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Re: Google Plans to Build Ultra High-Speed Broadband Networks
From: David Farber <dave () farber net>
Date: Sun, 14 Feb 2010 10:38:04 -0500
Begin forwarded message: From: ken <ken () new-isp net> Date: February 14, 2010 5:11:25 AM EST To: George Ou <George.Ou () digitalsociety org> Cc: "dave () farber net" <dave () farber net> Subject: Re: [IP] Re: Google Plans to Build Ultra High-Speed Broadband Networks George, If you reread my initial post you will see that I did include a cost for "homes passed" but labeled it as "backhaul" which is the terms we use in the WISP industry. In an off-list exchange that Bob Frankston and I are having I clarified that the $5K number includes one mile of 144 strand fiber as well as two men and a Ditch Witch. Additionally, Jaguar mandates a target of one mile of fiber trenched per team per day. Now, if we use the what used to be Adelphia Cable's model of 14 homes per mile for a minimum adoption rate, we find that each house has a cost of $358 assigned to is for that individual mile. If we then assume that 1 mile of backhaul needs to be run to bring connectivity to any given location that number doubles, bringing the cost to slightly over $700/home. Turning to the point you made about Google cherry picking locations, the only point I can think of making is, how is this any different from Verizon's redlining or what AT&T is doing with their FTTN deployments? Any business, at least any business that will survive, needs to minimize their costs and deploy in locations that will provide the best ROI and then move to the neighborhoods that provide a marginal ROI until whatever threshold the company sets is hit. I would posit that Google is no different, except that they are raising the bar and I seriously doubt they are doing it with the aim of making money directly from this exercise. Respectfully, Ken DiPietro Ellerslie MD On 02/14/2010 02:54 AM, George Ou wrote:
Your estimates aren’t even remotely complete. $600 per home connected is only the cost to run the cable from the curb to the home which includes the cost of the ONT, battery, router, set top box, etc. It takes one or two trucks to roll out and dig a hole through the lawn and wire up the house. You’re skipping the cost of the cost of passing each home. For aerial cabling, it’s several hundred dollars for a suburban deployment. If you have to trench cable (under the ground), it’s a few thousand dollars. For Verizon’s mixture of roughly three quarters aerial and one quarter underground, it averages out to around $700 per home passed. But this is the cost of wiring every home. If you only sign up 25% of the neighborhood, and because you had to deploy to 100% to it available to people, then your actual cost per home is $700 x 4 = $2800. Then you gotta add the connect cost and you’re up to $3600 per home. Of course if you get better than 25% uptake, your cost per home goes down. But if it’s lower than 25% uptake, then the cost per home is even higher. As for Google cherry picking locations, they’ve pretty much already said this is what they’re going to do when you read their disclaimer. They’re looking for the right communities that will make it as cheap as possible, with the least amount of bureaucratic red tape, easy right of ways, etc. No need to wait and see when Google tells you this up front. George Ou *From:* Dave Farber [mailto:dave () farber net] *Sent:* Saturday, February 13, 2010 6:57 AM *To:* ip *Subject:* [IP] Re: Google Plans to Build Ultra High-Speed Broadband Networks Begin forwarded message: *From:* ken <ken () new-isp net <mailto:ken () new-isp net>> *Date:* February 13, 2010 9:52:48 AM EST *To:* dave () farber net <mailto:dave () farber net> *Subject:* *Re: [IP] Re: Google Plans to Build Ultra High-Speed Broadband Networks* Dave, Perhaps these comments and this link will help to shed some light on this discussion. George, (et al) Donny Smith (Jaguar Communications) has the lowest connected cost of any FTTH network construction company that I am aware of and Jaguar trenches all of their installations. Here is a link to an analysis of Jaguar's network even thought I am reliably told that their numbers now are closer to $5K/mile for backhaul plus $600 per home connected. http://nextgencommunications.net/blog/2005/05/the-better-model/ Now, with respect to whether Google will cherry pick locations, I believe it is only fair to wait and see before passing judgment. Respectfully, Ken DiPietro Ellersile MD On 02/12/2010 10:54 AM, Dave Farber wrote: Begin forwarded message: *From:* George Ou <George.Ou () digitalsociety org <mailto:George.Ou () digitalsociety org> <mailto:George.Ou () digitalsociety org>> *Date:* February 12, 2010 7:31:46 AM EST *To:* "dave () farber net <mailto:dave () farber net> <mailto:dave () farber net>" <dave () farber net <mailto:dave () farber net> <mailto:dave () farber net>>, "ChrisSavage () dwt com <mailto:ChrisSavage () dwt com> <mailto:ChrisSavage () dwt com>" <ChrisSavage () dwt com <mailto:ChrisSavage () dwt com> <mailto:ChrisSavage () dwt com>> *Subject:* *RE: [IP] Re: Google Plans to Build Ultra High-Speed Broadband Networks* “For example, I recall that Loma Linda (a municipal fiber build) used some UK-based inexpensive fiber-laying system using micro-trenches, and fiber in some special sheathing to make it especially easy to run. A completely new network might be able to use such a system in a way that an established network provider might not find attractive.” I guess you think that Verizon must be really stupid for doing things the old fashion bell-head way and spending $800 per home passed plus another $800 to hook up an actual subscriber. Those young wizards at Google will just figure out how to cut costs in half. Now let us return to reality. Verizon’s costs are the lowest in the industry because most of their cabling is aerial. Underground plant costs about 7 times more money and this is one of the major reasons Qwest is avoiding fiber because 3 quarters of their homes use underground plant while Verizon has the opposite ratios. Google is going to cherry pick fewer than 1% of homes that will be the cheapest/shortest aerial runs and communities with the least onerous regulations. Then they’re going to turn around and claim that this is somehow relevant to the remaining 99% of the nation. George Ou *From:* David Farber [mailto:dave () farber net] *Sent:* Thursday, February 11, 2010 5:43 AM *To:* ip *Subject:* [IP] Re: Google Plans to Build Ultra High-Speed Broadband Networks Begin forwarded message: *From: *"Savage, Christopher" < <mailto:ChrisSavage () dwt com>ChrisSavage () dwt com <mailto:ChrisSavage () dwt com>> *Date: *February 11, 2010 8:27:39 AM EST *To: *< <mailto:dave () farber net>dave () farber net <mailto:dave () farber net>> *Subject: RE: [IP] Re: Google Plans to Build Ultra High-Speed Broadband Networks* Dave, I’d add the following to Chuck’s points. Suppose Google goes big and ends up serving 500,000 people. At 2.5 people/household that’s 200,000 customers. I don’t have the numbers handy but I suspect a network with 200,000 customers would put them in the top 20 network operators in the country. (Numbers fall off pretty steeply after Verizon-AT&T-Qwest-Century-Comcast-TW-Cox-Cablevision-Charter-BrightHouse…) Their experiment may be the worst flop of all time, but whatever they learn will reasonably apply to a very large segment of the populace. For example, I recall that Loma Linda (a municipal fiber build) used some UK-based inexpensive fiber-laying system using micro-trenches, and fiber in some special sheathing to make it especially easy to run. A completely new network might be able to use such a system in a way that an established network provider might not find attractive. If that process was cheap enough, and scaled well, that would be very interesting information for the industry as a whole (not to say regulators) to see. (Cf. /The Innovator’s Dilemma/). It would imply that Chuck’s back-of-the-envelope cost estimates are high by a nontrivial factor. As another example, I have heard some strong network neutrality proponents argue that over a reasonable planning period, the cost of adding bandwidth to deal with the demands of the top 5% or 1% or 0.1% of users who send/receive massive amounts of data is actually cheaper than the cost of deploying the systems needed to monitor, limit, and/or bill for their usage. This has always struck me as an interesting, if a bit implausible and counterintuitive, assertion. A 1 Gbps network might well provide a test of it. (I am reminded here of the survival approach of the 17-year cicadas that we get here in the mid-Atlantic. It’s called “predator satiation.” With billions of defenseless cicadas available, predators eat all of them they want, and then get sick of them and mainly leave them alone – with billions still left. Perhaps with currently available apps there really is an upper limit to how much bandwidth any one person will use, i.e., maybe it is possible to simply satiate the bandwidth “hogs”.) I have to say – win, lose, or draw, Google’s proposal here is one of the most */interesting /*things to happen in the business for quite some time… Chris S. ------------------------------------------------------------------------ *From:* David Farber [mailto:dave () farber net] *Sent:* Thursday, February 11, 2010 7:56 AM *To:* ip *Subject:* [IP] Re: Google Plans to Build Ultra High-Speed Broadband Networks Begin forwarded message: *From: *"Charles Jackson" < <mailto:clj () jacksons net>clj () jacksons net <mailto:clj () jacksons net>> *Date: *February 10, 2010 9:47:32 PM EST *To: *"'Faulhaber, Gerald'" < <mailto:faulhabe () wharton upenn edu>faulhabe () wharton upenn edu <mailto:faulhabe () wharton upenn edu>> *Cc: *"'David Farber'" < <mailto:dave () farber net>dave () farber net <mailto:dave () farber net>> *Subject: RE: [IP] Google Plans to Build Ultra High-Speed Broadband Networks* Well, Google never claimed to be providing a real broadband distribution service or significant infrastructure. Rather, they proposed an experiment. On Google’s blog, they claim that they are looking to offer service to between 50,000 and 500,000 people. If we assume 2.5 people per household, this works out to 20 to 200 K households. If we assume $1,000/passing, $1,000 more per active drop, and 10% penetration, then passing 50 K people (20K subs) would cost them $22 million. I think they can afford that. Heck, they might learn enough about future or emerging consumer needs that this experiment will be well worth the money. See <http://googleblog.blogspot.com/>http://googleblog.blogspot.com/ and <http://www.google.com/appserve/fiberrfi>http://www.google.com/appserve/fiberrfi. There’s also the political side. If they pick a medium sized community (100 K pop), with above ground utilities (easy to build), outside the snow and hurricane zones (no interruption of construction), and a poor cable TV system and no FIOS, their service could easily come out looking golden. Making the experimental network “open” probably costs them little and gives them another political plus. Chuck *From:* Faulhaber, Gerald [mailto:faulhabe () wharton upenn edu] *Sent:* Wednesday, February 10, 2010 9:15 PM *To:* Charles Jackson *Cc:* 'David Farber' *Subject:* RE: [IP] Google Plans to Build Ultra High-Speed Broadband Networks Well, if we have a charitable organization willing to lose money on broadband distribution, fantastic! We’ll let search advertising subsidize infrastructure. I’m all for that; but then I don’t own any Google stock. My point re: CLECs is that a firm actually needs to have real experience in local distribution networks to make them work (i.e., run with reasonable reliability, not break down due to weather and poor outside plant, not have the fiber chewed up be squirrels, not have repeaters used for target practice, all the boring stuff that network guys know and Silicon Valley guys don’t), not just money to throw at the problem. When they’ve successfully trenched 5,000 miles of fiber under city and suburban streets and it actually operates for a year without failure, then they might have some network cred. Professor Emeritus Gerald Faulhaber <http://assets.wharton.upenn.edu/~faulhabe> Business and Public Policy Dept. Wharton School, University of Pennsylvania Philadelphia, PA 19104 /Professor Emeritus of Law/ /University of Pennsylvania/ *From:* Charles Jackson [mailto:clj () jacksons net] *Sent:* Wednesday, February 10, 2010 8:56 PM *To:* Faulhaber, Gerald *Cc:* 'David Farber' *Subject:* RE: [IP] Google Plans to Build Ultra High-Speed Broadband Networks I’m game to sharing this exchange with the IP audience. My response to Gerry’s response is that the proper model for Google’s experiment is not a CLEC (funded by investors trying to get their money back) but more like “Green Acres” in which Oliver Wendell Douglas can get by even if he doesn’t make any money farming. If Google is willing to lose a little money (in Google terms) and puts a good manager on the project, they can provide first-rate service. If they choose a market that is currently underserved, they could end up looking pretty good. If they offered service to 100,000 people, that would be about 40K households. If they got 10% penetration, that’s only 4K customers. It doesn’t take a lot of resources to give good service to 4K customers—especially if you are willing to lose $2 for every $1 billed. Chuck ====================== Charles L. Jackson 301 656 8716 desk phone 888 469 0805 fax 301 775 1023 mobile PO Box 221 Port Tobacco, MD 20677 ------------------------------------------------------------------------ *From:* Faulhaber, Gerald [mailto:faulhabe () wharton upenn edu] *Sent:* Wednesday, February 10, 2010 8:05 PM *To:* Charles Jackson *Cc:* David Farber *Subject:* RE: [IP] Google Plans to Build Ultra High-Speed Broadband Networks Chuck [Dave, I’m happy to have this exchange on IP, if Chuck agrees]-- I mis-spoke. I meant experience in running a local distribution network, and was a bit sloppy in not being specific. But running a long-haul network is worlds apart from running a local distribution network. Evidence? Many of the CLECs /circa/ 2000 were run by redundant AT&T operations guys, who thought they understood networks. Turns out they were clueless when it came to local distribution, and most went belly-up (helped along by recalcitrant ILECs of course). But these guys went into a business they didn’t understand while thinking they did understand it. Running Google’s CDN is no experience for local distribution. Professor Emeritus Gerald Faulhaber <http://assets.wharton.upenn.edu/~faulhabe> Business and Public Policy Dept. Wharton School, University of Pennsylvania Philadelphia, PA 19104 /Professor Emeritus of Law/ /University of Pennsylvania/ *From:* Charles Jackson [mailto:clj () jacksons net] *Sent:* Wednesday, February 10, 2010 7:47 PM *To:* <mailto:dave () farber net>dave () farber net <mailto:dave () farber net> *Cc:* Faulhaber, Gerald *Subject:* RE: [IP] Google Plans to Build Ultra High-Speed Broadband Networks Gerry wrote: Google has never run a carrier-grade local networking business (besides its trivial Mountainside, CA WiFi network) and has zero experience in networking. Networking is a very different business from anything Google has done before . . . Google’s Internet backbone appears to be the second or third biggest backbone. Google runs an ENORMOUS network. A recent presentation stated that Google accounts for about 5% of Internet traffic—behind only Level 3 and Global Crossing. See http://www.nanog.org/meetings/nanog47/presentations/Monday/Labovitz_ObserveReport_N47_Mon.pdf. Google may not be an ILEC or cable company, but the organization must possess a significant (enormous?) amount of networking knowledge. They haven’t been doing access networks—but there are probably very few entities in the world that spend more on routers. If Google chooses to offer service in a community that has a poor cable company and no FiOS, they should find it easy to look golden (assuming that they are willing to lose a few hundred dollars per household passed.) Chuck (Charles L. Jackson) ------------------------------------------------------------------------ *From:* Dave Farber [mailto:dave () farber net] *Sent:* Wednesday, February 10, 2010 6:50 PM *To:* ip *Subject:* [IP] Google Plans to Build Ultra High-Speed Broadband Networks I agree with Gerry. Djf Begin forwarded message: *From:* Gerry Faulhaber < <mailto:gerry-faulhaber () mchsi com>gerry-faulhaber () mchsi com <mailto:gerry-faulhaber () mchsi com>> *Date:* February 10, 2010 5:59:59 PM EST *To:* <mailto:dave () farber net>dave () farber net <mailto:dave () farber net> *Subject:* *Google Plans to Build Ultra High-Speed Broadband Networks* Dave [for IP] I am a huge enthusiast for more broadband competition and welcome Google into the business. I have always wondered why Google (whose market cap = $179B compared to total US cable industry = $95B) whined incessantly about the domestic BB providers when it could well have entered the market itself. It certainly has the financial strength to do so, and has for quite some time. Its entry (which this announcement perhaps heralds) is long overdue, in my book. But this is merely a blog announcement, and talk is cheap. Let's be cautious about how much we read into this. But let's be serious; Google has never run a carrier-grade local networking business (besides its trivial Mountainside, CA WiFi network) and has zero experience in networking. Networking is a very different business from anything Google has done before, and my guess is that unless they are in for the long haul, they will get their head handed to them...by customers who are unwilling to tolerate poorly performing networks. They have also shown themselves cack-handed at dealing with the politics of local distribution. Remember the Google/Earthlink San Francisco Free WiFi network proposal? Google, I certainly encourage you to get into this business. But this ain't no search engine biz; running carrier-grade networks for commercial and residential customers is tough and demanding and presents challenges you have never encountered before. I hope you are up to it. Professor Emeritus Gerald Faulhaber Wharton School and Law School, University of Pennsylvania ----- Original Message ----- *From:* Dave Farber <mailto:dave () farber net> *To:* ip <mailto:ip () v2 listbox com> *Sent:* Wednesday, February 10, 2010 1:25 PM *Subject:* [IP] WSJ TECHNOLOGY ALERT: Google Plans to Build Ultra High-Speed Broadband Networks Begin forwarded message: *From:* "charles.brownstein" < <mailto:charles.brownstein () verizon net>charles.brownstein () verizon net <mailto:charles.brownstein () verizon net>> *Date:* February 10, 2010 1:18:05 PM EST *To:* David Farber < <mailto:dave () farber net>dave () farber net <mailto:dave () farber net>> *Subject:* *Fwd: WSJ TECHNOLOGY ALERT: Google Plans to Build Ultra High-Speed Broadband Networks* __________________________________ Technology Alert from The Wall Street Journal Google plans to build and test broadband networks that could deliver speeds more than 100 times faster than what most Americans use. The plan, announced on a company blog, could expand Google's position on the Internet by answering consumer demands for ever-faster connections. <http://online.wsj.com/?mod=djemalertTECH>http://online.wsj.com/?mod=djemalertTECH Archives <https://www.listbox.com/member/archive/247/=now> <https://www.listbox.com/member/archive/rss/247/> <http://www.listbox.com/> Archives <https://www.listbox.com/member/archive/247/=now> <https://www.listbox.com/member/archive/rss/247/> <http://www.listbox.com/> Archives <https://www.listbox.com/member/archive/247/=now> <https://www.listbox.com/member/archive/rss/247/> <http://www.listbox.com> Archives <https://www.listbox.com/member/archive/247/=now> <https://www.listbox.com/member/archive/rss/247/> <http://www.listbox.com> Archives <https://www.listbox.com/member/archive/247/=now> <https://www.listbox.com/member/archive/rss/247/> [Powered by Listbox] <http://www.listbox.com> Archives <https://www.listbox.com/member/archive/247/=now> <https://www.listbox.com/member/archive/rss/247/> <http://www.listbox.com>
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- Google Plans to Build Ultra High-Speed Broadband Networks Dave Farber (Feb 10)
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