There is no business case for broadband Interent [Was re: Interconnect Scaling]

[David Farber <dave () farber net>]

Begin forwarded message:

From: Dewayne Hendricks <dewayne () warpspeed com>
Date: December 15, 2006 11:36:14 PM JST
To: Dewayne-Net Technology List <dewayne-net () warpspeed com>
Subject: [Dewayne-Net] There is no business case for broadband  
Interent [Was re: Interconnect Scaling]
Reply-To: dewayne () warpspeed com

[Note:  This item comes from reader Bill St. Arnaud.  DLH]

From: "Bill St.Arnaud" <bill.st.arnaud () canarie ca>
Date: December 14, 2006 5:06:58 AM PST
To: <dewayne () warpspeed com>, "'Dewayne-Net Technology List'" <dewayne- 
net () warpspeed com>
Subject: There is no business case for broadband Interent [Was re:  
Interconnect Scaling

I would argue that it is not a question of capacity but whether there  
is a
sustainable business case - either in the core, or in the last mile.

The reality is that broadband Internet is a brutal business with  
razor thin
margins.  With the advent of free Wifi Internet services, and now free
broadband services that we are seeing deployed in Europe - Inuk,  
SkyB, etc,
you would be insane to enter the broadband business either as a  
public good
community open access facility, or a commercial enterprise.  Cable TV  
is far
more lucrative (and frankly has higher demand) than broadband Internet.

As a side note I am in Sweden at the moment where there are many  
community
open access fiber and wireless networks. It is interesting to see  
Telia (
the incumbent) is slowly taking over the management of many of these  
open
access community networks.  The electrical companies and communities are
desperate to unload them because they can't make a decent return and  
scared
of their future prospects. We have seen the same problem in my home town
Ottawa - where the city owned open access and fiber network is being  
sold to
Bell Canada, for the same reasons that the city is losing money and  
are not
even able to cover their costs.   Of course the incumbents are making  
the
usual warm fuzzy statements about maintaining the open access policy etc
etc. We will see how long that lasts.

In Canada it is the cablecos that are cleaning up and even giving the  
telcos
a hard time.  But the telcos are discovering that buying the  
management of
open access fiber/wifi networks is far cheaper than building your own
network

Bill



-----Original Message-----
From: dewayne-net () warpspeed com [mailto:dewayne-net () warpspeed com] On
Behalf Of Dewayne Hendricks
Sent: Wednesday, December 13, 2006 1:19 PM
To: Dewayne-Net Technology List
Subject: [Dewayne-Net] re: Interconnect Scaling

[Note:  This comment comes from reader Thomas Leavitt.  DLH]

From: Thomas Leavitt <thomas () thomasleavitt org>
Date: December 12, 2006 8:06:47 PM PST
To: dewayne () warpspeed com
Subject: Re: [Dewayne-Net] Interconnect Scaling

Dewayne,

Despite all the back and forth... it still isn't clear to me whether
the Internet backbone, as most of the mainstream carriers / service
providers have structured their portions of it or are capable of
adapting, is capable of handling the vastly greater traffic load that
the advent of P2P based HD video distribution networks will
precipitate. This seems to be a matter of:

a) whether the interconnects between the various carrier / provider
network backbones are diversified and distributed enough to prevent
chokepoints from developing
b) whether the architectural optimizations of your average P2P
network mean that vastly smaller amounts of traffic will actually run
over the backbone and through any potential chokepoints than might
otherwise be the case... which also seems to be a dependent on what
percentage of the traffic generated will consist of widely popular
(and thus widely served) content versus specialized content that is
less likely to be available from a nearby peer (within a network
backbone boundary)

I suppose that, given the rapid and relatively painless (at least,
apparently so) emergence of Internet video over the past year and the
(apparent) ease with which the additional traffic was accommodated,
we shouldn't worry too much... does anyone have year over year
figures on the total volume of Internet traffic and the percentage
increase year over year? I tried hunting this information down in
Google, but wasn't successful....

Regards,
Thomas Leavitt


Dewayne Hendricks wrote:
[Note:  This item comes from reader Mike O'Dell.  DLH]

From: mo () ccr org (Mike O'Dell)
Date: December 12, 2006 9:23:38 AM PST
To: dewayne () warpspeed com
Subject: interconnect scaling


the mystical powers of "large peering points" still lives, i see

for the better part of a decade, large ISPs have used multiple
point-to-point interconnects between their networks, situated
by the demands of network engineering, not the location of
"peering points".

the *only* magic in MAE-EAST (or MAE-WEST) was that once upon
a time, when the total traffic to exchange was a couple of T1s
worth with 4-5 other ISPs, there was an economy of scale in
buying those T1s as a cross-town DS3 (or later, metro ethernet.)
everybody got their DS3 to the same place and a switch was put
there to connect the dots.  once the traffic between pairs of
ISPs got big enough, the economic optimization that was MAE-EAST
and MAE-WEST fell apart.

that's all they ever were - a policy-neutral economic optimization.

and one that went deeply sub-optimal many, many years ago
(at least for large ISPs - they still get used by smaller
players whose traffic exchange needs can still take advantage
of that particular economy of scale.)

-mo







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