IP: The real bandwidth numbers.

[Dave Farber <dave () farber net>]

------ Forwarded Message
From: "Adam L. Beberg" <beberg () mithral com>
Date: Wed, 10 Apr 2002 21:43:28 -0700 (PDT)
To: <farber () cis upenn edu>
Subject: The real bandwidth numbers.

Since you posted about what it costs to be a wireless ISP, It might also be
interesting to look at an old writeup I did of wired costs back in January,
since you still have to plug the wireless into the net somewhere. Some
people pointed out I seem to be off by by 2x, and I pointed out you need to
buy enough to handle use at 5pm or people go elsewhere.

- Adam L. "Duncan" Beberg
  http://www.mithral.com/~beberg/
  beberg () mithral com

------------

So, I've been pushing some numbers back and forth with a friend who runs a
fairly large ISP. The job of an ISP is to move bits. They do lots of
colocation, dialup, and DSL, so they have the economies of scale going for
them with a good mix of customers. They have been around over 10 years, so
it's not some dot-com run by dot-idiots either.

Also important to keep in mind is that this is in a city with flatrate
(cheap) phone lines, also "one hop" from the main trans-US backbone, thus
cheap bits. Anywhere outside North America and you are talking _seriously_
higher numbers - add a zero.

So here's how it boils down (in US dollars):

$1.75/GB for the bandwidth coming in and out of the cables to the
backbone companies - the wholesalers, Sprint, MCI, Qwest, etc.

Now, once you add employees, routers, power, AC, phones, etc etc...

$12.88/GB.

...

$7.75 for a 600MB CD image (41 hours modem, 2 hours DSL).
$2.83 for a 220MB MPEG of your favorite 30 min TV show (commercials removed)
$0.06 for a 5 minute MP3 file (20 min modem, 1 min DSL).

Compare this to $1.00 postage included, for a logo encrusted CD via US
postal service - which is still cheaper then if you use the "just for a
cable in the wall" cost above. And video tapes are really cheap too.
Shipping alot of bits over the internet is not cost effective at all.

A modem can move about 7GB/month. 768kb DSL can move about 150GB/month even
with those really slow hours during the day.

I leave for the reader to calculate how many DSL customers you need at
$40/month running gnutella to make a profit :)

Enduser per-GB rates are coming.



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