422 karma · joined January 13, 2015
Fiber optics have lots of limiting factors: power limits, chromatic and polarization mode dispersion, spectral attenuation, manufacturing imperfections, crosstalk, ...
Fiber optics are just better than a lot of other mediums, but that does not mean there aren't limitations.
No, this is incorrect. Subsea fiber cables use all optical amplification at each repeater.
There is no optical-electrical-optical conversion.
Also competition is bad. People might get ideas...
As to the actual mechanics of laying fiber, there are whole industries dedicated to this task. If you want more detail, you'll have to be more precise.
https://www.cga.ct.gov/2012/rpt/2012-R-0515.htm
At 4% interest, 83 000 subscribers and attributing none of the costs of the fiber network to the smart meter project the payback period is 10 years and 7 months. A far attribution of costs to the smart meter project would bring the payback period to under 10 years.
"EPB issued $229 million in revenue bonds in 2008. Of this amount, $162 million was used to build the fiber optic network, which is owned by the EPB's Electric Division and is used for both the smart grid and telecommunications services."
"To date, EPB's Fiber Optic Division has borrowed approximately $50 million from the Electric Division to finance the costs of adapting the broadband network to provide telecommunications services to its customers."
For simplicity, let's ignore the fact that a part of these costs should be attributed to the power company, as the fiber network is also used for smart metering.
At a cost of $212M for 83 000 subscribers, this gives us a cost per subscriber of $2554.
If you add $28M to account for the first three years interest and other financing costs, it becomes $240M for 83 000 subscribers, resulting in $2892 per subscriber.
So there. A far cry from $5000 per subscriber.
True, but that still does not mean you can attribute 100% of the federal smart meter grant to the fiber buildout. Even if you chose to ignore all the other investments made into the smart metering infrastructure, fiber routes built to service the electric grid (such as routes to substations) cannot be used for providing Internet service. As such it is not reasonable to attribute 100% of the $111.5M grant to EPB fiber's network.
> Sure, with the newer 83,000 subscribers figue, it's more like $4,000 rather than $5,000.
This again assumes 100% of the federal grant being used to subsidize EPB fiber. I don't think that argument has any merit, as both the Feds and the incumbents would have words if that were the case.
> The FiOS uptake rate is under 40% (and during the first decade was under 1/3).
Yes, but we aren't talking about Verizon here. EPB's take rate is somewhere between 50% and 66% (83k subs out of 120k households, but part of those 83k are businesses), so my point still stands that costs are equivalent, given the actual take rate.
> It says that's the "Average cost of hooking up new fiber optic customer for EPB." I don't take that to be the cost including construction of the network in the first place.
No, but it includes the new construction needed to hook up customers in new developments.
> Is that for debt service? That could be for shared O&M too.
"$10 million: Fiber optic system access fees and rents paid to electric system in 2014"
> Television packages are also a major revenue source. In computing the operating margin, if you exclude TV from costs you also need to exclude TV from revenues.
Yes, but TV services are usually a loss leader and a break even proposition at best. Margins would probably improve by dropping TV.
That assumption only holds if the cost of the inputs do not rise with time. In fiber builds up to 80% of the costs are labor. If/when labor costs rise more than the cost of money then you are worse off putting off an inevitable/intended investment.
Furthermore if putting off an investment causes duplicate costs (build aerial, later replace with buried) or causes you to forego OPEX savings (aerial vs. buried facilities maintenance costs), then you are actually worse off by paying later.
Thus the time value of money is not the end all and be all.
As to the smart grid project, that was a separate $232M project. https://www.smartgrid.gov/project/epb_smart_grid_project.htm...
Of those smart grid investments, only the Backhaul Communications part could conceivably (in part) be attributed to the fiber network buildout costs. In no way can 100% of the federal smart grid grant be seen as a subsidy to the fiber network. Even if you subscribe to conspiracy theories about the power side secretly subsidizing the fiber side, that 100% subsidy theory just does not survive the collision with reality. Given how litigated this issue has been, there's no way the opponents would let a hundred million dollar misuse of federal grant money slide.
Either way, no matter what dollar cost you peg the fiber network buildout costs at, your $5,000 cost per subscriber is plain wrong. The correct figure is closer to $2650, but it's still not even close to $5,000, even if you slap on an additional hundred million dollars in costs.
This obviously also makes your payback times wrong.
To give some context to EPB fiber's costs, ten years ago Verizon paid $850 per premise passed and an additional $880 per premise connected. These are in line with EPB's costs if you assume a 50% take rate for FiOS.
Just to rub it in on how wrong your estimate of $5,000 per subscriber is, the very source your cite yourself states that the average cost to connect a new subscriber to EPB fiber is $1,200.
But, wait, there's more!
Your analysis on the economics of fiber networks just crumble when you look at the annual report of EPB. Here's the punchline:
- operating expenses include debt service!
EPB fiber pays EPB $10M per year for the use of the fiber network. This is enough to cover the costs of the $220M bond. In fact it covers half of EPB's whole debt service. Incidentally EPB fiber's operating income would more than covers the remaining debt service with change to spare.
In other words your assumption of 60% in operating expenses excluding debt service is just plain wrong and all your calculations are wrong.
And that's even before factoring in the fact that service at $70 per month usually does not include cable tv. This in turn means that a large chunk of operating expenses for that service can be excluded, as cable tv rights are a major cost item.
All in all, even assuming debt service is included, 60% operating expenses for a fiber network is not a given.
Wireless is not always cheaper than fiber. The cost depends on geography and spectrum availability. Wireless is also more expensive per bit. Wireless also has a shorter lifespan than fiber. All these are things that have to be taken into consideration when determining which has the lower total cost of ownership over the lifespan of the asset.
Both figures are inaccurate. The $330M includes $111.5M in federal grants which was used for EPB's smart grid. Thus only $220M can be attributed to the fiber network.
EPB fiber also had 83,000 subscribers at the end of FY2016, as per their annual report. 87,000 projected by end of FY2017.
Taken together this gives us $2650 per connected subscriber, almost half of what you claimed. Even with the smart grid grant, it would be less than $4000. Obviously this figure goes down with the number of subscribers.
> $122.6 million in fiber optic revenues, $78.5 million in fiber optic operating expenses). That is 64% of revenues going to operating expenses.
That's not correct. The annual report clearly states on page 11 that operating expenses were $41M, which is equal to 31% of revenues. Furthermore, it should be noted that operating expenses do not equal maintenance and customer service only.
How about we ditch the emotional appeals to deploy whatever technology is the flavor of the month, and instead deploy whatever meets the needs and has the lowest TCO over the lifetime of the asset?
No on the economics, yes on the politics and again no on the logistics.
> Say you build out to the whole city of Baltimore, and get 40% to subscribe at a cost of $5,0000 per subscriber.[1]
How did you get that $5,000 number? It's far more than Verizon paid for FiOS and I can't get it to line up with EPB's numbers either.
> Say you charge $70 for service, and 60% of your revenue goes out the door in maintenance and customer service.
60% is far in excess of what maintenance and customer service costs. A brand new fiber network does not require significant maintenance and customer service is a small fraction of the monthly cost.
> 30-year bonds may be practical for a school building, but not so much for a telecom network where you'll need to make ongoing capital expenditures to upgrade the network.
30 year bonds work just fine for fiber networks. Upgrading active equipment is a minor effort, covered by your operating budget, unlike building the network which is CAPEX heavy.
> It's a political non-starter to issue city bonds to build a network you lease out to private ISPs to sell $70/month internet service that poor people and the elderly can't afford.
Yes, politics is a problem, but the above isn't what's stopping builds.
> And then there is logistics. Who do you pay to maintain said fiber network?
You outsource it like everybody else, unless it becomes cheaper to do it in-house. This is a solved problem.
But they do, and that's what they want to keep on doing. An Internet connection is by definition a dumb pipe. It's only when you start messing with it and prioritizing traffic that it becomes something else.
> And once an ISP starts trying to provide value above and beyond the pipe, all the same questions about neutrality come up again.
No, this is just a silly argument. Just because an ISP provider other services in addition to or on top of the Internet connection does not make nor any net neutrality issues. It is only when they start prioritizing stuff that there is an issue.
> What happened to "dumb pipe"? Both of these, especially the former, seem to contradict that.
Nothing. Seriously, this is how the Internet works and is supposed to work. You are supposed to interconnect networks, that's why it's called the Internet. Doh!
Just because somebody else has a shorter path to you than somebody else doesn't make it wrong or unfair.
> All the numbers I've seen suggested that raw bandwidth costs significantly more than ISPs charge for it, because consumer ISPs rarely expect 24/7 utilization of the full bandwidth, and likely also because they can provide some of the larger sources of content for free out of their own datacenter.
Well, it doesn't and it's not for the reasons you state. Wholesale bandwidth prices decrease by 30% on average year on year. Consumer prices are stagnant, or rising.
While it's true that consumers don't use their connection 24/7 (although some make a pretty good go at it), the ISPs could without much problem support that use case. Furthermore ISPs provide close to zero of the content consumers consume. All the content is coming from the content providers, either directly, via an IX or a local cache. The ISPs have nothing to do with it, they are just dumb pipes.
What problem?
> It doesn't matter how much your fiber can transfer if the arrangements at the meet-me room can't get you that much content for a price you want to pay.
So free isn't enough for you?
You can pretty much get as much content as you want, if you have the customer demand for it.
Join an IX and you'll get as much content as you want for free for the cost of the port. If you got serious content demand, do a private interconnect and get the content for the price of a crossconnect. There are facilities with no recurring costs for crossconnects. Need a shitload of content? The content providers will send you a CDN node to you, for free.
In summary, your your statement is provably false.
> Raw bandwidth costs more than a plan from an ISP offering that much bandwidth.
You obviously never bought wholesale bandwidth. Wholesale IP transit is 20 cents or less per Mbps. IX peering is cheaper than that. Private interconnects, again cheaper.
I don't see ISPs offering 100M connections for $20 or less.
Again, your statement is provably false.
Really? How many definitions are there?
https://en.m.wikipedia.org/wiki/Dumb_pipe http://www.hyperorg.com/misc/stupidnet.html
> In an ideal world? A form of local loop unbundling, with a not-for-profit entity running/maintaining the local fiber, and umpteen ISPs readily available to handle termination and routing at the other end.
That's nice. Now you've either locked out small/unsophisticated ISPs/network users who can't or can't afford to light the fiber or increased cost and/or complexity by requiring an additional service provider on top of the dark fiber provider to provide bitstream, retail and other transport services. Also excellent choice for finger pointing when these two actors donit get along.
Yes, they do. That's exactly what they want. A dumb pipe that transports their bits and nothing more.
I'm omitting your list about dumb pipes, as nothing you write has anything to do with dumb pipes and is all completely wrong.
> Personally, I'd like a dumb pipe only as far as the nearest major datacenter, and then quite a lot of smarts in that datacenter. I don't just want a raw connection to a major bandwidth provider, though.
Hate to disappoint you, but there are no smarts in any ISP datacenter. It's just a big router and some interconnects. Raw bandwidth is all you get, if you are lucky.
> See also the last paragraph of my previous reply: I'd be in favor of separating out the "dumb pipe" as a utility, and then having ISPs operate independently from that. I think that would solve the majority of the problems.
It's not that simple, there are a lot of implementation details that matter. Do you want local loop unbundling, bitstream access or only resale?
This argument makes no sense. Colocating a CDN node has nothing to do with prioritization. Nobody is fiddling with any QoS settings.
> Putting a server in the ISP's datacenter is a common approach. Traffic to those servers doesn't have to go over any external peering links.
What is your point?
> As one simple example, look at the ISPs that accelerate the first N bytes of connections, to prioritize interactive requests over bulk transfers/downloads.
This is an incorrect characterization of PowerBoost. PowerBoost uncaps your DOCSIS connection temporarily to take advantage of any momentarily free spare capacity. This is not prioritization, it's getting a free tier upgrade temporarily.
> Other ISPs apply more sophisticated approaches.
Such as?
> So, receive and deliver all traffic, regardless of available capacity or financial constraints?
Don't be silly. As long as the ISP provides whatever speed tier they sold to the consumer all is good and well. If they cannot do that then they are shortchanging the consumer and should be penalized for that.
> Provision every part of the network so it can handle all the traffic passing over any other part, because they're not allowed to limit bandwidth in any way at any point?
Yes, to the extent required to provide the service they sold.
> A saturated interconnect might mean "we're trying to screw Netflix", or it might mean "we can't afford it right now" (either because they're a small ISP and don't have the money, or because they're spending it on something their customers want more).
If you saturate your interconnect you fail at ISPing. There is no excuse. Interconnect capacity is cheap and plentiful.
Why do you think turning ISPs into dumb pipes only would not fix most, if not all, problems?
The reason we have all these problems is that the ISPs do not want to be dumb pipes only.
This is simply incorrect. CDNs are not prioritized on any ISP network. CDNs work because they have a shorter route to the end user, not because they have a higher priority.
ISPs should not and do not apply QoS in their core for VoIP or anything else when it's part of generic Internet traffic. It's the end users responsibility to QoS police VoIP or other traffic on their WAN interface. The ISP just shifts the bits.
Not privatizing traffic does not break CDNs nor customer QoS. Neither of these things have anything to do with net neutrality.
> But even then, how do you draw a bright line between "deliberately degrading", "not giving an advantage to", and "not doing anything to address bandwidth problems when they arise"?
It's pretty obvious how you draw that bright line. Don't prioritize and don't congest interfaces.
> How would you suggest writing a regulation that doesn't break CDNs and similar, and that can tell the difference between "deliberately hurting" and "not helping"?
Easy. As I already wrote, forbid prioritizing and saturation of network interconnects.
> How will that regulation adapt when people come up with new ideas to make the web faster?
It does not need to when done right, as explained above.
> One angle I could imagine working: limiting the ability of one company or family of companies to run both an ISP and network services via that ISP. Still hard to write something robust, though.)
Nothing hard about it. It's called functional separation and it's a widely applied remedy to the anticompetitive nature of telecom markets in other countries.
In case you think we are talking hypotheticals here, what you are describing is exactly how rent control works.
Ssh into a shell account and use a text based browser :)