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

To: fred g who wrote (25770)	3/10/2008 7:23:12 PM
From: Frank A. Coluccio	Read Replies (1) \| Respond to of 46821

Hi Fred. You noted: "My article suggests that the current marketing model, based on peak rate, is wrong. That's the one that gives rise to an oversubscription ratio. Instead, the proper product should be bucket-of-bits-per-month. And that is slightly more amenable to traffic engineering." This calls to mind a comment made last year by Amory Lovins (and I'm sure others, before and since), concerning the irrelevance of one's momentarily lowering their electric usage on the total cost of power generation (and its environmental effects), since supply will be generated at a relatively fixed rate and cost, anyway. [Citing from somewhere near the beginning of his talk here: sic.conversationsnetwork.org ] Of course, that last claim doesn't properly take into account the ability to dynamically allocate supplies from sources other than those tied down to large generation plants, and further disregards the costs associated with appropriately sizing electric transmission and distribution facilities (at the substation and feeder levels) downstream. If the latter (downstream facilities) aren't sized properly, then, in the "broadband" scenario, at least, which includes the last mile provider's switch/cmts/hub and local loop ratings, then the size of the larger bit bucket residing upstream doesn't matter all that much anyway -- except for periods of very low aggregate use, when an individual user might have access to the entire supply. So where, in your example, does the larger bucket of bits reside? Is it at the last mile provider's CO/HE/Hub (substation), or farther upstream in the core? A rhetorical question, of course, but it casts a slightly different light on some of the factors involved, from which one might be inspired to think of alternative topologies. FAC ------

To: fred g who wrote (25770)	3/10/2008 11:20:26 PM
From: wonk	Respond to of 46821

…Reread the numbers. 100 miles * $100/mile/month + $2k loop = $12,000/month for a single DS3 or OC1. OC3 is no longer tariffed as of last year, so it could cost $1,000,000/mile, or $1,000 per hundred miles, as the ILEC sees fit on a case by case basis. It is unreasonable for an ISP to pull 100 miles of fiber! In some places (the soft-soil regions), it's possible to trench it in pretty cheaply, and sometimes poles are available, but the farther you go, the less likely you are to get the whole path. A few miles, maybe. But ISPs are not in the long-haul fiber business. You can't expect them to pay $1M to build a fiber path to the backbone. What kind of schytthole country doesn't even have a common carrier backbone network? Oh, I forgot, we live in New Argentina. I did understand your numbers. The point I was trying to make was that in our “new” deregulated world, if it is not profitable to provide the service it won’t be provided. As you just said yourself above, the ISP -- at least in this example -- can’t afford to build it. My example was to demonstrate why it can’t afford to build it. It is not because the ISP is not in the business of long haul fiber. The reason it can’t afford to build it is because the route does not generate an adequate rate of return on the deployed capital. Show me routes where the ILEC is overcharging in the amounts you describe, and if it’s a profitable route, heck I’ll build it or find people who will. If we don’t address the financial realities of the route, then effectively you’re going to find yourself in the ironic position of making MaBell’s arguments against MCI. We can pull out the dusty old history books (and you can still pull them from the Commission’s public reading room though I doubt any of the current occupants ever have) and discuss the TELPAK tariff, Docket 16509, AT&T’s Series 11,000 proposed tariff and the entire 20 years between 1963 when Jack Goeken conceived MCI to 1/1/1984 and divestiture. (I really do have the books - and they are well thumbed.) That argument from MaBell’s perspective in my best MaBell voice: '...LD and data subsidizes local voice; urban subsidizes rural, competitors are cream-skimmers. Yes certain services are provided above cost so other services can be provided below cost...' Your frustration is that they still have their monopoly, but the compact of the universal service obligation is being rendered meaningless. While Special Access may be so deregulated that the ILECS can now charge “…whatever the market will bear…” if they truly do rip the customer off, someone will step in IF they can make money. If no one steps in, then you have the public policy argument of Universal Service for broadband, of which transport has to be a component. Having said all that, philosophically I’m right with you regarding the ILECs “milking” their monopoly.