Hello Ry,
Sorry if I took you out of sequence, it's been a busy couple of days of catch up posting. Your points are well taken about the incumbents' preserving their value bases from the pre-existing voice model they have used for decades in order to ensure their quarterly dividends. I too am concerned that they will attempt to extend it forward into what is now being called the "broadband" space [I go into a coughing jag whenever I am forced to say that word in this context, so please excuse me for a moment].
I have recently bemoaned this aspect of their shortsightedness on the LastMile and some of the other threads. But it may not be entirely founded, when I think about it, at least not based on the examples you've cited and from what we are seeing in the way of comparative pricing these days.
I would not compare the commercial-grade services for enterprise users and serious soho / telecommutes which are offered by Covad, Rythyms, and Northpoint to the residential service offering of ADSL that the RBOCs and some CLECS are making available today for casual home surfers.
The DSL startups in the enterprise space price their services higher for a whole set of reasons, primarily because they are doing things that approach delivery of more secure, and deterministic levels of service. This stands in stark contrast to the best effort delivery capabilities of other providers of residential DSLs and cable modem.
Their offerings are complete with enhanced backbone provisions in support of VPN capabilities with ToS/QoS attributes, on-demand capacity features, tiering, policy administration, security enhancements, customized billing, and so on.
They do not offer nirvana, I'll agree, and many of their own promises are still very difficult for them to fulfill at this time due to industry-wide and cross-domain compatibility and interoperability issues. And their costs are still very high on the surface, granted, but they have value adds that make them attractive to small businesses and work at home users, and the enterprises they work for. And DSLs offer some enchanting possibilities for small business in the way of transforming their PBX and facsimile operations, while cutting out many of their other dial tone lines, going forward. We're seeing these things happen already through the use of integrated termination devices that do multi-line voice, fax and data all in one enclosure.
The RBOCs, on the other hand, where they are now only beginning to offer DSLs, offer a lower grade of service thus far, for the most part, and these are priced dramatically lower than the Northpoints and Covads. They are not yet doing the same kinds of architectural things for the consumer level that these other startups are doing for the business users. And their costs to the end user are far lower, as a result. See my post to AHhaha which demonstrates this point.
It shows BLS's new FASTACCESS service priced at ~$50 or ~$60 dollars per month, depending on bundling leverage, for a 1.5 Mb/s down and 256 kb/s up ADSL line. I still think that these costs are higher than they should be in order to create a deluge of uptake, but from an historic perspective they are incredibly low.
In '97 I investigated getting a T1 to my home for some MPEG video delivery I was entertaining pursuing with some colleagues, and the costs for same were similar to the wireless model you cited (for the last mile portion only). And it didn't include the cost of trunking on a dedicated basis.
Today, if BEL and their DLEC resellers deliver on their word, I will be able to get the same functionality out of an ADSL link which is tied to the Internet (in one direction only, granted) for 10% of the original cost of the T1. Sure, it's not apples to apples by any means, but it will likely satisfy the same end. In this regard, at least, there is a departure from the DS-0 value basis I would say.
And the wireless example you used isn't a fair representation either, because it will in all likelihood be used by takers to satisfy some demanding niche applications where it is successful, having to do with mobility and portability. Otherwise, why wouldn't a user simply elect to go for a full T1 at slightly higher costs?
In those instances where this kind of wireless service will be most successful, it wont be for the casual couch potato surfing the web, rather, it will be for enterprise users who will view this as a steal, and be more than happy to pay $500 per month for the privilege. But these are not commodity related offerings, and they are not priced as such, either.
I would not consider this representative of future wireless pricing trends where residentials are concerned. Emerging wireless offerings will, by necessity, and in order to compete, show the same variations to the fractional T offering you cited, as do today's residential ADSL pricing to the legacy T1s that I cited. I would look to start seeing comparably rated wireless offerings in the fractional T1 and beyond priced in the $40 to $65 per month range, sometime over the next one to two years. Otherwise, why should they bother, when DSLs and Cable Modems are already are priced more affordably?
BTW, would you happen to know if the cost of the wireless service in your example covers a dedicated fractional T-1 port to the Internet at the router level, and disc space in the SP's POP, as opposed to being pooled with others like dialup and most forms of cable modem and ADSL services are today? What other differentiating qualities does it possess that I couldn't get with cable modem or dsl in other words? Curious.
Regards, Frank Coluccio |
