RE: An Attempt at Economically Rational Pricing: Time Warner Trial

["Tomas L. Byrnes" <tomb () byrneit net>]

there are already companies like Vyatta that represent the nascent part
of this space, at least on the software/equipment side.
 

> -----Original Message-----
> From: owner-nanog () merit edu [mailto:owner-nanog () merit edu] On 
> Behalf Of michael.dillon () bt com
> Sent: Friday, January 18, 2008 1:17 PM
> To: nanog () nanog org
> Subject: RE: An Attempt at Economically Rational Pricing: 
> Time Warner Trial
>
>
> > The problem in the ISP industry isn't lack of usage based pricing. 
> > It's that the going rate for basic connectivity was driven 
> below that 
> > which is economically sustainable by the ILECs when they engaged in 
> > predatory pricing to drive the CLECs out of business in the 
> late 90s. 
> > Now that they own the market, they find that, having driven 
> the prices 
> > down, they can't raise them, so they are engaging in various 
> > subterfuges that are designed to cover up the basic thing they are 
> > doing:
> > trying to charge more for the exact same service.
>
> Sooner or later, somebody is going to try to apply Google's 
> approach to hardware in a network backbone. Imagine a network 
> backbone with no Cisco or Juniper boxes in it, just lots of 
> commodity boxes with triple-redundancy everywhere (quintuple 
> in NFL cities). 
>
> Vadim Antonov tried to build something like this into a 
> backbone router, but the market for IP backbone equipment is 
> so incredibly conservative, and the pricing was up there with 
> the big boys, so he never had a chance at it.
>
> I don't know if Google is doing something like this between 
> their data centers, but I think that the fundamental price of 
> fiber is low enough that with commodity router/switches and 
> triple the fiber miles, we can have a reliable IP packet 
> moving service without jacking prices up.
>
> Even if prices do go up, it will be a short term thing 
> because sooner or later, Google, or somebody who thinks as 
> bold as they do, will build a true commodity packet-moving 
> service, and  the telecoms industry will fall back into the 
> razor-thin margin utility sector where it belongs.
>
> I'm sure many of you will think I am crazy because you know 
> just how much those high-speed ports cost and you can't see 
> any letup in bandwidth growth. But the fact is that ports are 
> not the fundamental components of routers. Chips are, and as 
> we all know, chips keep getting smaller, cheaper, faster and 
> more powerful. FPGAs, SOCs, multicore CPUs and so on. The 
> company that cracks the Internet utility problem might even 
> design and build their own devices rather than outsourcing 
> that, at a high price, to the benevolent vendors.
>
> --Michael Dillon