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Bandwidth Shortage And The Telephone Company
FasterThanLight writes: "This article from USA Today regarding (non)usage of existing fiber and its impact on bandwidth in the semi-near future ... more doom and gloom. Why? Greed, of and by the (surprise, surprise) large telcos." Remember, this story is about a predicted shortage, not a current shortage.
When I see billboards around town suggesting a second phone line for internet use, I suspect the telcos' plan is to get lots of people addicted to having long internet sessions on their modem, after which the telcos will go running to Congress saying that they need to start charging local calls by the minute due to the excessive connect times in the Internet Age.
Why, why am I so cynical? Oh, well. It was fun while it lasted. I now return you to the scheduled rants...
Sheesh, evil *and* a jerk. -- Jade
1. DWDM -- OC768 is coming your way and a lot of badly beat down telecom providers want to sell it.. BAD. Think they'll give ya a discount if yo buy a bunch of units?
2. Theres so much fiber in the ground on long haul routes that if there is ever anything resembling a shortage in my lifetime, I'd be impressed.
3. It's not nearly as expensive as the article poses to setup electronics on fiber. It's not $1 to install a fiber and $20 to put electronics on it. It just doesn't work like that.. Dug up the street lately? It costs a fortune.. Attaching the fiber to the Gigabit Ethernet port is far less.
4. Greed -- If there is money to be made, the bandwidth will be created.. It's called the law of supply and demand..
"Why? Greed, of and by the (surprise, surprise) large telcos."
What does this have to do with the shortage of services? Commodity prices are determined by the market. Aptly put by the article, fiber is like farmer's seed. Farmers are actually subsidized by the government to not grow certain crops, because it make it harder to make money when *everyone* is growing the same thing. When it costs 20 times to actually use dark fiber compared to just laying it down, this makes it hard to make money running a fiber service. The big telcos can afford to always undersell the startup. Such is the nature of the market. And don't spew any of that "there's no competition" crap, look at how many telcos there are. If that number is more than 1, you have competition.
When prices do rise due to "shortage" then as the article predicts, those who raise prices because they do not want to use more fiber will be undersold by new companies that will find it suddenly profitable to provide comms services. The article is basically predicting that the 20:1 cost ratio of use vs. creation will decrease.
Well, in the case of your telco, it loooks better on the books not to have capital depreciating, so their move made economic sense, from a business finance perspective.
I have serious doubts about this article though. While they make the single valid point that it costs money to light up a network, there were and still are valid mechanisms for financing that activity. Most of the telcos that have gone under were in debt to the equipment manufacturers like Lucent, Ericson, and Nortel Networks. That is all bad debt now, which causes these manufacturers to cut costs by (among other things) reducing R&D expendatures. This means advances in the industry will not come as fast as they were, but they will still come eventually.
These manufacturers are still willing to finance the lighting of fiber networks, as needed, (in that such activity requires purchase of multiplexing equipment and switches, the sale of which these companies have financed for the past two decades).
When it comes down to it, the industry is returning to a pre-tech-bouble state, not dying completely. The determination of which companies will still be standing will be which are able to adapt quickly enough. Unfortunately, this is made more difficult with a Wall Street backlash against the telecom industry, but such things happen and will be overcome in time.
There will be no shortage because the market is capable of meeting demand. The required financing will become available because it is the only way the manufacturers will stay in business.
In closing, let me just say that I always get my technology news from McPaper because after all they're known for their technical expertise and research prowess.
--CTH
--Got Lists? | Top 95 Star Wars Line
Stop and think about how much bandwidth costs.
It's a lot more than routers and fiber. In fact, compared with the costs of upkeep and support, the infrastructure is almost negligible. That's why there's so much infrastructure already built, but so little utilized.
Why not use it all? Because people are not yet willing to pay for what they get. Standard business practice is to charge the customer 5x the actual cost of a product or a service.
Broadband service is so desparately trying to compete with the low cost of dialup, that it's not making the margin it needs. Of course it doesn't scale linearly, as a 128kb DSL connection doesn't cost 32x a 4kb dialup, but a 128kb DSL connection for only 2x or 3x the cost of that dialup sure isn't making the DSL provider the same margin as the dialup gives the dialup provider.
Bandwidth is expensive, we want -- no, we demand 100% uptime, no slowdowns, this, that, etc. Until people are willing to pay the true cost of this service, none of the greedy Telcos are going to make any money out of this, and will have no motivation to build new infrastructure, make new plans available.
I've been involved with a WAN project, based on in ground fiber. At the time, people started with Cisco based fiber routers, because of networkability - these cost $30k on both ends for a T3 line worth of bandwidth. I personally think it was a horrible idea and would far prefer 100Base-FX on both ends - 1/20th the price (I estimate), and greater functionality for our situation, which is mainly data traffic.
Phone companies simply can't use ethernet - it doesn't have QOS, or guaranteed packet delivery times, dedicated channels, etc... These are what telcoms want/need, and the technology that does it costs a ton. For your joe blow data network, ethenet makes sense - telcom is a different issue entirely.
BBK
All I want is 1mbit up and down, and no restrictions on what services I can use (ie. servers). Is it too hard for these broadband 'providers' to offer something so simple? Is it so hard?
No, it's not hard, in fact it's pretty easy, though it takes a few weeks to set up.
If you want to run servers, you need to get a real ISP.
You call up bandwidth.com. You say, Hi, I'm Joe Blow and I want a megabit up and down. They will say "great, a T1 is just what you need".
The helpful staff will then compile a list of packages you can buy, ranging from about $800-1600/month for 1.54 Mbits/sec in most areas.
You see friend, in the real world, people have to pay for bandwidth. Your ISP has to do the above when they buy bandwidth, and logically, they can't sell it to you for less than they pay for it, otherwise they won't be in business very long.
They may get a little discount if they can afford a T3, but that's still $20,000-$30,000 a month, and is about the equivalent to 30 T1s.
Are all you people that whine that they want 1Mbit up and down, unrestricted, for $30/month math challenged, or just stupid?
I've had enough abrasive sigs. Kittens are cute and fuzzy.