Railroad lines and fiber-optics
Jose G. Perez
jgperez at netzero.net
Tue Jun 19 22:30:37 MDT 2001
The price of Cable or DSL service is simply this: the cost of a second, "no
frills" phone line plus the cost of unmetered Internet access. That's
$40-$50 a month. It is ENTIRELY unrelated to the cost of providing the
a) I'm not sure anyone actually knows, and certainly "the market" doesn't
b) Has got to be a lot less than the cost of providing phone service.
Let's take up "b" first. The MAIN cost of phoneline DSL or cable services
are simply the physical infrastructure. Putting in the wires/fiber, hooking
them up, repairing them when there is storm damage or some jerk with a
backhoe severs them, that's the biggest expense.
Now, here's the thing about BOTH cable and DSL -- maintaining the physical
connection is ALREADY paid for, entirely, completely, in providing either
cable TV or dialup over that coax or twisted pair. The actual physical,
working connection is already there. Internet access is simply going to
"piggyback" on it.
In my case, BellSouth Fast Access is kind enough to tell me just how much my
connection to the rest of the Internet beyond its own local network costs.
That cost, which is a separate line item on my bill, amounts to about $5 a
month, and it used to be until the end of last year about $8 a month.
That price CUT has led to the following:
- My Fast Access bill has increased from $40 to $45 a month. So BellSouth
pocketed the $3 price reduction from UUnet, they ALSO increased their "take"
by an additional 5%. The cut before was $32, and NOW is $40. That's an
INCREASE of 25% in their cut in 5-6 months.
- My FastAccess account included an unlimited "backup" dialup account. Now
that's been cut to 20 hours/month. Extra hours are $2 each. BellSouth sells
the 20-hour/month accounts for $10, and the unlimited ones for $20. Taking
them at their word about the value of their services, that's a $10 CUT in
services provided to DSL subscribers/month).
- A mailbox storage limit of 5megs is now being enforced, whereas previously
no attempt had been made to enforce it (at least not for 50 megs, insofar as
I was personally able to verify). With the cost of raw storage on a hard
drive approaching $2/gig on a hard drive (and the average hard drive is good
for 3-5 years of continuous service), five meg limits are obviously
*ridiculous.* You get MORE by signing up for a couple of free pop3 accounts
- Usenet service has been "outsourced" and whereas originally I was promised
unlimited newsgroups at fast access (1.4mbit/sec) speeds, now my fast
newsgroup access is capped at 500mbit/month, and unlimited access is
speed-crippled to 64kbit/month, basically, dialup-type speeds.
(THIS, BTW, is *precisely* the kind of thing that PROVES beyond ANY HOPE of
contradiction that the people running Bell South Fast Access ADSL service
are irremediable technophobes who have not got a clue. They *imagine* that
by reducing access speeds they are decreasing the load on the servers and
reducing costs. The truth is they are doing *exactly the opposite*. The
explanation is a little technical and complicated, so I'll put it in a p.s.)
What accounts for all this is that the local phone companies have succeeded
in bankrupting most of their competitors in offering DSL service. They did
so by a simple exercise of monopoly pricing. They could charge other
providers as much as they wanted for BellSouth providing them the basic DSL
connectivity to resell. In Bell South's case, this was reported to be in
excess of $30/month. At the same time, Bell South's own DSL retailer could
charge as little as it wanted, undercutting everyone else's prices.
In addition, Third-party DSL providers were entirely dependent on Bell South
to "condition" and "provision" the line. The procedures set up for this in
the case of third parties were onerous in the extreme. For example, When I
tried to SWITCH from Bell South to another provider, I was told it would
take a couple of MONTHS. Although, clearly, my line had ALREADY been
provisioned AND conditioned for DSL, and all the switch would take was to
move the two wires connecting my line to the Bell South DSLAM at the central
office 1 or 2 feet to the other provider's DSLAM, "co-located" as the
industry jargon puts it, in the same Central Office. There were forms to be
filled out, Bell South --which, mind you, is ALREADY billing me $40/month
for DSL-- needed to check whether my line was suitable for DSL, I had to
sign special forms --forms which I wasn't required to provide to Bell South
when I signed up for its DSL service-- authorizing this company to change my
DSL service from Bell to them, etc. etc. etc.
In fact, it took more than a couple of months. My order for a switch of
service was placed in October. It was still pending in March when the new
provider went bankrupt. Ironically, One person in my neighborhood who HAD
succeeded in getting hooked up to this other providers', DSLAM was able to
restore DSL service in less than 48 hours by agreeing to have Bell South
become their ISP. The next month, April she got the cutback in the backup
dialup account; the following month the Bell South price increase, and,
finally, this month the news about the cutback in newsgroups.
But there's more. My connection to the CO had proved, after initial
problems, to be quite reliable, and easily exceeded to top up/down speeds
BellSouth lets you have. The month AFTER BS's couple of biggest "co-located"
competitors went under, my connection did so also. Speed began to drop, and
then the line died.
I complained, and in three or four days, my connection had been moved from a
central office DSLAM to one at a "remote cabinet" at the entrance to the
townhouse development where I live, a distance of perhaps 1/2 a kilometer
from my house. NOW my theoretical maximum DSL connection speeds tops out at
nearly 8mbit/second, though BS keeps it capped at the same 1.5mbps. And my
"up" speed is nearly 800kbit, 3X+ the BS cap of 256kbit.
Here's the kicker: Bell South doesn't have to let other ISP's co-locate DSL
terminal equipment at a remote cabinet, at least not if a connection can be
established from their CO. And just to make sure that any CO connection on
my phone line would be problematic, BS either a) reinstalled coils and
filters on my phone line at the "voice service" cabinet at the entrance to
my subdivision. Or b) unhooked my phone line from the unfiltered pair or
wires that I had been using leading to the CO from that cabinet and put me
on a filtered pair.
How do I know? Because my dialup connection speed collapsed from 44-48K to
20-24K. That happens when filters and coils are put in an otherwise
good-quality line, or when a shitty line replaces a good quality one. And
because I talked to the guy from BellSouth doing the work. Took out a coke
to him, in fact.
All of this relates to point a). Which is that no one knows the real cost of
providing broadband Internet access because the unregulated monopolies
offering this service are doing all sorts of "work" that is totally
unnecessary to providing the service, and is mostly aimed at making sure
they have a stranglehold on the market. Tremendous amounts of advertising
for what is essentially at this point an early adopters market. Fiddling
with the lines that will make it harder and more expensive for competitors
to hook me up, even UNDOING the adjustments to the line to the CO that had
previously made it possible to have DSL over it.
A *central* concern of the phone monopolies especially in doing this is
preserving the OUTRAGEOUS pricing structure they have imposed on businesses.
ISDN --128kbit/sec connections-- cost $80 with Bell South, require a 5 YEAR
(!!!) contract, and have per-minute usage charges above a certain minimum.
The physical connection, the wire, is essentially the same as for DSL. It
has to be a plain wire, unfiltered, not loaded with coils and such. There is
a modem-type-box at both ends, just like with DSL. Similarly, a business DSL
account starts at $100 and goes from there. And T1 lines, which are 1.5 mbit
up and down on mostly the SAME twisted wire pair as used for ISDN and DSL,
are something like $800 a month. BellSouth could easily provide me, from
their remote cabinet in my neighborhood, with MULTIPLE T-1 lines, probably
2-3 on EACH of the two twisted pairs from the cabinet to my house. The
CAPACITY to take the signals beyond the cabinet is there, the main street
was dug up and fiber installed a year ago, and probably all but 1 or 2
strands of the several dozen in the fiber bundle are "dark" at this point.
There's simply no point to digging up a street and putting in fiber UNLESS
you're going to go ahead an put in terabytes of bandwidth, since the cost of
the installation is the lion's share and is the same, whether you put in a
few megs of bandwidth or dozens of terabits. The fiber itself is relatively
cheap. And I believe in the particular case of my main street, both all
phone company services AND all cable services are being carried on that one
same fiber bundle, although perhaps BOTH monopolies put in their own
individual fiber bundle cable.
The reason why it is important to keep business services as expensive as
possible is that these are regulated, at least in the case of ISDN. The way
regulation works in Georgia (and perhaps other places) is cost plus. However
much the service costs, you add to that a certain percentage for profit. The
more expensive the service, the higher the profit.
Those with a quick mind for economics will instantly recognize this as a
formula for high labor costs (variable capital) and technological
backwardness. Why do they charge by the minute for ISDN connections?
Precisely *BECAUSE* it is monstrously expensive to do so. Sure, if you did
not keep track of minutes, you could offer UNLIMITED ISDN at, say,
$40/month, but that would be less profitable.
The BS tech who worked on my line a couple of months ago explained it all to
me. He said now the line from my remote cabinet to the CO would be optimized
for voice. And my DSL reliability would be top-notch. He's the one that
offered the tidbit that on this good (short) a wire, he could easily give me
a couple of T-1's, just by hooking up the right terminating equipment at
either end of the wire and hooking up the stuff on his end to the fiber. He
was totally loyal to BS, by the way, all the stuff about how BellSouth is
using this to monopolize the market are my own conclusions or come from
Most of this is about DSL. Fast Internet access via cable is another story.
That is much harder to do, in fact, because cable as originally deployed
wasn't a 2-way network. Each neighborhood on cable access is configured
essentially as a Local Area Network, like you might find in a office.
However, before you start crying for the poor cable companies, remember than
LAN cards at retail run about $10-$15 each. I just picked up a pair to set
up a home network for $10+$3s&h from computer geeks, and they provided both
Ethernet AND phoneline home networking. Of course, that was surplus, "white
At any rate, to provide the two-way interactivity that cable companies have
been telling us for more than a decade is the future of television, the
entire cable infrastructure needed to be upgraded and rebuilt. Cable
Internet access was just an afterthought, added on a couple of years ago
after the cable moguls flopped in testing the concept that people would be
willing to pay $20-$30/month more for the "service"of pressing 28 separate
"alt-mega-cokebottle" key combinations on a TV remote with keys designed for
fingers the size of those on four year olds rather than picking up the phone
and ordering the same pizza using what the MIT media lab calls a "natural
language" interface, i.e., your voice and the ears of the person on the
other end of the phone call. The *cost* of the upgrades are being paid
*entirely* out of current subscription fees. If you look at cable company
balance sheets, and their huge debt loads, you'll see that these debts have
resulted ENTIRELY from buying cable systems, and NONE comes from upgrading
So, whether cable or DSL, BOTH monopoly providers are simply trying to
extort however much they can from a fairly high-end market. The cost of
providing the basic service is probably somewhere around $10-$15/month. We
*know* that's the case because AOL is rolling out AOL plus over phonelines
(i.e., DSL) for an additional charge of $19.95/month. AOL has sufficient
clout to FORCE the local telcos to offer it "fair" rates. Even if its bought
and paid for judges, politicians and regulators weren't enough, the threat
to prevent them from advertising on either local cable avails (advertising
"slots" over national cable channels that the local cable sells in the local
market -- one of Ted Turner's ideas, which is how he succeeded in getting
everyone to carry TBS and CNN initially) or national cable channels would be
PS: On the BellSouth news servers. limiting bandwidth to DSL or cable
subscribers for Usenet downloads is counterproductive for the following
a) People are used to working interactively with newsgroups like
alt.2600.wares and others that carry "binaries" (i.e., file attachments,
whether these be music, pictures, movies or computer programs). With a fast
connection, you download headers and then look at the individual picture or
whatever, if you want it you save it. But if the newsgroup makes you wait to
look at each item, the solution is simply to set your newsgroup client to
download the ENTIRE content of that particular group, which the program does
automatically. Since you're using very little of your bandwidth in this
operation, you can still surf, stream videos, do anything else you want
while these megabit downloads proceed in the background. The net result is
that instead of decreasing the total amount of gigs served and transmitted,
you increase them radically. People can no longer use the server
interactively, so they cache tons of sever content on their own hard drives
(and remember, right now 40 gigs can be had for as little as $100) to
b) The slow downloads multiply the number of connections a server has to
keep track of. If I could be in and out in two seconds, I would do that.
Instead, my news client in the background is keeping a connection with the
server open for many minutes, even hours. Keeping track of all those
connections eats up the resources of the news server. Think of it this way:
if you want to put a litter of water on some plant, it is much easier to do
it with a bucket than an eye dropper. I fill up the bucket, dump the water
on one plant, then go on to the next. But if I do it with an eye dropper, it
is going to take me much longer. Moreover, I'll need to get assistants to
drip the water, one drop at a time, on the other 10, 20 or 100 plants that
This isn't something I've discovered, it's a well-known phenomenon in
computer science and networking, and is one of the basic argument for having
faster networks. If it is extremely hard and painful to get X content which
you *might* need once in a blue moon, everyone will want a copy on their own
hard drive, or on diskette or CD. And the bigger the file, the more
pronounced the effect. If the only fast, convenient access is for stuff in
local storage, you will put everything in local storage. If, however, you
know you can easily get the file in a few seconds from the network (or the
Internet), there's no reason to store it locally. So there is a certain
point at which having a fast/convenient enough network REDUCES the load on
the network, because people are less likely to download stuff "just in
case." And when you throttle bandwidth/ease of access/connectivity you
INCREASE the total load on the network from a sector of the user community,
the "hard core" sector, which is * precisely* the sector that patronizes
----- Original Message -----
From: "jonathan flanders" <jon_flanders at compuserve.com>
To: <marxism at lists.panix.com>
Sent: Monday, June 18, 2001 5:06 PM
Subject: Re: Railroad lines and fiber-optics
>> Few people have fast Internet connections, and prices are rising for
who do. <<
Prices were high from the beginning. For whatever reason, the cable
companies and phone companies did not try to gain market share and volume
by offering low cost service.
Why should I sign up for the cable access I could have obtained years ago,
actually, when the cost would double my cable bill? In my case, all they
had to do was provide a modem.
On top of that, my family uses AOL, and I still am a Compuserve Classic
user, but would get no discount as AOL subscribers from our cable provider
AOL-Time-Warner. The AOL 9.95 per month would be added to the Road-Runner
Monopolies can overshoot, if they overcharge for a service people can do
without. Let's see what happens with Windows XP.
Cable/DSL is a ripoff, and now the piper must be paid.
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