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The cost to send a marginal bit on your ISP is essentially zero. This doesn't mean it's cheap to keep an ISP going. The primary cost is that they have to keep

The cost to send a marginal bit on your ISP is essentially zero. This doesn't mean it's cheap to keep an ISP going. The primary cost is that they have to keep building. My neighbors are going to want more and fatter Netflix streams all at the same time that my family wants them. That requiring increasing the maximum capacity at peak demand time.

hga 12y ago
"The primary cost is that they have to keep building [capacity]." Demonstrably false. AT&T and Verizon stopped with the Great Recession. US Worst/Century never seriously played that game in the first place. Don't follow the cablecos much since I'm (just) outside of a city and only have non-U-verse 150 GB/month AT&T as an option, but don't a lot of them also cap in a variety of ways, including just peering congestion, especially since Netflix directly competes with them? Unfortunately, I'm old enough to remember watching "We're the phone company, we don't have to care", and that hasn't changed much. Cablecos, I suppose we'll see.
- rayiner 12y ago
  Verizon's wireline capex was $5.7 billion in 2014.
  - hga 12y ago
    Ah, yeah, I did leave out that they have some FiOS build out commitments in various cities like NYC, but from what I've read they are not putting money into anything else or anywhere else, see e.g. http://arstechnica.com/business/2015/01/verizon-nears-the-end-of-fios-builds/ http://arstechnica.com/business/2015/01/verizon-nears-the-en... "I have been pretty consistent with this in the fact that we will spend more CapEx in the Wireless side and we will continue to curtail CapEx on the Wireline side. Some of that is because we are getting to the end of our committed build around FiOS, penetration is getting higher," Verizon CFO Fran Shammo said yesterday in the Q4 2014 call with investors. Although maybe they're replacing DSLAMs as they become unmaintainable; AT&T is just moving hardware around (even pulling an old DSLAM out of a training facility), adding newer generation DSL here and there, and in many places where we supposize all the DSLAM slots are filled just refusing to supply new service. I don't think this invalidates my argument about capacity, though. If you're not in a Verizon FiOS area, or worse, in one of the many states and territories they've sold, you're not getting more capacity out of your DSL line from them, right? They might, though, be putting in more backhaul to satisfy, and I've heard no reports of AT&T DSL suffering from saturated backhaul.
    - danielweber 12y ago
      DSL providers are forced to let resellers (also known as competitors) use their networks. Cable providers get to capture the speed increases for themselves. This is why people were afraid of the "let one company build the network, but everyone else gets to compete on it" plans. It might make all the networks look like the DSL networks. And this meme that Internet speeds are staying flat is just plain wrong. Akamai's state of the internet report consistently shows average speeds increasing year-over-year in nearly every state in the US. ("Vermont was the only state across the whole country to see a year-over-year decline in its average connection speed—the cause of this decline has been discussed in prior issues of the report.") For peak speeds, only Vermont and Oklahoma saw year-over-year losses.

hga 12y ago

"The primary cost is that they have to keep building [capacity]." Demonstrably false. AT&T and Verizon stopped with the Great Recession. US Worst/Century never seriously played that game in the first place. Don't follow the cablecos much since I'm (just) outside of a city and only have non-U-verse 150 GB/month AT&T as an option, but don't a lot of them also cap in a variety of ways, including just peering congestion, especially since Netflix directly competes with them? Unfortunately, I'm old enough to remember watching "We're the phone company, we don't have to care", and that hasn't changed much. Cablecos, I suppose we'll see.

rayiner 12y ago
Verizon's wireline capex was $5.7 billion in 2014.
- hga 12y ago
  Ah, yeah, I did leave out that they have some FiOS build out commitments in various cities like NYC, but from what I've read they are not putting money into anything else or anywhere else, see e.g. http://arstechnica.com/business/2015/01/verizon-nears-the-end-of-fios-builds/ http://arstechnica.com/business/2015/01/verizon-nears-the-en... "I have been pretty consistent with this in the fact that we will spend more CapEx in the Wireless side and we will continue to curtail CapEx on the Wireline side. Some of that is because we are getting to the end of our committed build around FiOS, penetration is getting higher," Verizon CFO Fran Shammo said yesterday in the Q4 2014 call with investors. Although maybe they're replacing DSLAMs as they become unmaintainable; AT&T is just moving hardware around (even pulling an old DSLAM out of a training facility), adding newer generation DSL here and there, and in many places where we supposize all the DSLAM slots are filled just refusing to supply new service. I don't think this invalidates my argument about capacity, though. If you're not in a Verizon FiOS area, or worse, in one of the many states and territories they've sold, you're not getting more capacity out of your DSL line from them, right? They might, though, be putting in more backhaul to satisfy, and I've heard no reports of AT&T DSL suffering from saturated backhaul.
  - danielweber 12y ago
    DSL providers are forced to let resellers (also known as competitors) use their networks. Cable providers get to capture the speed increases for themselves. This is why people were afraid of the "let one company build the network, but everyone else gets to compete on it" plans. It might make all the networks look like the DSL networks. And this meme that Internet speeds are staying flat is just plain wrong. Akamai's state of the internet report consistently shows average speeds increasing year-over-year in nearly every state in the US. ("Vermont was the only state across the whole country to see a year-over-year decline in its average connection speed—the cause of this decline has been discussed in prior issues of the report.") For peak speeds, only Vermont and Oklahoma saw year-over-year losses.