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The State of Broadband
Bartbrn writes "Here's an article ripped from today's headlines! Though this sounds like one of those Reader's Digest articles like "Ten Ways to Make Herpes Work For You!", it's actually a pretty interesting nugget written by Stephen Heins, Director of Marketing (uh oh) for NorthNet LLC, concerning the current political state of broadband access in the USA." Although this guy has a vested interest in the process, his take on the situation looks pretty accurate as far as I can tell.
In the UK, BT is holding back ADSL because of marketing reasons -- ie. it can make more money from dial-up.
Meanwhile, I live in the urban part of town, high schools, businessess, high population .. no dsl .. no plans to put dsl in ... however this dosen't stop them from sending out flyers every 6 months to announce that dsl is avaliable in my area --then you call them and they tell you they aren't REALLY planning on putting dsl in, they just wnated to see how many people are interested to gague wether it'd be profitable ...
Free Techno/Jazz/DNB/MI Music by guys obsessed with monkeys!
Apparently you can only get cable modems or ADSL if you live in one of two cities, have a sister called Sue, an even number of vowels in your name and order on a Thursday.
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I think you blinked and missed it. In Amsterdam there were high-speed all-weather web stations clustered with pay phones all over town for the past couple years. Now most of them are gone. I don't think they got a lot of use - I saw lots of people staring at them and taking pictures, but not many actually sidling up to do some surfing.
Likewise the web kiosks that were placed in shopping malls all over Malaysia have vanished (no great loss, as half of them were displaying BSOD at any given moment).
Yet both countries have thriving internet cafe cultures. In Amsterdam they've now got what seems to be the largest internet café on earth, and it's been packed every time I've been there (and with its high speeds, ludicrously low charges, comfy workstations with nice LCD screens, and well-kept machines, I'm there quite often).
I just think people didn't want to do their webbing standing up. And a fair number of them wanted to be able to run telnet, IRC clients, etc., which most of the kiosks don't offer.
"Patriotism is your conviction that this country is superior to all other countries because you were born in it." -- GBS
Mr Cringley had go on this very subject last week.
Example 1 - Traditional widget manufacturer: develops a product in R&D labs. Incurs high development costs, prototype units are each hand-built by engineers. Manufacturing process is developed (at additional expense), assembly-lines are set-up, workers hired and trained. Now the first widgets come off the assembly line and quality-control finds problems in 50% of the widgets. Reasearch determines that a crucial step was missed when developing the process, which then must be revised.
Example 2 - Plumber, a service provider: Fred, a plumber decides to open his own plumbing business. He is a trained professional with 10 years of experince. One day, he may work on a bathroom remodling job, the next he may be working on new construction. He initally invests in a computer to help with his bookeeping, a set of tools, and a truck. After a while, he has more work than he can do himself so he hires a helper. This enables him to work faster, but he would like to take on even more work, so he hires a few more teams of plumbers and helpers, but then needs to expand his administrative staff to cope with the new employees. He hires supervisors and foremen to direct the work.
Now, in the context of the first example, the unit cost of the first 100 units is quite high while the unit cost of the millionith unit is quite small since the development costs can be spread over many more units. This is the basis for the "economy of scale."
The impact of "economies of scale" is much less pronounced in the second example. Yes, the unit cost (to Fred, not the customer) of the first job is much higher than the 100th, because Fred has to recover the costs of the tools, the truck, and the computer. On the other hand, Fred is not able to serve customers more quickly (and thus reduce his cost) just by increasing the number of jobs completed. The increased overhead of the additonal administrative expenses will curb an increase in profits. Fred may, in fact, be better off as an independent contractor and limiting the number of jobs that he can do.
I am a network engineer, not a plumber nor a widget maker, so I'm sure that these examples are over-simplified. But I am equally certain that the telecominications is much more like the service provider and less like a widget maker. Yes, there are economies of scale early on: it will take much longer to recover the cost of a 100 port DSLAM with only 10 customers, but much less with 90. But guess what? The 101st customer will require that an additional DSLAM be purcased, space found in the Central Office (notoriously cramped places), cables run from the MDF (main distribution frame), etc. At the 201st customer, the same exercise must be repeated. At the 1001st customer, an extension to the Central Office must be built, power and HVAC installed, new distribution frames installed, and so on.
I have not even mentioned customer care, network engineering and operations, billing, and all of the other factors assoicated with rolling out a communications service.
Economies of scale just don't apply in the "big" telco world.