Broadband in the US: not as good as you think, it seems...

Forums › New Zealand Broadband › Broadband in the US: not as good as you think, it seems...

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#389506 8-Oct-2010 11:38

kobiak: >So how does the ISP pay for the cost of having a phone line to your house if there isn't a minimum rental fee paid by you?

It should be covered under telephone bill only. if naked DSL, then I could understand minimum servicing fee... but for ordinary dsl. just pay per data used. no additional cost.

And yes, I know FTTH where no additional charges, just for traffic consumed or unlimited plan with different limits for speed. not NZ though :(

Wow... Just Wow... You're plain wrong. There is a cost to have a customer that doesn't actually use the service. There's additional billing, there's support (which needs to be provisioned), there's capacity that needs to be reserved on the national network, on the local DSLAM (Those ports aren't free you know) etc.

I know what you're trying to say, but it doesn't work unless there is ZERO COST to providing the connection and that's not the case.

Just saying that it should be covered by the phone line rental is fine, but only if you are prepared for that to go up by the base cost of DSL... Are you?

Would someone that doesn't have DSL be happy to cover the base cost of DSL in their phone line rental? NO?

Cheers- N

Please note all comments are from my own brain and don't necessarily represent the position or opinions of my employer, previous employers, colleagues, friends or pets.

kobiak

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#389514 8-Oct-2010 11:53

@Talkiet I'm sure there are already these kinds of cost hidden in the price of each GB. so we consumers are paying double data (that's what I believe, do I live with it? yes :D)

Connection cost are fixed. that's probably the cost of earlier termination. end it's not required by anyone go and connect-reconnect every month. The billing and support should be covered by these hidden charges per GB.

I know, these minimum fees might sound reasonable unless you know FTTB/H providers who charge NO minimum costs, usually NO connections cost and just pay per GB you use. NO use - NO pay. simple. and I guess it's more cost involved in FTTB/H as new network need to be in place rather then use of old telephone lines.

What I suggest is additional charges rather then minimum fee. eg. $1 call to tech support, or $5 for email account, static IP, webspace, what ever people might want from their ISP. Let me chose what services I want.

helping others at evgenyk.nz

Rollux

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#389525 8-Oct-2010 12:27

kobiak:
What I suggest is additional charges rather then minimum fee. eg. $1 call to tech support, or $5 for email account, static IP, webspace, what ever people might want from their ISP. Let me chose what services I want.

You have to remember tho, these are run as a business. Aside from connections/hardware costs there is wages to pay, power, capital expenditure, maintenance, loans/rent/leases to cover - and more, right down to the coffee in the staff room and the payouts required to keep the hundreds of shareholders happy.
Yes, the charges in the data rates prob cover costs of connections, but I doubt they would cover all these other expenses that any business has to pay. And too, the prime reason for having a business is to make money. Nobody runs a business just to provide a service with no financial gain whatsoever.
You couldn start your own ISP and do as you have suggested - but you'd probably go broke as you couldn't afford the hundreds of employees required, leases on the offices required etc.

However, I would love to pay $10/month access and $1Gb used, as would many others, but I don't see it happening with Telecom or Telstra any time soon.

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wuzy

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#389536 8-Oct-2010 12:43

The biggest problem with NZ ISP is mixing data usage for international and national together and thereby killing any business2home opportunities involving big-sized CDN from national sources. Almost all of the colo datacenters I visited here in NZ offers national bandwidth tier by speed and not amount of data. But it's no good when NZ homes are limited by a small data cap.

The introduction of iSKY later this year, along with ISPs that have joined to offer uncounted data is the first. I hope more will follow and eventually offer unlimited national or national with a soft data cap.

kobiak

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#389537 8-Oct-2010 12:49

@Rollux they could have all of these cost spread on per GB cost and additional charges.

that $20-30 minimum fee per customer generates only $20-30m in total for WHOLE New Zealand :D Is that really the profit ISPs make? I hope their profits are bigger and I guess are generated from traffic goes from customers through their network + additional service they provide.

and most of that $20-30m charge goes to telecom for renting the lines.

And now you still believe that ISPs make their profits or cover their costs because of that minimum charge?

:)

helping others at evgenyk.nz

webnation

67 posts

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#389546 8-Oct-2010 13:04

@kobiak Telstraclear have plans for $75/month and then you choose what data pack you need, is that something you are looking for?

http://www.telstraclear.co.nz/residential/homeplan/packages/broadband.cfm

Talkiet

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#389547 8-Oct-2010 13:06

kobiak: @Rollux they could have all of these cost spread on per GB cost and additional charges.

that $20-30 minimum fee per customer generates only $20-30m in total for WHOLE New Zealand :D Is that really the profit ISPs make? I hope their profits are bigger and I guess are generated from traffic goes from customers through their network + additional service they provide.

and most of that $20-30m charge goes to telecom for renting the lines.

And now you still believe that ISPs make their profits or cover their costs because of that minimum charge?

:)

Sorry Kobiak - you're working from a lot of badly flawed assumptions. I'm afraid that I can't provide full corrections either due to confidentiality requirements.

Having opinions, and making suggestions is a damn good thing... However, portraying your interpretation as reality I'm afraid isn't accurate.

Bear in mind that any ISP which has unbundled could offer the type of plan you speak of, but then they wouldn't be covering their investment in making the unbundling possible. One final thing to consider is that the first monthly fee covers _NOTHING_ _LIKE_ the up front investment to deliver Broadband to a customer. There's a significant amount of amortization going on.

Cheers - N

Please note all comments are from my own brain and don't necessarily represent the position or opinions of my employer, previous employers, colleagues, friends or pets.

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ockel

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#389548 8-Oct-2010 13:09

kobiak: @Rollux they could have all of these cost spread on per GB cost and additional charges.

that $20-30 minimum fee per customer generates only $20-30m in total for WHOLE New Zealand :D Is that really the profit ISPs make? I hope their profits are bigger and I guess are generated from traffic goes from customers through their network + additional service they provide.

and most of that $20-30m charge goes to telecom for renting the lines.

And now you still believe that ISPs make their profits or cover their costs because of that minimum charge?

:)

Have you tried to backsolve what level of profits an ISP makes? Take for example a 0Gb Naked DSL plan.
Find out the Urban wholesale Naked DSL price from the commerce commission. Assume that the data costs charged are pure cost recovery.
Estimate the per user OSS and BSS charge that an efficient (ie scale operator) would incur (obviously it would be skewed high from a subscale or startup). You can make your assumptions about charging for "extras" like customer service.

Calculate the rate of return you would require for running that business (given your $$$ are at risk and you could deploy them in the bank or property etc).

Contrast that with an "average" user of 3-5Gb with these total costs shared across those average GB's. If you think that such an offering in the market would be economic then by all means start up your own ISP and go for it. Of course you'll be taking the risk that you attract very low traffic users and only earn a fraction of your expected revenue cos they dont hit that "average" traffic number on which you've based your offering.
But you'll still have to pay that Commerce Commission determined NakedDSL price to the access provider each and every month.......

Or you could pare it back to a ULL based offering and rent the exchange space and lease the equipment..... hoping that the fixed costs associated with having those racks and cards are covered by your customers who like the idea of paying a high GB fee but dont use much traffic (and generate low revenue).

Do the math - if there is a gap in the market that someone hasnt exploited then by all means start it yourself. Seeing an opportunity is what business is all about.

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kobiak

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#389564 8-Oct-2010 13:36

@Talkiet, @ockel I'm talking about ONLY fixed cost passed to the customers. $20-30m a month just to cover all new zealands fixed cost associated with network infrastructure to provide DSL service is pretty good rate of return, is not that? I assume it was spent about $2-3 billions to build infrastructure, that's only 10 years to go when it's paid + maintenance cost sure. Plus ISP have margins in per GB cost; plus additional services - running cost = profit :)

So fixed cost passed to customer to cover the cost of investment and any margins on GB sold + additional services cover all the rest.

This is the basic assumption I could make by not going dig into financial details.

Sorry had to add. If it's possible to provide services with no minimum fees in other countries, I see no reason why it could not be done in NZ. YEs, data cost more here, then anywhere else apart from north korea :)

helping others at evgenyk.nz

Talkiet

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#389574 8-Oct-2010 14:09

kobiak: @Talkiet, @ockel I'm talking about ONLY fixed cost passed to the customers. $20-30m a month just to cover all new zealands fixed cost associated with network infrastructure to provide DSL service is pretty good rate of return, is not that? I assume it was spent about $2-3 billions to build infrastructure, that's only 10 years to go when it's paid + maintenance cost sure. Plus ISP have margins in per GB cost; plus additional services - running cost = profit :)

So fixed cost passed to customer to cover the cost of investment and any margins on GB sold + additional services cover all the rest.

This is the basic assumption I could make by not going dig into financial details.

Sorry had to add. If it's possible to provide services with no minimum fees in other countries, I see no reason why it could not be done in NZ. YEs, data cost more here, then anywhere else apart from north korea :)

Well, without going into specifics, how much of the infrastructure for Broadband do you think lasts longer than 10 years? Hint, not much... Sure the copper has lasted longer, but it doesn't last forever, and neither will fibre... All the electronics and network equipment has substantially shorter lifetimes...

You are _assuming_ that ISPs have margins in the per GB cost. This may or may not be correct, and different ISPs have differing levels of 'margin' in the per GB costs.

As for other places that can do this... I sure they have all or several of the following
- Less or no regulatory requirements
- Far denser population
- A much higher percentage of local traffic consumption

The model for BB plan and charging in NZ is driven largely by the demand and external factors, of which these are just three.

If I was in Singapore, then the massively dense population and the fact they are closer to a large amount of the content they consume will mean a different model is adopted.

I would definitely like to have some of the overseas plans and charges available here, but I have to accept that if I want to live in lovely little NZ, then I don't get the same deals as some overseas places.

Cheers - N

Please note all comments are from my own brain and don't necessarily represent the position or opinions of my employer, previous employers, colleagues, friends or pets.

dman

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#389580 8-Oct-2010 14:32

tdgeek: dman

I fully agree, if you have a more active household as you describe yes you will use more than 10Gb. maybe 20Gb, maybe 40Gb, maybe a little more. That will work with todays plans as a higher user in the range of low, medium and high.

I'm not really agreeing that the current range of plans today are right.

I just wanted to make sure the point is got across that we should not be discussing USER usage but HOUSEHOLD usages :) Big difference, and important. & one that sometimes get mixed up. (generally whenever people start using the *I* pronoun....)

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tdgeek

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#389777 9-Oct-2010 00:03

dman
I just wanted to make sure the point is got across that we should not be discussing USER usage but HOUSEHOLD usages :) Big difference, and important

From an ISP point of view it is ONE ADSL connection, whether it is a single user home or a flat. NZ, wit its small population and international requirements, cannot model the plans they have overseas. Regrettably, just because you need a high GB plan for low cost for a mutli-user household, doesn't mean it is possible. An option is if one connection for one user can work for most, you can try two connections for multi users.

Krisando

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#389801 9-Oct-2010 06:49

Dude you can get unlimited fast broadband for $30us.

ojala

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#390004 9-Oct-2010 22:21

As for other places that can do this... I sure they have all or several of the following
- Less or no regulatory requirements
- Far denser population
- A much higher percentage of local traffic consumption

There are a number of countries that offer decent, unlimited or misuse-restricted, internet access around the world that are no bigger than NZ.

It's usually just matter of thinking. What can we do instead of this is why we can't do it here. Start small, it may grow big. Or if you think about the numbers, a mobile carrier doesn't think if $0.42 or $0.43 is the right price for a minute of call, or megabyte of mobile data. With thousands of customers they care about the average revenue, what to do make customers pay $35 instead of $30 a month. With 100,000 customers that $50,000/month is much important than $0.01/minute difference.

That's what is happening with fixed broadband in other markets. And in general people are less and less being fooled by caps, dozens of plans and other ways to confuse the customers.

Or if you look at Stokab. When Stokab in Stockholm was established back in 1994 to build fiber around the city, owned by the city, they didn't know how useful it could be. ADSL wasn't around that time, Internet was relatively new and dial-up access was the norm for consumers. For us ISP folks it looked pretty smart thing to do and we hoped other cities would do the same. Here in Finland the government is making laws that 1 Mbit/s broadband is a civil right -- just typical political bs while at the same time the commercial telco's are installing fiber here and there. It's not about waiting for the government to put billions aside but building the ground work for future businesses. That fiber can and will be useful for anything from providing gigabit internet access to the end users, adding new services like IPTV, and even for that 3G/LTE/4G/5G base stations that they might need one day in that building.

And as far as local traffic is concerned, that's something that will happen if it's possible. If you charge local traffic, new services just won't happen or they are crippled. How can you build something new? YouTube could have never born. To go to the extreme, TradeMe is said to be the highest traffic source in NZ and the service look likes it was built in the mid 90's (no offense anyone, Ebay isn't that modern either). Here in our NZ-sized country the national traffic has never been charged separately (international has), and through the IX the mid-day traffic is around 25-30 Gbit/s. That's just part of it as plenty of traffic stays within the carrier networks and many high-volume customers connect to several carriers (more scalable and reliable). How does that compare with NZ?

ojala

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#390310 11-Oct-2010 01:22

ojala: And as far as local traffic is concerned, that's something that will happen if it's possible.

Another good example that national traffic is bound to appear if it's accessible.

http://kiwiology.co.nz/ lists 860 kiwi blogs.
http://www.blogilista.fi/ lists 38392 finnish blogs.

Exactly the same happened with mobile data. When it was charged by the volume, nothing happened. Now when it's available as flat rate (or reasonably big chunks as one carrier doesn't do flat rate) and mobile services are growing rapidly, thanks to the iPhone and Android platforms (yes, this is the Nokia-country). And when there's certain freedom of data. global phenomenons like Angry Birds can come from small countries like Finland -- or New Zealand, if..

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