From: Rabid Wombat <wombat@mcfeely.bsfs.org>
Date: Tue, 13 Aug 1996 05:01:03 +0800
To: "James A. Donald" <jamesd@echeque.com>
Subject: Re: (Off Topic) Re: FCC_ups
In-Reply-To: <199608120538.WAA29683@dns2.noc.best.net>
Message-ID: <Pine.BSF.3.91.960812153240.26183B-100000@mcfeely.bsfs.org>
MIME-Version: 1.0
Content-Type: text/plain




On Sun, 11 Aug 1996, James A. Donald wrote:

> At 02:34 AM 8/12/96 -0400, Rabid Wombat wrote:
> > Anyone that wants to carry a large volume of traffic via the 'net will
> > find that either the market will dictate that they pay for the bandwidth
> > they use, or the FCC will. I don't see the FCC getting involved, unless
> > the "phone service via internet" providor tries to use the courts to get
> > out of paying for the bandwidth they use. 
> 
> Bandwidth costs almost nothing, unless you are doing full motion
> video.
> 

I disagree - the cost doesn't stop w/ the cost of the circuit itself - 
installation, CPE, maintainance, management, customer service (re the 
purchaser of the bandwidth, not the "voice customer") all contribute to 
the cost. None of these costs are realy "fixed" - all are fixed+marginal, 
so the costs increase as bandwidth is added.

Also, I've worked with a number of large sites, as well as a large ISP - 
the amount of RealAudio traffic is amazing.

> What is expensive is cutting that bandwidth up into little pieces 
> and delivering those pieces to the people who want to use it at
> the time that they want to use it.

Yes, but having enough bandwidth to service your customer base means 
having enough bandwidth to service peak periods of demand - otherwise, 
customer satisfaction will be low. What is your point? If x bandwidth is 
sufficient during "off-hours", but 6x bandwidth is needed for peak 
periods, then either the voice providor leases 6x bandwidth, or a 
higher-tier providor must provide the capacity for 6x bandwidth, and 
lease "bandwidth on demand" to the voice providor. The infrastructure 
must still support 6x bandwidth, with accompanying costs. Do you think 
"BigTelco" will lease bandwidth on demand without charging more for high 
levels of use during peak hours? Not on a large scale.

This reminds me of the old arguements that "bandwidth costs would come 
down so fast that the Internet would be essentially free."  Haven't seen 
that happen yet, either.

> 
> Thus those who retail bandwidth will have the bulk of the revenue,
> rather than those who wholesale it.

The breakup and the addition of competition and second-tier voice
providors hasn't killed AT&T yet. If anything does, it will be bloated
corporate structure, not 2nd tier competition. (They're working on that -
funny how years ago we spent gobs of tax dollars breaking up AT&T, and now
they've gone and done it to themselves voluntarily). Most second-tier
providors differentiate themselves through marketing and/or customer
service.  Customer service is a big expensive pain in the butt. Many
larger companies out-source it anyway, when they can get away with it. 
Larger companies will still retail large accounts, and leave the smaller, 
less profitable crumbs to the niche marketers.


I still see voice over the Internet as a hobby - nobody is going to spend 
$800 for a telephone, er "voice terminal." If I decide to, who will I 
call? Only others with similar equipment? That's not very functional. 
Yes, this new carrier could implement equipment in each CO to convert my 
call to POTS systems, so I can call my computerless Grandmama from my PC 
- what will this do to costs?

Most of corporate America is still grappling with learning to use email. 
I don't see the business customer buying into voice services via PC anytime 
soon. The equipment costs per user are too high. I started working with a 
whole slew of telephony and convergence products years ago - they've been 
very slow to catch on.

Yes, one day voice, video, and data will all be carried on the same
infrastructure - using ATM, or a similar technology. The convergence is
inevitable. Large corporate phone switches will communicate with the 
outside world via packet switched, rather than circuit switched 
networks. This isn't the same as the "save money on phone calls by 
using cheap Internet bandwidth and your PC"  sales pitch, however. 

ob crypto (for anyone who read this far): When packet switched voice 
systems become a reality, how can secure calls be placed to any number? 
Key exchange during call set-up? How long will this make the call set-up?
Ideas?

-r.w.