Friday, September 28, 2012

"Fiber Economics - Quick and Dirty"

"Fiber Economics - Quick and Dirty" is a primer for those who want to understand the raw economics behind any fiber build—Lafayette's included. The author, Dave Burstein, uses examples from Google's build in the Kansas Cities and Australia's national broadband initiative as anchor points but the logic is clear and straightforward. Almost as valuable is Burstein's judgment on the current basic costs—there's no one more knowledgable.

As a taste:
Bandwidth isn’t free, but it’s darn cheap. A moderately sized carrier pays less than $1/month/customer Google pays much less, while small and rural carriers sometimes pay much more. Bandwidth use goes up only modestly with higher speeds; the industry rule of thumb is about 1/3rd more usage if you give the customer higher speeds. A Netflix movie will come in at 2-4 megabits whether you have 12 megabit service or a gigabit. You don’t get more email because your connection is faster.
That's actually very interesting. What it means is that Google offering every customer a gig of connectivity does NOT result in their using 100 times as much data as the average american user. Faster speeds don't mean linearly faster costs. Not even nearly. Which is something we here in Lafayette should think about.


Zane Hovell said...

Makes me think why then we need to pay for a higher bandwidth? If this is the existing cost, why can't we all exceed the present bandwidth for a faster It's definitely interesting.

InfoStack said...

The difference between "stock" and "flow" is not well understood, nor is marginal cost for a horizontally layered approach that not only scales rapidly obsoleting supply across constantly growing and shifting demand; both of which can be diverging or converging. Therefore the industry defaults to "average" costs and prices accordingly, instead of having price reflect marginal cost arrived at a priori.

Martha Hale said...

Not all clients understand the language of bandwidth. I for one, doesn't understand it all. All I want is a reassurance of the bandwidth, not just base from what the sellers are saying, but also users vouchsafe the truth to their claim.