Wednesday, April 22, 2009

Cable Neighborhhod Design

This is the first time I have seen the neighborhood network design for a cable company described in a major news outlet. The NYTimes has a blog post titled, The Cost of Downloading All Those Videos, which describes the last mile for Comcast including costs. The node shares 38 Mbps with the homes connected - as many as 500 homes!

In a presentation to investors in 2007, Comcast boasted about how its network is designed to make such node splits efficient. The cost depends on the configuration of the equipment at the node to be split. In some cases, little more than minor adjustments are needed, and the cost is $2,500. If the company needs to add a new Cable Modem Termination System, the device that connects cable wires to the Internet, it will pay $6,000 if the device is in one of its existing facilities. And if Comcast needs install a new C.M.T.S. on a pole, stringing a new fiber optic cable to it, the cost is $20,000. ... According to Comcast’s presentation, the average cost of all these upgrades comes to $6.85 for each home served in the neighborhood.

There isn't detail on DSL, but as most of us know, there is transport to the DSLAM, where NxT1 is being replaced by fiber. If the DSLAM is over-capacity, another is added to the pedestal if space and power allow. In other cases, a new remote DSLAM is installed "upstream" and backhauled with copper. No idea what the costs are on that. Also, no idea what the VZ FiOS neighborhood GPON design looks like nor what the U-Verse plan is with Ma Bell.

DOCSIS version 3 was described as "The first generation of Docsis 3 service combines four 38-Mbps channels into a pool of roughly 152 Mbps that can be divided among customers." With the move to digital channels, there will be plenty of bandwidth available to MSO's.

How much does the bandwidth cost an ISP? According to the article 1GB port is $10,000/mo plus the loop at another $2,000-15,000 per month. Across 500 homes, the MB is just $2 at the high end and less than $4 per MB at the high end for 250 homes. Even less if the ISP provides its own transport.

"That tracks with what I’ve heard from Mr. Werner of Comcast and other cable industry experts I’ve talked to, who say that the bandwidth costs are rising somewhat but they are a relatively small portion of the overall expense of providing Internet service."

Mind you that all these costs are FIXED not varied. Neighborhood upgrades are one time costs. Bandwidth costs are fixed and not the majority cost to the ISP. AND these costs are based on the high side as if the ISP was buying transit at $10 per MB instead of peering (free) or using Cogent/ (less than $10). (I am guessing tech support, email and network maintenance are the main costs).

The kicker is that MSO's won't give businesses a metered plan (see end of article) but want to do that for consumers. "In other words, the cable and phone companies want to charge consumers per gigabyte even though they refuse to sell it to business customers on the same basis."

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