My super amazing plan for ntl cable broadband

[slimshady]

My feelings are than just an internet connection at a lower price would be of value to some people but it would be the minority on the majority. I use my ntl mailbox's but I will eventually be moving over to a hosting package with www.123reg.co.uk, www.estratospherehosting.com or some other company. I also don't use the ntl webspace, and i've not been used newsgroups for sometime, and if I did need them I would either pay money to subscribe to one or erm use the newsgroups in work, theres a newsgroup server downstairs connected to SuperJanet 4 (that'll do nicely!)

But I do feel that a cut down internet service for a few pounds less would be of benefit, I would find another IP address/IP lease more useful than mail, news, and webspace.

Slim.

[andygrif]

Hmmm...a bit of cross posting going on. I'll post what I replied over at DS:

I see your point, but I don't feel this is the answer - on a number of levels:

1. Added value services that cost very little money per subscriber to provide (like the ones you mentioned) improve the chances of getting more customers and retaining those you already have. Although there is a strong case for a 'no-frills' tier of service, removing three very valuable services won't help get the customers that require these.

2. The newsgroups and the webspace maybe, but removing email for be a crazy move for ntl - surely this is one of the most used resources for most internet users.

3. I would think (although I'm willing to be proved wrong) that the actual bandwidth is the most expensive part of providing broadband to customers. So suddenly doubling capacity for everyone would not be cost efficient at the price you suggest, and I would not think that many current 600k or below customers would pay more. On top of this you'll find those that want to use web based email actually use up far more bandwidth reading their mails than those that just download it into Outlook.

4. The 150k service serves two very important roles - first and most important it boosts ntl's 'broadband' subscriber figures. Second, it provides a viable alternative for light users to the dial-up method. This also frees up a phone line allowing ntl to make even more money becuase you can make calls at the same time as surfing.

The answer is not to downgrade services becuase they are having trouble providing some of them. This is a bit like saying that we should shut the M1 at rush hour becuase of the traffic jams!

The answer is to fix what they have, make it better than anyone else's service - this will mean that more people will stick with them, and they can get new customers on-board too.

[erol]

Originally Posted by andygrif

3. I would think (although I'm willing to be proved wrong) that the actual bandwidth is the most expensive part of providing broadband to customers.

I am not sure what you mean by the 'actual bandwidth' but if you mean external internet connectivity, then you are wrong I am afraid. If you really want I could try and 'prove' this to you.

Originally Posted by erol

I am not sure what you mean by the 'actual bandwidth' but if you mean external internet connectivity, then you are wrong I am afraid. If you really want I could try and 'prove' this to you.

I know this aspect of the cost of BB in the UK has come up in this forum before, but I've never quite got my head round it. I'd read your 'proof' if you posted it.

[Neil]

Originally Posted by towny

I know this aspect of the cost of BB in the UK has come up in this forum before, but I've never quite got my head round it. I'd read your 'proof' if you posted it.

So would I.

[andygrif]

Originally Posted by erol

I am not sure what you mean by the 'actual bandwidth' but if you mean external internet connectivity, then you are wrong I am afraid. If you really want I could try and 'prove' this to you.

What I mean is the actual bandwith costs associated in getting internet into and out of your house! This will include the pipe coming into your and maintainance thereof, and yes the connection to the rest of the net.

If you are doubling the size of the pipe, the pipe needs to be twice as big, therefore costs more.

[NoBB]

Originally Posted by Neil

Why should people have to go to the trouble of finding new email addresses, informing everyone they know of their new address, & do the same for their webspace & newsgroups, just because ntl & their network can't cope?

Anyone who relies solely on their ntl email addy must be nuts. My email addys are permanant and can be redirected therefore using any ISP email service. I have had to change from my ntlworld addy to another isp because of the enormous amount of spam I am getting now.

[erol]

Originally Posted by andygrif

What I mean is the actual bandwith costs associated in getting internet into and out of your house! This will include the pipe coming into your and maintainance thereof, and yes the connection to the rest of the net.

If you are doubling the size of the pipe, the pipe needs to be twice as big, therefore costs more.

The costs of 'getting internet' into your house are not generaly refered to as 'bandwidth costs' in my experience. The cost of getting a pipe / wire into your house are infrastructure costs. These are the same if you have just cable TV, 150k service, 600k service, 1meg service and beyond (if and when NTL decide to add higher service tiers).

It costs the same to NTL to deliver a 150k service as a 1 meg service - except for the external bandwidth costs (assuming a 1 meg users uses more external bandwidth than a 150k users). However these external bandwidth costs are a tiny tiny fraction of the overall costs and are falling faster than processing power is falling.

So if you double the bandwidth available to the end users, you do not have to put in a new bigger pipe - you just use the existing one. Thus cost impact is negliable (upto the limit of the pipes max capacity - which with cable is far beyond the 1 meg top tier currently offered). You may also have to upgrade the UBR's if people use more data on a higher tier service (as opposed to using the same amount quicker). Again though this would not normaly be considered a bandwidth cost but rather an infrastructure cost and the 'pipe' into your house remains the same.

[erol]

Originally Posted by towny

I know this aspect of the cost of BB in the UK has come up in this forum before, but I've never quite got my head round it. I'd read your 'proof' if you posted it.

I give it a go but try a more general description of the costs of providing BB into peoples homes.

The vast bulk of costs for a digital network (any digital network) are fixed sunk costs. That is the cost of digging up the road and putting the physical wires in.

There are then fixed costs for the 'boxes' at the end of the wires and typically these 'boxes' define the maximum potential data that can be sent / recieved.

Both the above are fixed costs and do not change at all with usage (upto the maximum limit defined by the boxes at the ends of the wires). Use not at all and the cost is the same as using it to it's max capacity.

With internet provision there is one cost that is incremental on usage (ie the more the thing is used the more it costs). That cost is the cost of NTL's external connectivity to the internet. There is also incremental costs for things like email and newsgroups (the more they are used the more processor/storage etc NTL have to provide) but agaion these are minimal and falling at a phenomenal rate. I am pretty much ignoring these costs for simplicities sake.

If you take a 'typical' BB residential service at say £25 pm then in very rough terms about £20 would represent 'paying back' fixed costs of the infrastructure (putting in the wires and the boxes at the ends of the wires). The remaining £5 would include all the other costs, staff, offices and incremental costs (external bandwidth, news/email servers etc) and (hopefully) profit.

You can get a kind of 'proof' for these ratios by looking at the cost of BT's wholesale products vs the retail price of the service charged to the customer. The BT Wholesale prices essentialy represent the fixed costs (and some alledgedly regulated profit for BT) and the difference between the BT wholesale cost and the retail price essential represents the cost of 'everything else' - that is staff, office and incremantal costs as well as profit for the retailer.

I do not really have the time to dig out the current BT wholesale prices for IP Stream (the product used by many ISP's to get connectivity from a customers house to the ISP/ their peering point) but they are publicaly available to those that can be bothered to search them out. If you do look at these figures and compare them to the retail price charged for such services then it's probably about the simplest 'proof' that the incremental costs of usage are a tiny fraction of the overall costs of providing BB to peoples homes.

Or to look at it another way entirely. Imagine your networking your office from scratch. The first biggest costs is the cost of laying your cat5 cable round the office. Then there is the cost of the 'boxes' at the 'ends' of the wires (NICs, hubs, switches routers etc). Lets say we spec 10mbs boxes initally. All the costs are fixed costs, with essentialy no incremantal usage costs - upto the 10mbs. If you want internet connectivty as well as LAN then there is a fixed cost for an shared external pipe as well. If external connectivity capacity becomes an issue you can upgrade the size of your internet connection without any cost implication for your internal network (you do not need to change any of the wires or boxes in your office). If internal bandwidth becomes a problem (10mbs is not enough) then you can change the boxes at the ends of the wires from 10mbs to 100mbs or 1gig (or even 10 gig now) boxes, without needing to change the cat5 wiring. Also the chances are that the new 100mbs or 1gig boxes will be cheaper that your original 10mbs boxes (moores law). Thus hopefuly from the above it is clear that 'bandwidth' or 'incremental' (on usage) costs of a digital network are zero or near zero and the vast bulk of costs are fixed costs independent of usage. Or to put it another way, once you have paid for the infrastructure the cost of 'bandwidth' is zero (upto the maximum limit of the capacity of the boxes you chose).

I hope than makes some kind of sense ?

[andygrif]

Originally Posted by erol

The costs of 'getting internet' into your house are not generaly refered to as 'bandwidth costs' in my experience. The cost of getting a pipe / wire into your house are infrastructure costs. These are the same if you have just cable TV, 150k service, 600k service, 1meg service and beyond (if and when NTL decide to add higher service tiers).

It costs the same to NTL to deliver a 150k service as a 1 meg service - except for the external bandwidth costs (assuming a 1 meg users uses more external bandwidth than a 150k users). However these external bandwidth costs are a tiny tiny fraction of the overall costs and are falling faster than processing power is falling.

So if you double the bandwidth available to the end users, you do not have to put in a new bigger pipe - you just use the existing one. Thus cost impact is negliable (upto the limit of the pipes max capacity - which with cable is far beyond the 1 meg top tier currently offered). You may also have to upgrade the UBR's if people use more data on a higher tier service (as opposed to using the same amount quicker). Again though this would not normaly be considered a bandwidth cost but rather an infrastructure cost and the 'pipe' into your house remains the same.

I think you're misunderstanding me. Of course the cable between your house and ntl is no bigger - I mean that would be crazy if every time you upgraded your service they had to lay another cable!!

What I mean is that if you double the size of the potential capacity, you would have to assume that, even sporadically, more actual data will be consumed en masse.

This will cost ntl more money, this means the concept will not work.

Also, I don't see how providing an email server (or two) can cost more than the data transfer from ntl's provider.

[erol]

Originally Posted by andygrif

I think you're misunderstanding me.

If I am it is not on purpuse and I appologise for it. I am getting a bit confused when you refer to 'bandwidth costs' but I am not sure we undersand the same thing from this.

Originally Posted by andygrif

What I mean is that if you double the size of the potential capacity, you would have to assume that, even sporadically, more actual data will be consumed en masse.

This will cost ntl more money, this means the concept will not work.

It will cost NTL more money if they have to increase how much external connectivty they buy to support users, which is a reasonable assumption. My point is that this increased costs in _minisucle_ when compared with the overall cost of providing the service. I would estimate that external connectivity accounts for around 1% or less of the total cost of provision for the service. Thus if NTL doubled eveyones connection speed overnight (and assuming that _thier_ internal network could handle this) and that everyone then double their data volume usages such that NTL had to buy twice as much external bandwidth then the overall impact on costs would be neglible, as the cost element that has doubled (though prob less than double to double their external connectivity) is tiny to start with. Then add into the equation the fact that the cost of external bandwidth is falling year on year fatser than the cost of processing power is falling.

The fact is, if external connectivty was a significant cost then you just would not see retail services at only a few pounds more than the BT wholesale IP Stream product, which only pays to get data from customer to ISP and nothing else (ie not external connectivity). The fact that many many companies can operated on BT wholesale prices + a few pounds more to cover everything else (external connectivity, staff and office costs, profit etc etc) is about the simplest clearest 'proof' that external connecivity is a tiny fraction of the cost of provision.

Originally Posted by andygrif

Also, I don't see how providing an email server (or two) can cost more than the data transfer from ntl's provider.

I would suspect that NTL pay at least as much or more for such services as they do for their external connectivity. You have machines / hardware for email servers, newsgroup servers and proxy servers. You then have software licesense for all these. You then have staff costs to configure and maintain these servers and staff costs to support the problems they cause for users. The hardware costs are falling about the same rate as the cost of external connectivity. SW is not falling so fast and staff costs are just going up (bar outsourcing to other countires). So even if NTL do not pay more for running their 'servers' than they pay for external connectivity today - they soon will do.

[Ron Jeremy]

erol - what a fantastic few posts. take a bow.

[paulyoung666]

Originally Posted by Ron Jeremy

erol - what a fantastic few posts. take a bow.

and i would agreee with that and have repped accordingly

[andygrif]

Originally Posted by erol

If I am it is not on purpuse and I appologise for it. I am getting a bit confused when you refer to 'bandwidth costs' but I am not sure we undersand the same thing from this.

Don't worry it's probably me! I'm not explaining myself very well I think.

Originally Posted by erol

It will cost NTL more money if they have to increase how much external connectivty they buy to support users, which is a reasonable assumption.

This is what I mean. I'm presuming that if the 150k customers suddenly had 10 times the capacity, then they would use at least a little more bandwidth than they do now.

As ntl would be paying by the mb/gb/tb then the costs would be higher to ntl.

You may be right in the fact that the additional cost would be tiny - not being an expert on the rate cards for connections through telehouse (assuming ntl go through telehouse) I wouldn't know - but I would have thought that this would be the highest cost to an ISP. But, like I said, I don't know, I'm only taking educated guesses.

Originally Posted by erol

The fact is, if external connectivty was a significant cost then you just would not see retail services at only a few pounds more than the BT wholesale IP Stream product, which only pays to get data from customer to ISP and nothing else (ie not external connectivity). The fact that many many companies can operated on BT wholesale prices + a few pounds more to cover everything else (external connectivity, staff and office costs, profit etc etc) is about the simplest clearest 'proof' that external connecivity is a tiny fraction of the cost of provision.

I guess that highlights what a mockery BT have made of the product! It costs more to put the line a short distance into your house than the global gigabits of lines circling the earth! Good example.

PS...I'd have repped you Erol, but it says I have to spread it round a bit, before repping you again (strange it must have been months since I last repped you!)

[erol]

Originally Posted by andygrif

You may be right in the fact that the additional cost would be tiny -


I guess that highlights what a mockery BT have made of the product! It costs more to put the line a short distance into your house than the global gigabits of lines circling the earth! Good example.

Re the costs have a look here

http://www.cableforum.co.uk/board/sh...131#post196131

re the BT mockery - to be fair to BT (yes I do try and be fair to them as well as critisie) a transalantic cable, though expenbsive to lay is a 'single' wire. The local loops into peoples houses represent millions of 'wires'. It may seem counter intuative but actualy local distribution is more expensive then trunk route carriage.