More Sidgemore on per-bit pricing
Pete Kruckenberg
http://www.news.com/News/Item/0,4,29533,00.html?st.ne.fd.gif.a
I'm sure this subject has been discussed at length here, but I still fail
to see any benefit for per-piece pricing other than to the seller's
revenue stream. I think it's always interesting that discussions of
per-piece pricing always fail to mention the fundamental issue: provide a
disincentive to the consumer to use the service.
There is already per-piece pricing: 1.544Mbps of traffic costs $500 to
$2000+/mo, depending upon how much the provider is counting on you to not
use the service. However, in this case the burden is placed on the ISP to
balance closing the sale with making money off of how much the customer
actually uses the service.
The thing I most distrust about people who talk about per-piece pricing is
that in spite of the fact that it should end up costing lower-use
customers less, for some reason it always ends up costing everyone more.
Look at UUNet's pricing now (for 256K ASU, or something like that), versus
the flat-rate price available from equivalent NSP's. Is that where things
are going?
Pete.
Peter Ford
Let's see:
You accect per piece pricing and identify that it is existing practice.
Sounds like you object to the units? Should the units be in terms of T-1s
(as you accept as exiting practice), DS-0 (probably the prominent per piece
model in use today) or what?
So is your complaint that that units might not be in terms of T-1s? Or is
it that the units are soft/virtual instead of hard as defined by the Telco
physical hierarchy?
If Sidgemore's experience matches others in the ISP business I suspect he is
considering/planning such service plans because several of his important
customers are asking for it. And I am sure he has the ability/mechanisms to
retain those customers who demand flat/predictable billing by offering that
as an option ...
chaeers,
peter
Barry Shein
One possible positive effect (for the consumer) of "per-bit" pricing
is the opportunity to buy larger pipes but only pay for what you use.
Right now flat-rate pricing mostly assumes you're going to, within
some statistical model, actually use the bandwidth you get, or
certainly that someone buying a DS3 is going to use a lot more
bandwidth, on average, than someone with a DS1.
So if you usually only use, say, 25-75% of a DS1 then you'd be
well-advised to only buy a DS1, even if 10% of the time you really
have a good use for more.
For example, imagine a company which wants to back up all the remote
servers in their branch offices once per week, but would like to get
it done as quickly as possible so it completes in the wee hours when
the databases are quiescent. The rest of the time a DS1 might suffice
for the usual email etc, but for those few hours, for the backups
which run on Sunday night, a full 45mb/s would be useful.
Under the flat-rate model that company would have to either buy a DS3
full-time, for around $50K/mo, or live with the DS1 for around $2K/mo
(or possibly find some equivalent flat-rate option in between such as
a 10mb, but that begs the point, they still can't pay for a T1 when
they need a T1 and a T3 when they need a T3.)
It all depends on the actual pricing models which might arise, which
indeed is an arguable point, but without stating that assumption one
can't argue the more general issue.
For example, if I were to offer you either:
a) DS1 $2K/mo
b) DS3 $48K/mo
c) per-bit DS3 $2K/mo/DS1-equivalent pro-rata per minute
you'd be foolish, unless you have no control over your bandwidth usage
(a whole other issue) not to take (c) if you occasionally need bursts
of high bandwidth and were seriously considering going to the DS3; the
most it can cost would be $48K/mo if you used that bandwidth 7x24
100%, but you almost certainly won't, so it can only cost you less.
Now, it's admittedly not likely that someone wouldn't charge some sort
of premium for the pro-rata bandwidth, perhaps it would actually be
$2500/DS1-equivalent, but unless you really need the DS3 100% of the
time (in which case you should buy the dedicated DS3) it's still
likely to cost you a lot less.
At a 50% utilization that $2500/mo pro-rata still only costs you
around $30K/mo which is significantly less than the $48K/mo for
committing to the whole pipe.
As we move to, e.g., gigabit pipes I suspect this sort of pricing
model will become more and more popular, or else not too many gigabit
pipes will get sold.
Buying 100% of a gigabit at the DS1 equivalent of, say, $2K/mo would
come to about $2 million/gb/month.
Customers certainly exist for $2M/mo connections, but not many of
them.
And the incremental cost of installing a pipe capable of gigabit
bandwidth on demand is relatively very small (mostly just a piece of
fiber and the boxes on each end), likely to be worthwhile even if the
customer just uses $10K or more per month of that potential $2M/mo
(pro-rata), or something like that much, much smaller than the $2M/mo.
We're a case in point of that, we have a good amount of fiber to our
offices here, NYNEX was happy to put lots of it in rather than ever
trench the street again (they had the backhoes out for us on this
urban street twice.)
However, one remaining problem is the local loop, the RBOCs, who do
like to price any service as if you are going to use 100% of it.
Thus, to even buy a per-bit DS3 from an ISP you would still have to
pay my RBOC around $5K-$10K/mo just for the local loop under the
current model, which if nothing else raises the bar for such services.
I think this is something Sidgemore is accounting for in his comments,
however.
--
-Barry Shein
Software Tool & Die | b...@world.std.com | http://www.world.com
Purveyors to the Trade | Voice: 617-739-0202 | Login: 617-739-WRLD
The World | Public Access Internet | Since 1989 *oo*
Karl Denninger
>
> One possible positive effect (for the consumer) of "per-bit" pricing
> is the opportunity to buy larger pipes but only pay for what you use.
The other possible effect is that you buy one of these, and then someone
launches a DOS attack at you and you get the bill for it.
The economic impact of this should not be underestimated. Per-bitrate
pricing is a problem as long as the receiver pays for the receipt of
transmissions they may not have solicited.
--
--
Karl Denninger (ka...@denninger.net) http://www.mcs.net/~karl
I ain't even *authorized* to speak for anyone other than myself, so give
up now on trying to associate my words with any particular organization.
Daniel Senie
>
> One possible positive effect (for the consumer) of "per-bit" pricing
> is the opportunity to buy larger pipes but only pay for what you use.
>
> some statistical model, actually use the bandwidth you get, or
> certainly that someone buying a DS3 is going to use a lot more
> bandwidth, on average, than someone with a DS1.
I wonder if the northeast is more expensive than elsewhere, but from my
recent shopping for T1's for myself and my clients, I find the cost of
the service over a T1 isn't the budget buster. For one location, all T1
circuits (before buying IP service, just the telco charge) is $613 a
month. To another location, the circuits are $900 to $1500 a month.
Adding $500 to $1000 on top of that for full-rate service, vs. adding
$200-$500 on top of that for "burstable" service just doesn't generate
much excitement.
Until the base telco circuit prices are lowered dramatically, the
pricing of packet service over them, while not "noise," is certainly
less interesting.
Now, if the whole circuit, T1 and IP packet service, were all priced on
the basis of traffic, that'd be interesting. An underutilized T1 would
incur some small base charge, plus traffic/usage increments beyond that.
That'd be quite attractive, though I doubt the phone companies would
think so.
Dan
--
-----------------------------------------------------------------
Daniel Senie d...@senie.com
Amaranth Networks Inc. http://www.amaranthnetworks.com
Barry Shein
On December 5, 1998 at 14:01 ka...@denninger.net (Karl Denninger) wrote:
> On Sat, Dec 05, 1998 at 02:38:57PM -0500, Barry Shein wrote:
> >
> > One possible positive effect (for the consumer) of "per-bit" pricing
> > is the opportunity to buy larger pipes but only pay for what you use.
>
> launches a DOS attack at you and you get the bill for it.
>
> The economic impact of this should not be underestimated. Per-bitrate
> pricing is a problem as long as the receiver pays for the receipt of
> transmissions they may not have solicited.
Well, a paraphrase of the above is: We must engineer the net to keep
the cost of criminal activities to a minimum so we can continue to
avoid solving the underlying issue.
That's not ridiculous, it may even be an unavoidable factor, but it's
still somewhat sad.
Tim Salo
> From: "Jay R. Ashworth" <j...@scfn.thpl.lib.fl.us>
> To: "'na...@merit.edu'" <na...@merit.edu>
> Subject: Re: More Sidgemore on per-bit pricing
> [...]
> Well, we'll see. The problem is suits who don't understand that
> billing by the byte, rather than by the router port, usually has higher
> costs than it does revenue enhancement. If I assert that I'm trying to
> reduce customer's billings, then, as a CEO of a publicly held company,
> I'd better have something up my sleeve that will actually enhance
> revenue, or I'll be out of a job, real quick.
I suspect that "it's too hard and/or expensive to bill by byte (or
kilo-byte or mega-byte)" may become one of the great myths of the
Internet.
It should be noted that phone companies, particularly LECs, are probably
better than anybody at billing in very fine usage-basee increments.
"Suites" often understand costs and pricing very well. Suites often
also understand competitive advantage. I wonder if John Sidgemore is
thinking that offering fine-grained usage-based billing is something that
he can do well (if he leverages the billing skills of other parts of
WorldComm) and that his competitors won't be able to replicate, (e.g.,
the thousands of ISPs who seem to think that sending out one fixed-rate
bill a month is a sizable burden).
Beyond suspecting that fine-grained usage-based billing in the Internet
will be introduced by those that can do it well, I haven't a clue what
the long term future is...
-tjs
Barry Shein
On December 5, 1998 at 15:05 d...@senie.com (Daniel Senie) wrote:
> Barry Shein wrote:
> >
> > One possible positive effect (for the consumer) of "per-bit" pricing
> > is the opportunity to buy larger pipes but only pay for what you use.
> >
> > some statistical model, actually use the bandwidth you get, or
> > certainly that someone buying a DS3 is going to use a lot more
> > bandwidth, on average, than someone with a DS1.
> > [Rest of post deleted for brevity]
>
> I wonder if the northeast is more expensive than elsewhere, but from my
> recent shopping for T1's for myself and my clients, I find the cost of
> the service over a T1 isn't the budget buster. For one location, all T1
> circuits (before buying IP service, just the telco charge) is $613 a
> month. To another location, the circuits are $900 to $1500 a month.
> Adding $500 to $1000 on top of that for full-rate service, vs. adding
> $200-$500 on top of that for "burstable" service just doesn't generate
> much excitement.
I don't think the model becomes very exciting until you model it for
DS3 and beyond, as you say below that there's not enough money
involved to get excited about.
But even at around $1K/mo for a T1 flat-rate, simple extrapolation
puts a 1gb line at $1 million per mo, even if there's a 50% discount
for that, $500K/mo, the customer base would be somewhat limited. Even
a 155Mb/s ATM calculates to around $100K/mo using straight
extrapolation. Being able to get an atm line in for, say, $10K/mo and
then paying the burstable rate might seem very attractive to some.
> Until the base telco circuit prices are lowered dramatically, the
> pricing of packet service over them, while not "noise," is certainly
> less interesting.
This is certainly true, and no doubt something someone in Sidgemore's
position is considering since Worldcom does local loop or is certainly
capable of affecting local-loop pricing.
> Now, if the whole circuit, T1 and IP packet service, were all priced on
> the basis of traffic, that'd be interesting. An underutilized T1 would
> incur some small base charge, plus traffic/usage increments beyond that.
> That'd be quite attractive, though I doubt the phone companies would
> think so.
Exactly my point.
Karl Denninger
>
> On December 5, 1998 at 14:01 ka...@denninger.net (Karl Denninger) wrote:
> > >
> > > One possible positive effect (for the consumer) of "per-bit" pricing
> > > is the opportunity to buy larger pipes but only pay for what you use.
> >
> > launches a DOS attack at you and you get the bill for it.
> >
> > The economic impact of this should not be underestimated. Per-bitrate
> > pricing is a problem as long as the receiver pays for the receipt of
> > transmissions they may not have solicited.
>
> Well, a paraphrase of the above is: We must engineer the net to keep
> the cost of criminal activities to a minimum so we can continue to
> avoid solving the underlying issue.
>
> That's not ridiculous, it may even be an unavoidable factor, but it's
> still somewhat sad.
Yep.
It is sad.
However, as long as we permit people to source traffic without cost and do
so through proxies, this problem will exist.
This is the primary argument AGAINST anonyminity on the Internet. Your
activities, anonymous or not, are not without cost to others. The entire
premise that you have a right to "anonymous speech" is based upon the fact
that you do not directly harm others economically or otherwise be
exercising it.
However, on the Internet, this is simply not true. "Recipient pays"
is a part of ALL Internet service, and always has been in one fashion
or another - even when the majority of traffic was moved via modems
in the 1980s and early 90s.
Note that this is VERY different from the phone or postal service
networks, both of which are nearly 100% SENDER pays. The exception is
cellular service, and there it is a CRIMINAL ACT to call a cellular
phone on an "unsolicited" basis - that is, to cost-shift where there
is a reasonable probability that the cost is unwanted. Further all
phone traffic is authenticated and can be traced to the source;
"spoofed traffic" (beyond activity which is per-se criminal such as
cloned cellular phones) doesn't exist.
If all transmissions had to be identifyable as to their source, and
chargeback capability was included (ie: if you spam me, I can charge
the transmission back to you - likewise if you ping-flood me) then
the problem would go away. But doing this requires strong authentication
and non-denyability of the transmission itself, which flies in the face
of those who scream for the ability to source anonymous traffic of one
form or another.
That engineering standards have not already stabilized to prohibit
sourcing of traffic with spoofed source addresses, enforced by the
providers themselves, is very much a telling factor here.
There wouldn't BE a DOS problem on the Internet via-a-vis ping floods,
SYN floods, etc. if the provider community refused to permit a connection
to be made without airtight packet source filters which prohibited the
transmission of data with unauthorized source addresses.
Add to that a "chargeback" mechanism (that is, refutation of authorization
for the transmission) and per-bit pricing can work.
Absent BOTH of those on a worldwide basis and I could never justify
recommending to anyone that they accept such a pricing system.
Barry Shein
On December 5, 1998 at 14:19 sa...@networkcs.com (Tim Salo) wrote:
> I suspect that "it's too hard and/or expensive to bill by byte (or
> kilo-byte or mega-byte)" may become one of the great myths of the
> Internet.
I agree 100%, it's one of the great "truisms" which has been repeated
over and over since the early '80's at least on lists like these.
In my experience it rests on largely a moralistic view rather than an
economic model. For example, the underlying presumption is that it's
somehow "wrong" to charge for the cost of billing (why?), and worse
yet to charge cost+profit on just the billing activity (why?) Yet in
essence every business which bills customers sells billing services at
a profit or they're not in business very long, if you want to look at
it like that.
I can certainly understand why someone would like to pay only for the
actual service or product and not pay for being billed, who wouldn't?
But if service+billing, where the billing is a larger percentage than
some other billing model, still is competitive (e.g. because it
reduces the cost of the service even more) then it's a potential
winner.
How the underlying charge pie-charts out in terms of cost-factors is
really of little concern to the customer if their final deal is
better. But that's basically what this "billing costs too much"
argument is often trying to say, that increasing the pie-chart slice
of billing is unreasonable, independent of how that affects the other
slices or the total cost (of course if the rest stays the same then
yes, it's probably a loser.)
Barry Shein
On December 5, 1998 at 14:28 ka...@denninger.net (Karl Denninger) wrote:
> Absent BOTH of those on a worldwide basis and I could never justify
> recommending to anyone that they accept such a pricing system.
Of course you could, if the per-unit cost were the same, pro-rata, as
paying for the whole thing. So if the choice was between paying
$48K/mo for a DS3 vs $2K/mo for each DS1-equivalent the worst case is
$48K/mo anyhow so may as well take your chances with crooks.
I'd argue that even at some premium, unless you're normally using
almost all of it, you'd still probably be better off on average even
if a crook gives you a bad week once in a while. $24K + $6K for a
crook is still a lot less than $48K guaranteed, crooks or not. Etc.
And there's probably going to have to be some accomodation (e.g.,
credits, refunds, more vigorous enforcement and detection of abuse by
sellers) with any such pay-per-bit scheme. Particularly if, as I
predict, it becomes a major way to sell a lot of very high bandwidth
lines (155mb+) to customers who otherwise wouldn't consider so much
bandwidth if they had to pay for all of it all the time.
You're right that something has to be done, but I don't particularly
accept that the situation is so untenable. On a service like this a
credit for a bad week with a crook doesn't really drive the provider
under either, particularly if they make some effort to prevent it
(e.g. prosecuting abusers, detecting and blocking abuse quickly, etc.)
I'd guess that one model which might work well is whitelisting: I want
on-demand bandwidth up to, say, 155Mb/s to this short list of sites
(VPN-ish), but only T1 to everyone else to prevent abuse.
Michael P. Lyle
provider really rolls it out and pushes it at a low cost, it's bound
to become a surety. Suddenly the provider with per-bit billing will
be able to steal all of the low-usage customers, while leaving the
expensive near-saturation customers at other providers... effectively
raising their cost per DS1...
As to the merits of per-bit pricing.. I could certainly see myself
purchasing a lot more bandwidth if I could use it on demand, even
with the possibility of someone deciding to smurf me. And think of
other positive effects-- there will be real economic forces urging
customers of providers not to be smurf relays, etc.
Mike
--
Michael P. Lyle
Senior Security Architecture Analyst
Exodus Communications, Inc.
ic...@phoenix.lyle.org <- PLAY
ml...@exodus.net <- WORK
Rubens Kuhl Jr.
> recommending to anyone that they accept such a pricing system.
Those price mechanisms are possible on connection-oriented networks, such as
X.25 and ATM networks.
On connection-less networks such as IP networks, the source will always have
the right to send traffic; packet filtering and traffic shaping can cut some
of the possibly unwanted traffic, but not all of them.
RUbens Kuhl Jr.
di...@power.net
Well, if you ever want to download DVD's or (HD DVD's in the future)
in anything approaching realtime or less then we need some way to
make 10-100Mbit pipes into homes economical.
Current high bandwidth pricing ($100K/month or so for OC3 Internet
connectivity) is just ridicuolous and in no way related to the
value that is created for the customer (you can argue that point
since some people are paying...)
Computers have gotten faster by a factor of x over the last n years
yet bandwidth costs have hardly changed in the last 10 years. This is
despite the fact that the capacity of fiber already in the ground
keeps increasing by leaps and bounds. Somehow this problems needs
to be solved.
If some sort of usage based pricing doesn't do it then we'll have to
wait for super high speed, auto configuring wirelss networking in
each PC. Everybody has a 100Mbit connection to all PC's within
"earshot". The higher the local computer density, the higher the
available bandwidth (with some upper limit of course based on how
much frequency space gets allocated to this). Problem solved,
phone companies roll over and dies.
Dirk
David P. Maynard
> > One possible positive effect (for the consumer) of "per-bit" pricing
> > is the opportunity to buy larger pipes but only pay for what you use.
>
> The other possible effect is that you buy one of these, and then someone
> launches a DOS attack at you and you get the bill for it.
We have used usage-based pricing for collocated customers since SMARTNAP
(now IXC Austin NAP) opened it's doors nearly two years ago. That allows
us to hand people a 100Base-TX port and let them pay for the bandwidth
they actually use. We don't bill per byte. Instead, we use the 95%
sustained utilization model that bills for your peak utilization in
Mbit/sec after throwing out 5% of the 5-minute samples for the month. The
5% amounts to about 36 hours of "free" bandwidth. That means you have to
be a pretty serious smurf target before attacks will affect your bill
significantly. Both we and our customers have been very happy with the
95% utilization model for this type of service. It lets us set pricing
based on a metric that closely follows the amount of backbone bandwidth we
have to provision to support a customer. UUNET uses the same metric for
their usage-based T3 lines. I believe other providers also use it.
Having said that, the 95% model isn't the end-all of usage billing. Some
people want to use high bandwidth for a short period of time (e.g. a video
conference) and just want to pay for that period of time. In the 95%
model they either win big or they lose big depending on whether their
high-bandwidth usage fits in the 5% window.
There are still some customers concerned about the lack of control they
have over their bill. Presumably, they will have a business model that
provides them with additional revenue if their traffic increases. It
still makes people nervous though. Using bandwidth-limiting mechanisms
can alleviate that concern at the cost of reducing their available peak
bandwidth.
> The economic impact of this should not be underestimated. Per-bitrate
> pricing is a problem as long as the receiver pays for the receipt of
> transmissions they may not have solicited.
The 95% model makes a fairly primitive, but fairly effective attempt at
addressing that issue. The issue will be more of a concern if
finer-grained usage-based billing becomes more common.
-dpm
--
David P. Maynard, Flametree Corporation
EMail: d...@flametree.com, Tel: +1 512 670 4090, Fax: +1 512 251 8308
--
Karl Denninger
>
> On December 5, 1998 at 14:28 ka...@denninger.net (Karl Denninger) wrote:
> > recommending to anyone that they accept such a pricing system.
>
> paying for the whole thing. So if the choice was between paying
> $48K/mo for a DS3 vs $2K/mo for each DS1-equivalent the worst case is
> $48K/mo anyhow so may as well take your chances with crooks.
Except that if I don't need a DS-3 often then the possibility of being
billed for it when I wasn't the requestor is a hell of a liability.
> Particularly if, as I
> predict, it becomes a major way to sell a lot of very high bandwidth
> lines (155mb+) to customers who otherwise wouldn't consider so much
> bandwidth if they had to pay for all of it all the time.
Again, it depends on the risk factors.
> You're right that something has to be done, but I don't particularly
> accept that the situation is so untenable. On a service like this a
> credit for a bad week with a crook doesn't really drive the provider
> under either, particularly if they make some effort to prevent it
> (e.g. prosecuting abusers, detecting and blocking abuse quickly, etc.)
>
> I'd guess that one model which might work well is whitelisting: I want
> on-demand bandwidth up to, say, 155Mb/s to this short list of sites
> (VPN-ish), but only T1 to everyone else to prevent abuse.
Possibly, yes.
--
sth...@nethelp.no
> provider really rolls it out and pushes it at a low cost, it's bound
> to become a surety. Suddenly the provider with per-bit billing will
> be able to steal all of the low-usage customers, while leaving the
> expensive near-saturation customers at other providers... effectively
> raising their cost per DS1...
I have seen it argued several times that if the price is "low enough",
customers prefer a fixed price, even if that price is slightly higher
than they could get by a variable-rate pricing scheme.
Why do you think per-bit pricing would be significantly different here?
Steinar Haug, Nethelp consulting, sth...@nethelp.no
Jay R. Ashworth
> In my experience it rests on largely a moralistic view rather than an
> economic model. For example, the underlying presumption is that it's
> somehow "wrong" to charge for the cost of billing (why?), and worse
> yet to charge cost+profit on just the billing activity (why?) Yet in
> essence every business which bills customers sells billing services at
> a profit or they're not in business very long, if you want to look at
> it like that.
Not at all, Barry. My assertion rests on two things:
1) Routers are too damned busy as it is; too busy, we're told, to run
the filters that would keep much of the crap off the net. It's
unlikely the money made by packing more customers into a given
amount of uplink would outweigh the costs of gathering and
processing the information at that fine a granularity.
2) The telcos currently control the local loop, and are pricing
that on a flat rate basis, mostly, frame and ATM
notwithstanding (there's _still_ a flat cost, somewhere).
I don't at all object to "usage-sensitive" pricing, burstable T's and
the like; I'm looking at one right now. It's this "slap a byto-meter
on it" mentality that demonstrated, I feel, a fundamental
misunderstanding of the net. But then, I expect that from telco suits.
Cheers,
-- jra
--
Jay R. Ashworth j...@baylink.com
Member of the Technical Staff Buy copies of The New Hackers Dictionary.
The Suncoast Freenet Give them to all your friends.
Tampa Bay, Florida http://www.ccil.org/jargon/ +1 813 790 7592
John Curran
operating on a global basis and absent the current somewhat US-
centric interconnection web.
In said world, the cost of serving a given-size customer or ISP connection
which contains 90% local traffic and 10% far-distant traffic ("international")
is different than serving one which is 10% local and 90% distant traffic.
In this situation, one can either ignore the actual cost-per-destination and
charge based on an assumed traffic distribution, or one can recover based
on some extraction of the actual customer traffic profile. Note that a
profile-
based method does not have to be "per-byte"; it can be as simple as having
spliting current monthly utilization fees into local/international
components.
The problem with the former case (assumed traffic model and price) is that
one risks too conservative a profile (with higher net price and loss of new
customers) or too aggressive a profile (with great growth potential but the
strong attraction of heavy distant-traffic customers and unrecovered costs).
This, btw, is today's model for the vast majority of ISP's; we all arrange for
some form of international connectivity and hope that these costs do not
dominate our overall infrastructure costs. Of course, this approach only
encourages distant-heavy usage applications (e.g. international IP voice/fax)
to migrate to profile-insensitive Internet services and is eventually self-
correcting.
/John
Tim Wolfe
not too long ago on this list or li...@inet-access.net. Could folks please just revisit the archives
or take this to an appropriate list (Ie. Com-Priv). At the very least,
please consider cutting out the text of the message you are replying to,
unless it is relevant to your response..
Much appreciated.
Tim
----------------------------------------------------
Timothy M. Wolfe | Why surf when you can Sail?
t...@clipper.net | Join Oregon's Premier
Sr. Network Engineer | Wireless Internet Provider!
ClipperNet Corporation | http://www.clipper.net/
----------------------------------------------------
David Diaz
Well what if I had a xDSL local loop from someone like Northpoint for
something like $150 and then did the per bit model. A T1 (or even slightly
less) for $350 starts to look rather attractive to a lot of people.
At 3:05 PM -0500 12/5/98, Daniel Senie wrote:
>Barry Shein wrote:
>>
>> One possible positive effect (for the consumer) of "per-bit" pricing
>> is the opportunity to buy larger pipes but only pay for what you use.
>>
>> Right now flat-rate pricing mostly assumes you're going to, within
>> some statistical model, actually use the bandwidth you get, or
>> certainly that someone buying a DS3 is going to use a lot more
>> bandwidth, on average, than someone with a DS1.
>> [Rest of post deleted for brevity]
>
>I wonder if the northeast is more expensive than elsewhere, but from my
>recent shopping for T1's for myself and my clients, I find the cost of
>the service over a T1 isn't the budget buster. For one location, all T1
>circuits (before buying IP service, just the telco charge) is $613 a
>month. To another location, the circuits are $900 to $1500 a month.
>Adding $500 to $1000 on top of that for full-rate service, vs. adding
>$200-$500 on top of that for "burstable" service just doesn't generate
>much excitement.
>
>Until the base telco circuit prices are lowered dramatically, the
>pricing of packet service over them, while not "noise," is certainly
>less interesting.
>
>Now, if the whole circuit, T1 and IP packet service, were all priced on
>the basis of traffic, that'd be interesting. An underutilized T1 would
>incur some small base charge, plus traffic/usage increments beyond that.
>That'd be quite attractive, though I doubt the phone companies would
>think so.
>
>Dan
>
>--
>-----------------------------------------------------------------
>Daniel Senie d...@senie.com
>Amaranth Networks Inc. http://www.amaranthnetworks.com
Thank you,
David Diaz
Chief Technical Officer
Netrail, Inc
email: dave...@netrail.net
pager: 888-576-1018
office: 888-NETRAIL
Fax: 404 522-2191
Colo facilities: Atlanta-NAP, Miami, Arlington, Chicago, San Francisco
-------------------------------------------------
Nathan Stratton
> I know this is a bit late sorry...
>
> Well what if I had a xDSL local loop from someone like Northpoint for
> something like $150 and then did the per bit model. A T1 (or even slightly
> less) for $350 starts to look rather attractive to a lot of people.
True, but if you become a CLEC and use something like access method 5 you
can get that loop cost to around $30 and also offer voice services using
the first 4 kHz of the loop.
--
Check out the new CLEC mailing list at http://www.robotics.net/clec
><>
Nathan Stratton Telecom & ISP Consulting
www.robotics.net nat...@robotics.net
David Diaz
turnkey option. However you can get good pricing from many CLECs and then
take a ATM (or even frame) T1 handoff. Pretty small barrier to entry and
it let's you scale from there without having to have the equipment, lawyers
and patience.
I'm also thinking where this model might work well is in bldings where you
can go in, drop a TNTdsl in the basement. Use existing copper to provide
1.5meg (soon 2.23meg/sec??) handoffs to each suite. Then run a frame
through the local RBOCs cloud to your hub. This would allow you to start
small at several bldings and scale from there.
It would make sense to charge by the bit since that most likely will be
your #1 cost. All the equipment can be leased including CPE side which
would be some cheap PipeDSLs.
Jay R. Ashworth
> > Well what if I had a xDSL local loop from someone like Northpoint for
> > something like $150 and then did the per bit model. A T1 (or even slightly
> > less) for $350 starts to look rather attractive to a lot of people.
>
> True, but if you become a CLEC and use something like access method 5 you
> can get that loop cost to around $30 and also offer voice services using
> the first 4 kHz of the loop.
Yeah... but you _STILL_ can't get that large a router port for that
little money, and you never will.
Bandwidth is what costs money, not copper.
Cheers,
-- jr 'and people _STILL_ miss this' a
Nathan Stratton
> Most small ISPs cant afford to do that. Becoming a CLEC is not a $100
> turnkey option. However you can get good pricing from many CLECs and then
> take a ATM (or even frame) T1 handoff. Pretty small barrier to entry and
> it let's you scale from there without having to have the equipment, lawyers
> and patience.
That is just it, that is why I said using access method 5, you dont need
to colo in the CO, most ISPs can afford to become CLECs if they can get
rid of that 100 - 300K expense. It is not a $100 turnkey option, but it is
something you could do for 5K. You say that you can get good pricing from
the CLECs, I just have not found that to be true. Have you looked at Covad
and Northpoints pricing? It is hard to make any money at that when the
ISP down the streets cost is $30.
> I'm also thinking where this model might work well is in bldings where you
> can go in, drop a TNTdsl in the basement. Use existing copper to provide
> 1.5meg (soon 2.23meg/sec??) handoffs to each suite. Then run a frame
> through the local RBOCs cloud to your hub. This would allow you to start
> small at several bldings and scale from there.
If you were in the building you could do VDSL and give everybody 53 meg.
> It would make sense to charge by the bit since that most likely will be
> your #1 cost. All the equipment can be leased including CPE side which
> would be some cheap PipeDSLs.
There also is CPE comming out with voice, video, and ethernet jacks all
under $750.
Nathan Stratton
> On Tue, Dec 08, 1998 at 11:03:16PM -0500, Nathan Stratton wrote:
> > > Well what if I had a xDSL local loop from someone like Northpoint for
> > > something like $150 and then did the per bit model. A T1 (or even slightly
> > > less) for $350 starts to look rather attractive to a lot of people.
> >
> > True, but if you become a CLEC and use something like access method 5 you
> > can get that loop cost to around $30 and also offer voice services using
> > the first 4 kHz of the loop.
>
> Yeah... but you _STILL_ can't get that large a router port for that
> little money, and you never will.
>
> Bandwidth is what costs money, not copper.
I was just saying how you could lower the cost of the ADSL loop from
around $150 to $30, with both you would need to supply the IP. The idea
would be that you would not just use the port for internet traffice. You
would provide voice services, you would provice VOD (video on demand), and
cable services (using something like I Magic TV).
--
Check out the new CLEC mailing list at http://www.robotics.net/clec
><>
Nathan Stratton Telecom & ISP Consulting
www.robotics.net nat...@robotics.net
> Cheers,
Daniel Senie
>
> On Tue, 8 Dec 1998, David Diaz wrote:
>
> >
> > something like $150 and then did the per bit model. A T1 (or even slightly
> > less) for $350 starts to look rather attractive to a lot of people.
>
> True, but if you become a CLEC and use something like access method 5 you
> can get that loop cost to around $30 and also offer voice services using
> the first 4 kHz of the loop.
Unfortunately you'd still be at the mercy of the RBOC to actually take
care of your line when it breaks. I'm not even sure being a really big
CLEC would help in my neck of the woods.
What I wouldn't give to be able to buy connectivity from someone other
than Bell Atlantic (he says, after waiting 27 hours for a blown mid-span
repeater to be diagnosed and replaced).
Jay R. Ashworth
> > Yeah... but you _STILL_ can't get that large a router port for that
> > little money, and you never will.
> >
> > Bandwidth is what costs money, not copper.
>
> I was just saying how you could lower the cost of the ADSL loop from
> around $150 to $30, with both you would need to supply the IP. The idea
> would be that you would not just use the port for internet traffice. You
> would provide voice services, you would provice VOD (video on demand), and
> cable services (using something like I Magic TV).
Oh yeah, I got that, Nathan. It's just that I get miffed when people
keep going on (don't take this personal) about how cool it is that I
can get my loop down from $300 to $150... when my router port is still
$1800. Nice, yeah, but not what people mean when they blather about
"cheap bandwidth". If it's _that_ cheap, it's running under completely
different assumptions than a standard T-1; viz: cable modems.
And now for something completely different. Anyone need a wireless T-1?
http://cgi.ebay.com/aw-cgi/eBayISAPI.dll?ViewItem&item=47936641
Cheers,
-- jr 'got a bunch of 5251 cards, too' a
Dean Anderson
>> I was just saying how you could lower the cost of the ADSL loop from
>> around $150 to $30, with both you would need to supply the IP. The idea
>> would be that you would not just use the port for internet traffice. You
>> would provide voice services, you would provice VOD (video on demand), and
>> cable services (using something like I Magic TV).
>
>Oh yeah, I got that, Nathan. It's just that I get miffed when people
>keep going on (don't take this personal) about how cool it is that I
>can get my loop down from $300 to $150... when my router port is still
>$1800. Nice, yeah, but not what people mean when they blather about
>"cheap bandwidth". If it's _that_ cheap, it's running under completely
>different assumptions than a standard T-1; viz: cable modems.
Um, actually, I think think you can get DSLAM's for about $700 per port or
less going by my recent informal surveys.
Router ports have been way overpriced for a long time. They were overpriced
when an AGS sold for 30K with a stack of ethernet, serial, and an fddi
port. Of course, back then the pricing model optimistically expected to
sell only a few thousand. They got even more overpriced later, and now
expect to sell hundreds of thousands.
What I've yet to find out is what sort of latency one gets with a DSL modem
as compared to a DSU...
I'm not sure DSL is somehow inferior technology (as Bob Metcalfe seems to
think from an article several years ago), or if it just represents a
(slight) change and a collapse of the fee structure.
--Dean
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Plain Aviation, Inc de...@av8.com
LAN/WAN/UNIX/NT/TCPIP http://www.av8.com
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Jay R. Ashworth
> >can get my loop down from $300 to $150... when my router port is still
> >$1800. Nice, yeah, but not what people mean when they blather about
> >"cheap bandwidth". If it's _that_ cheap, it's running under completely
> >different assumptions than a standard T-1; viz: cable modems.
>
> Um, actually, I think think you can get DSLAM's for about $700 per port or
> less going by my recent informal surveys.
>
> Router ports have been way overpriced for a long time. They were overpriced
> when an AGS sold for 30K with a stack of ethernet, serial, and an fddi
> port. Of course, back then the pricing model optimistically expected to
> sell only a few thousand. They got even more overpriced later, and now
> expect to sell hundreds of thousands.
Unless I'm misunderstanding you, you've misunderstood me. :-)
I'm not talking about the card, I'm talking about my proportion of the
amount the guy I'm buying from has to pay for _his_ uplink.
Bandwidth Costs Money.
Cheers,
-- jra
Dean Anderson
>Unless I'm misunderstanding you, you've misunderstood me. :-)
>
>I'm not talking about the card, I'm talking about my proportion of the
>amount the guy I'm buying from has to pay for _his_ uplink.
>
>Bandwidth Costs Money.
Oh I see. But you insert 'value added' inbetween, right? Or in the case
of Cable modems/home DSL for 50/mo, its probably better described as 'value
removed'.
If I put 50 DSL T1's against 1 T1 uplink, I can pay a lot for uplink and it
still won't make much difference. As long as the DSL lines hit a web
cache and a newserver, everything is fine. When they don't, too bad, I
guess. Isn't USWest doing all of Phoenix on 4 T1's? Whats that come out
to? X,000 to 1?
It looks to me like the crucial cost factor is the cost of the home
equipment, and whether the customer pays for that or the ISP pays. It's
not the last mile, its the last 6 inches.
Nathan Stratton
> Um, actually, I think think you can get DSLAM's for about $700 per port or
> less going by my recent informal surveys.
I don't want to speak for Jay, but I think he was talking about the cost
of bandwidth, not hardware or loops.
--
Check out the new CLEC mailing list at http://www.robotics.net/clec
><>
Nathan Stratton Telecom & ISP Consulting
www.robotics.net nat...@robotics.net
> --Dean
Nathan Stratton
> Oh yeah, I got that, Nathan. It's just that I get miffed when people
> keep going on (don't take this personal) about how cool it is that I
> can get my loop down from $300 to $150... when my router port is still
> $1800. Nice, yeah, but not what people mean when they blather about
> "cheap bandwidth". If it's _that_ cheap, it's running under completely
> different assumptions than a standard T-1; viz: cable modems.
I dont take it personal because I agree with you. :-)
--
Check out the new CLEC mailing list at http://www.robotics.net/clec
><>
Nathan Stratton Telecom & ISP Consulting
www.robotics.net nat...@robotics.net
> And now for something completely different. Anyone need a wireless T-1?
> http://cgi.ebay.com/aw-cgi/eBayISAPI.dll?ViewItem&item=47936641
>
> Cheers,
> -- jr 'got a bunch of 5251 cards, too' a