Begin forwarded message: From: Jason Weisberger <jweisberger@xxxxxxx> Date: June 2, 2006 1:31:49 PM EDT To: dave@xxxxxxxxxx Cc: ip@xxxxxxxxxxxxxx Subject: Re: [IP] more on Another Net Neutrality question... Gentlemen,This is no new idea, it has already been done in the past and the whole net neutrality thing seems to just be a neat way for Big Content and Big Telecom to fight and hand money to politicians. I speak from a background of having been a telecommunications and internet networking executive and having worked on some of the largest IP networks out there. I was VP of Network Engineering for Digital Island, a company that built and "overlay" network, like you are discussing and I did stints as VP of Product Management and VP of Commercial Strategy at Cable & Wireless in the US. I spent a lot of time trying to explain to a large number of people how to pull that company out of the toilet and largely being ignored. I've seen first hand what it is that drags down the telecom infrastructure players that are providing backbone and longhaul internet transport to Microsoft, Ebay, Google, Yahoo and many others. I'm no fan of big telecom but I think they are getting a really unfair image cast over them in this net-neutrality show.
First: No one is talking about taking the core IP-based internet service away from Big Content sites and making them pay unfair rates. Right now Yahoo, Google, Ebay and others pay unfair rates now, but I'm pretty willing to bet its too late there and telecom will never get them paying anything close to cost.
Here is what happened: The big providers over built. Then there was a scramble to grab marketshare, regardless of cost. That led to MSFT, Y!, Amazone, Ebay and others getting artificially depressed prices for volume; at or below cost. Then the market started to dump and prices were dropping like a rock to try and bring in ANY revenue as dotcom groups imploded and all the marginal revenue they were generating in the marketshare race went away. Big Content took this opportunity to really drive prices down on the telecoms.
At the time I left C&W we had situation that looked something like this:
Total Capacity of the Backbone Network: 70GbpsTier One Tax: 35Gbps (we can talk about how the roots of the internet as a research and educations platform have created some bad habits if you like, but basically bilateral peering is a mistake because it isn't bilateral, its 2:1 or worse for the backbones who cater to content as opposed to the guys who cater to eyeballs) Theoretical Salable Network Capacity: 35Gbps (in reality you can never sell 100% because you have to expand between 70 and 85% before you hit the ceiling.)
Cost to run this network (US Only) $8MM month Average Price/Mbps = $150 150X35000 = $5.25MMSo, even running in a perfect world with 100% capacity sold, that pig was never gonna grow wings and fly. I've heard of prices well below $75/Mbps now.
Now - "Net Neutrality" is just saying that Big Content doesn't want to pay more than Big Telecom would charge itself to use the same network AND that Big Telecom can't develop new services and charge a fair price for them, they need the same artificially depressed rates they are getting now. So with all the management who got Big Telecom into these problems gone and new management in and trying to fix them - we're told that it'd be bad to fix them and let the telecoms find a way to run a healthy business.
I think Big Telecom is resigned that basic internet service, sort of the Tier One world we're used to is going to be a loss leader. Prices aren't likely to come back up because most of their volume is bought up by Big Content who won't let the prices increase much. I clearly remember a Big Content manager telling a product manager that they didn't care if they killed one of our product lines at C&W, we had to reduce their price. Not very sensical..
Why shouldn't telecom develop a QoS overlay network to the bulk rate internet? Its akin to FedEx and the Post Office. If there are applications/services that need better QoS why would we not want to have them? If AT&T invested the capex into the network, Shouldn't it cost Yahoo more per unit to ship QoS than AT&T? How does AT&T recover their investment and make margin on the capacity Yahoo uses if they don't get to charge them more? Why shouldn't AT&T seen an advantage from investing the tons of cash it'll take to roll this out? So what the fiber is in the ground? Everything above that layer costs money too...
Maybe Cisco and Lucent should have to sell all this kit below cost, so AT&T can build it to sell it below cost. Then Big Content can show awesome profitbability numbers while Telecoms AND hardware file CH11 again and again.
Claims that Big Telecom is holding innovation back by wanting to create an overlay and charge appropriately for it are nuts. New software applications will in part be based off newly available infrastructure. When QoS is widely available a whole raft of applications taking advantage of it will arise. Impacting Big Content's margins a bit isn't going to slow down technology innovation. Its not like they are really innovating any more, any how. They buy people who innovate.
I do not understand how this net neutrality thing has even come so into the spotlight. What happened to letting the markets set the price?
On Jun 1, 2006, at 12:03 PM, David Farber wrote:
Begin forwarded message: From: Gerry Faulhaber <gerry-faulhaber@xxxxxxxxx> Date: June 1, 2006 2:00:47 PM EDT To: dave@xxxxxxxxxx Subject: Re: [IP] Another Net Neutrality question... [for IP, if you wish]Good job spotting this trend, Hiawatha. We have seen the future and it is private networks?Remember that old maxim that the Internet sees censorship as a network outage and routes around it? Well, how about a new maxim: network operators will see legal constraints on the traditional Internet as a flaw and they will build around it?Let's call it the Othernet. And will somebody please tell me how we got here?Professor Gerald R. Faulhaber Business and Public Policy Dept. Wharton School, University of Pennsylvania Philadelphia, PA 19104 Professor of Law University of Pennsylvania Law School ----- Original Message ----- From: "David Farber" <dave@xxxxxxxxxx> To: <ip@xxxxxxxxxxxxxx> Sent: Thursday, June 01, 2006 11:38 AM Subject: [IP] Another Net Neutrality question...Begin forwarded message: From: h_bray@xxxxxxxxx Date: June 1, 2006 11:15:37 AM EDT To: dave@xxxxxxxxxx Subject: Another Net Neutrality question......this one asked in my role as tech reporter. I'm doing a story on the matter. It'll be straight down the middle, no sides taken. But there's an aspecr of this issue that I haven't seen addressed, and I'm hoping thehypersmart people on the list can tidy it up for me.We keep talking about a two-tiered Internet. I may have helped establish that meme with a story I did on this issue a couple months ago. But is that really what's happening? Can't one just as easily argue that the"premium" broadband tier isn't really the Internet at all?Imagine that Verizon, without using the "I" word, had decided to build a new high-speed private data network to millions of homes. They'd use thisnetwork to carry TV signals, as well as a variety of computer dataservices. The network would use TCP/IP technology, but would run entirelyover Verizon's prvately owned hardware.If Verizon had done such a thing, would anyone argue that the company was obligated to share this network with others, without charging them usage fees? Wouldn't we shrug and say that since Verizon spent the billionsneeded to build the network, they could do with it as they pleased?But this is pretty much what's happening now, isn't it? This second tier of Internet service is really more like a private network. It's not somuch a bifurcation of the Internet, but a complete departure from it.Looked at that way, why shouldn't the broadband providers charge use feesto other data services? Hiawatha Bray Technology Reporter Boston Globe 135 Morrissey Blvd. P.O. Box 55819 Boston, MA 02205-5819 USA 617-929-3119 voice 617-929-3183 fax 617-233-9419 cell bray@xxxxxxxxx watha@xxxxxxxxxxxxxx Recent writings: www.boston.com/business/technology/bray ------------------------------------- You are subscribed as gerry-faulhaber@xxxxxxxxx To manage your subscription, go to http://v2.listbox.com/member/?listname=ipArchives at: http://www.interesting-people.org/archives/ interesting-people/------------------------------------- You are subscribed as jweisberger@xxxxxxx To manage your subscription, go to http://v2.listbox.com/member/?listname=ipArchives at: http://www.interesting-people.org/archives/interesting- people/
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