Capacity/transit costs vs growth

Jared Mauch jared at
Thu May 28 03:32:49 UTC 2015

On Thu, May 28, 2015 at 03:07:45AM +0000, Faisal Imtiaz wrote:
> Telco's cost structure model is very different from Cable Co's. Additionally the way they are regulated is also very different.
> Based on the additional details you have shared, you are saying that Bell charges $1016/100meg of Colo to Colo Transport ?
> Now you also need to add a bit more info, like.
>     What type of transport is this ? (Layer 1).. TDM (OC3/OCX) ? SONET ? or Ethernet ?
>     Is this connectivity flat rate ? or distance sensitive ?
> Keep in mind that the Cost Efficiency in conjunction with Increase in Traffic is/has been only for Ethernet Transport....
> not in the TDM or SONET.... 

	I would add here, some people face no incentive to modernize
this equipment, and in fact they may lack an incentive at all due to
the fact they are only 3 years into a 15 year capital plan, despite the
fact that we're not still using a 7500 with your vip2-40 to operate
a backbone these days, or even a GSR.  There may be some accountant though
who sees that unused asset and gives you a run for your money though.

> >>> when you move from 1gbps to 10gbps to 40gbps links, what sort of price/gnps reduction do you get ? 20% ? 30% ?
> While the question may be simple, the answer is more of a What if type....
> When you move from 1gbps Ethernet Switches, to 10gbps Ethernet Switches you can easily spend between $5,000 to $25,000 for each Ethernet Switch.
> So, if you have only 2gbps of traffic, i.e. 1gpbs infrastructure is out of capacity, you have the spend the money for 10gpbs switches, and the cost of the upgrade has to be justified via the increase in traffic of only 1gbs.

	As mentioned above, there are some points where the scale
and per unit costs make more sense.  I'm not familar with the model in Canada
but cost models SHOULD be revisited less than 10 years apart from each
other.  Most people are not going to sign a 10 year deal for IP transit,
and if you still want to pay 1000/Mbit please contact me, I'll setup a LLC
and resell you something quickly in the US.

	Most 1G hardware is inexpensive these days and you can find 'cheap'
10G hardware out there as well depending on what your use case is.  Real
routers tend to cost real money and can even cost more to power over the
lifecycle than to purchase (depending on how long you are looking at).

	If everyone is picking up service from Bell at Front st in Toronto,
you may be able to make the case that going from Windsor to Toronto
doesn't make a lot of sense and you should be able to purchase/lease your
own 10 or 100G backhaul between those areas to offset cost, either
with a bell provided service or by rolling your own.

> I highly doubt if anyone here can give you any reasonable number on what is the cost of per 1G connection when using 10G infrastructure..simply because "10G infrastructure" has different meaning (cost wise) to different folks.

	These usually take off when the 10G costs less than 10*1G.  There
should be some regular open bidding that occurs as part of the CRTC model
allowing for resetting the regulated rate.  It's way cheaper to reach
the stadium from Front st than reaching Alert, NU.

> I don't doubt for a moment that you can get consensus that 10gb infrastructure can move 10gbs of traffic at a lower per unit cost, but how much lower will be a very subjective number.  

	This is important, unless there is an incentive for people to compete
in the market, you see odd things occur.  I live in an AT&T territory and
their fiber goes within 1200 feet of my house but there are no services
available.  I could pay a local provider $50k to build fiber to me, but it's
much cheaper to do something else (yay WISP).  Unless there is some
risk of business loss due to having a rate, there is no incentive for
change.  I await someone willing to issue a press release so Comcast or
AT&T will take these territories without basic broadband and announce fiber
services in Michigan.

	- jared

Jared Mauch  | pgp key available via finger from jared at
clue++;      |  My statements are only mine.

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