 
pure physics, they haven't figured out how to get packets to flow any 
faster over the last mile on the existing copper network, without 
spending megabucks to trench fiber to the home.  The Telcos are afraid 
to spend the CapX to proactively trench in new technology (e.g. fiber) 
only to find that a new technology (e.g. 5G or 6G cell service) delivers 
faster bandwidth over some other path, and whoever trenches in the fiber 
goes BK before they can recover their costs.  Anyone remember Ricochet?  
They spent a fortune on putting in a wireless network in Silicon Valley 
that was over-run by the cellular networks moving into broadband, 
providing faster and more ubiquitous service, service that worked while 
you were in-motion (Ricochet didn't work on a bus or train, it wasn't 
designed to hand off to neighboring cells).  Buh By Richchet.

Meanwhile, consumer utilization of their available last-mile bandwidth 
has gone up.  10 years ago how many people were watching downloaded 
movies, exchanging software with P2P, using skype video, etc? 

# Feb. 12, 2008. In a net neutrality filing with the FCC, Comcast stated 
(p. 13, footnote 31) that "[o]n average, each Comcast High-Speed 
Internet customer uses more than 40% more bandwidth today than one year 
ago."
(Cite: <http://www.dtc.umn.edu/mints/ispreports.html> )

Anyone have handy graphs showing end user bandwidth consumption on 
broadband connections over time, say from ~2000-2010?

A big part of the cost in providing service to end consumers is customer 
support and install costs, not the cost to move bits.  Wild-ass 
speculation:  This is why your base cable bill, your base broadband 
bill, your base POTS phone bill, your base cell phone bill, etc. hovers 
in the $20-30/month range, it simply costs that much to provide the 
people network (customer support, truck roll technical support, etc.) to 
support the customer, even though the underlying network cost to deliver 
the actual product is far less.  (This is also why many systems dropped 
per-minute and per-call billing for local and in-country calls, because 
the cost to measure and bill for, and deal with customer complaints 
about, these metrics aren't worth doing - it's cheaper to raise the 
price slightly and give the user "unlimited" calling.)  Of course, I 
could be wrong, but I know which way I'd bet on this question - do you 
want to give me odds?  :-)

jc





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