Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : The *NEW* Frank Coluccio Technology Forum -- Ignore unavailable to you. Want to Upgrade?

To: Frank A. Coluccio who wrote (7010)	4/2/2004 11:23:11 AM
From: ftth	Respond to of 46821

Upstream asymmetry in the access network is fabricated scarcity. When access network providers purchase interconnect bandwidth, they do so as symmetric links. There ain't no "Upstream OPEC" past the last mile. In a truly competitive consumer market for access network providers, this fabricated asymmetry would be competed away. Since we all know we don't have this truly competitive market in the US, it will either have to be arm's length competition from Korea, Japan, Europe that pressure our regulators to take action against the market power that allows the fabrication to be sustained, and/or "new," non-incumbent providers will apply pressure, with TBD effectiveness.

To: Frank A. Coluccio who wrote (7010)	4/2/2004 6:06:44 PM
From: ftth	Respond to of 46821

re: Does anyone see another alternative that will allow the local service provider the ability to recover their increased costs for bandwidth in support of a mass market Internet-based video delivery model? Who says the increased costs will be significant? The bandwidth is low-duty-cycle bursty utilization, practically negligible on a bandwidth-month basis. Transit bandwidth is only about $3 of the $40 per month per subscriber fee charged for US-based DSL and Cable "broadband." Today's flavor of broadband in the US would be $20/month in a competitive market. Some relevant quotes, snipped from DSLPrime Dec 31, 2003: "The 20% of Koreans who have already upgraded to VDSL (10-50 Mbps) prove the demand is strong for higher speeds, if priced fairly in relation to cost. Korea Telecom and Masayoshi Son, pioneers of the fast web, tell me the difference is $1-3 per month, and dropping. Few use the speed often, but it's great to have when you need it. 13 Mbps, 50 Mbps: same backbone demand So far, no increase in backbone needed KoreaTelecom tells me "In tests, we've supplied the same GigE loops to DSLAMs serving 20 and 50 Mbps as we do for 10 and 13 Mbps. The customers love having the speed, but in practice use it so rarely the increase in demand has been barely noticeable. That will change, of course, but we don't anticipate heavy traffic for several years. We're putting in the 50 Mbps VDSL because it will cost little more, and should meet many people's needs for many years. We also will have plenty of capacity for the video we and independents plan to offer over the network, and incredibly realistic live actions games." If the backhaul is virtually the same, the difference in cost of providing much faster service is very small, less than $30 in equipment. Masayoshi Son estimates the higher speeds add 2-4% to his cost. Yahoo BB, followed by NTT and Belgacom as well, proved that increasing peak speeds is an inexpensive customer friendly move, that costs surprisingly little because the total demand goes up far less than proportionately.

To: Frank A. Coluccio who wrote (7010)	4/2/2004 6:24:22 PM
From: ftth	Read Replies (1) \| Respond to of 46821

re: What incentives do local service providers have to ensure that their upstream pipes will handle the onslaught of new demand? In order to make a profit it almost suggests that they will have to be included in the distribution of profits that follow. ------- This is a fundamental problem with vertical integration of content and connectivity. The value of broadband to users will always be lower so long as vertically-integrated providers tack on no-value-add profits in the way you describe. In a horizontal industry structure (separate content and connectivity providers), the connectivity provider has every incentive to upgrade their pipes to meet demand, since increased demand for their connectivity is how they make more money. They have no considerations for how that increased connectivity might substitute or replace their current content offerings because they aren't in that business.