Broadband Bytes for 2014-10-31

Tagged . Bookmark the permalink.

22 Responses to Broadband Bytes for 2014-10-31

  1. charlesH says:

    It is equally ridiculous to say everyone needs 1Gb/s as it is to say no one needs more than 5Mb/s.

    We currently pay $50/m for 25Mb/s. We could get 50Mb/s for $60 but we don’t do it because we don’t need it. 25Mb/s supports two HD Netflix streams and web-browsing at the same time. This is the “sweat spot” for our family.

    I would much rather bay less for 25Mb/s than more for 1Gb/s.

  2. charlesH says:

    Not true. It’s 55 for 100. You have to add the utopia fee ($20).

    Point is 1G is not what most people want to pay for. They want cheaper <=25M. The cheapest Utopia plan is $55.

    What can I get for $30? $40 on Utopia? Nothing. Utopia is trying to see a Lexus in a Toyota market.

    • charlesH says:

      Actually I think the Utopia fee is $25. So the cheapest Utopia plan is $60.

      Forget about 1G. Where are the $30, $40 plans on Utopia?

  3. Ronald D. Hunt says:

    After taxes and pleasure of not having basic fee, my comcast 50 meg is $82 dollars per month. The 25 meg is only $10 dollars cheaper.

    We have access to centurylink’s 20 meg service, mind you that was thee, bar none WORST service I have ever had. Unbelievable how their tech’s played the blame game, claiming nightly DSL outages where due to the power company, or how they kicked me off my ISP(xmission) and forced me onto there junk internet provider(msn), after they ‘upgraded'(hah) my area to FTTN(copper from the node) network.

  4. Ronald D. Hunt says:

    And while most customers may at the moment not need 1 gig lines for the throughput, they do need the 1 gig lines for the vastly improved latency.

  5. Ronald D. Hunt says:

    People do more then Netflix you know!, VOIP, Gaming, even web browsing benefits a great deal from latency improvements, and I do like my web pages to be snappy.

    For say round trip Utah to seattle,…

    Under best conditions DSL is around 40ms higher then 1 gig fiber, mind you best conditions only apply to about 30% of DSL customers(those people close enough to the dslam and have good copper inbetween).

    Under best conditions Cable is around 70ms higher then fiber, mind this can vary greatly depending on other customers usage levels, generally speaking this is much worse during peak hours.

    I have seen sub 20ms latencies on fiber connections, it really makes a difference.

    • charlesH says:

      Using speedtest.net i’m seeing 12ms latency as I write. Comcast cable.

    • charlesH says:

      I’m skeptical of the claim that fiber has inherent lower latency than cable. There is not technical basis for this claim and the limited data I have doesn’t support the claim either.

      I consistently see latency of <20ms with cable.

      I also am skeptical of the claim that 1G service has lower latency than 25M. Network latency depends on the physical plant not the last mile technology.

  6. Ronald D. Hunt says:

    comcast runs speedtest.net aka it is not a good source to use.
    kick up world of warcraft and see what the latency meter tells you.

    There is not technical basis for this claim and the limited data I have doesn’t support the claim either.

    Actually, cable networks are ring networks, a single line with hundreds of clients gloaming on the line, transmitting in turn on their channel one after the next. The latency goes up as a function of the count of clients, and the provider has to give all clients in turn a chance to transmit even if not all clients have something to send. They can pass on their turn quicker when they don’t have any data to send, but that still has a time cost.

    Fiber at least on the Utopia network is a switched technology. Tho even GPON, which is also a ring topology, does better as the client count is much lower, a typical GPON ring is generally at most 30 houses.

    Fiber also, does not need to waste time with re-transmission of bad packets as fiber does not suffer from electromagnetic or radio interference like copper based networks do.

  7. Ronald D. Hunt says:

    Test it this way, get google chrome, in the menu goto the more tools option and open developer tools, click on the network tab that it brings up, now hit http://www.amazon.com and see how long it takes you to load the page.

    And see that huge list of files, you are paying the latency hit on each and every one of those in turn.

    Now Amazon is really good at hiding the fact that their page is still loading long after it “appears” to have finished loading, not every site is as well built.

    • charlesH says:

      latency is not how long it takes to load the page. latency is the time for the first response to a random initial request.

      Using pingtest.net I get 26ms.

      Again, the point being 25Mb/s cheaper is more attractive than 1G more expensive to most people, which is obvious when one considers the low take rates for Utopia in served areas.

  8. Ronald D. Hunt says:

    pingtest.net is part of speedtest.net, again owned and operated by comcast.

    Perhaps you don’t under why that test is bad, Comcast first of all gives a high QoS status to communications from them, meaning that traffic from these sites is moved to the front of the line of other traffic, basically the opposite of what comcast did to netflix.

    latency is not how long it takes to load the page

    Correct, latency is the time to takes to send a request, not the time required to fulfill said request.

    latency is the time for the first response to a random initial request.

    I will give that a 4 out of 10. Latency effects all requests and responses not just the initial one. Any potential caching you might think is their isn’t in fact their, Only thing that is faster after the first request is the dns lookup as domain names do get cached.

    The tcp/ip handshaking process can only be avoided with protocols that keep open the connection for further requests, http and https don’t do this.

    • charlesH says:

      Bottom line.

      Comcast 25/5 is fast enough. I have tried Comcast 50/10 and I see no MATERIAL difference for what I do. I do not want to pay more for faster speed. I am like most of the market. 1G is vast overkill for what I need.

      So if Utopia wants to increase their market share, they need to offer 25/5 cheaper than $50, not continue to talk about 1G (a speed most of the market could care less about).

      Utopia continues to try and sell a Lexus (1G) in a Toyota (<$50) market. Which explains why their take rates are so low and are a failed business thus far.

  9. Ronald D. Hunt says:

    Sounds like you should be satisfied with the proposed basic service line that comes with the utility fee then, And that even comes with basic phone service.

    Really I don’t see the complaint here, 100/100 is a perfectly fine minimum service level for the paid service tiers.

    Utopia’s biggest problem is reaching customers, not market take rates, They need to expand to create a large enough base of reachable customers that their service providers can afford to market services on a continuing basis, that is what will increase their take rates and make the whole thing work.

    To many potential customers are locked into contracts, and can’t simply switch services on a dime, not that it matters because to few people even know about utopia because of a lack of marketing.

    In Utopia’s current position lower tier services with do nothing but gut mid tier subscriber revenue.

    • charlesH says:

      “Utopia’s biggest problem is reaching customers, not market take rates, They need to expand to create a large enough base of reachable customers that their service providers can afford to market services on a continuing basis, that is what will increase their take rates and make the whole thing work.”

      The problem is the take rates are so low they can’t finance expansion. It’s like they lose money on every widget but try to make it up in volume.

      “Sounds like you should be satisfied with the proposed basic service line that comes with the utility fee then, And that even comes with basic phone service.”

      Basic service is 5/3? Not quite the same as 25/5 is it? So I don’t understand your point.

      Utopia – Lexus in a Toyota market.

  10. Ronald D. Hunt says:

    The problem is the take rates are so low they can’t finance expansion. It’s like they lose money on every widget but try to make it up in volume.

    They simply don’t have access to enough customers to use sell by volume tactics.

    And their take rates are not that low, overall close to or a little over 30%, which is shocking considering the complete and utter lack of any marketing at all.

    What you are asking for is for Utopia is cause all its current providers to lose a chunk of their revenue from customer downgrades, so that a new lower tier can be accommodated, which might grow their take rate over the next several years as subscribers turn over on multi year discount agreements.

    You are asking service providers on Utopia to both take in less revenue and invest more to market and advertise, so that maybe 2-3 years from now they might get back to where they are now.

    No, sir, you need to look at reality, Utopia needs outside investment, to increase the size of the network, so that the service providers can afford marketing services, because the marketing can be aimed at new revenue from new customers without risking existing revenue.

    “Basic service is 5/3? Not quite the same as 25/5 is it? So I don’t understand your point.”

    25/5, 100/100 from the perspective of Utopia it makes no difference, stop looking at the rated speed, and lets call both what they are, the minimum service tier generally available.

    Comcast, caps their speeds to 25/5 for 2 reasons, one to tier the market, for the purpose of allowing customers to feel like they picked the service level that best fits them, and two and most importantly, because the shared topology of their network technology would to easily become saturated in very many customers had 100/100 service.

    The first issue, is completely marketing BS, a docsis 3 connection is a docsis 3 connection is a docsis 3 connection. The imaginary tier they put you in has little real meaning other then QoS on the router they use.

    The second issue doesn’t apply to fiber.

    • charlesH says:

      ” Utopia needs outside investment, ”

      Yes, because the take rates are too low to be self financing. That is why the utility fee is proposed by outside investors. To compensate for the low take rate.

      Lexus in a Toyota market.

      • Jesse says:

        Charles, this has been very amusing to watch. You’ve dug yourself into an intractable hole from which there is no escape.

        First off, let’s talk the cost to deliver service. For a 100Mbps circuit, it’s about $25/mo. This doesn’t substantively change if you’re filling the pipe or not. What does change is the retail price. You can charge $50/mo for the 100M service. If you charge your suggested $30 for 25Mbps service, that cuts the profit margin by 80%. That means you need to sell five customers on the $30 plan to make as much money as signing up one customer on the $50 one. Heck, that’s probably not high enough because of the customer acquisition costs.

        Then you run into cannibalization issues. Let’s say you manage to sign up five $30 customers, but, wait, one of them was previously a $50 customer. Now you need to change down another five customers to try and make up the money you just lost from the customer who switched plans!

        Do you see where this is going?

        Your suggestion to come up with low-cost plans isn’t new and it always has the same outcome, being dashed mercilessly upon the rocks of reality. You either spend all of your profit margins on customer acquisitions, cannibalize higher-margin plans, or some combination of the two. Whatever it is, you lose money to gain customers. That’s a horrible outcome. (PS You may recall that this is why Veracity got in a rut with iProvo.)

        The only reason that cable and phone companies can offer such low-cost plans is they have paid off their networks many, many times over in non-competitive marketplaces. They’re also willing to cross-subsidize from other markets to stomp out competition. UTOPIA has no such luxury.

  11. Ronald D. Hunt says:

    Yes, because the take rates are too low to be self financing.

    Increasing the take rate while lowering the revenue per subscriber does nothing to help the situation.

    Utopia needs to decrease the cost of the minimum paid tier(the 100/100) to move customers into the service from other providers. But they can not do this without direct and concerted efforts of their service providers marketing services continually. Without service provider cooperation, lower transport fees would be a lose with no gain.

    Service providers will not engage in direct marketing in area’s where their is a low opportunity rate for subscriber take up. If a particular area has a 30% take rate on Utopia already, and we can assume another 30-40% of customers are in existing contracts(ones that include early termination fees), What remains is rather slim pickings, people that don’t want wireline services(cell only households), have an existing service and won’t switch regardless of other options.

    From the providers point of view its not worth it.

    Now if the providers are engaged in marketing to newly available area’s, and are running direct marketing to them, the opportunity cost of marketing to the rest of the Utopia service area decreases dramatically. More importantly if new address continue to become available over an extended period of time, then so to will the marketing efforts continue.

    Any solution that Utopia moves towards, needs to have direct active support from the service providers, They need to have a reason to invest in marketing efforts.

    That is why the utility fee is proposed by outside investors.

    The Utility fee is proposed because that would give them access to municipal bond rates rather then corporate bond rates. 3.5-4.5% rather then 6-7%+.

    Cities are willing to hear it because, this method allows them to keep a portion of the revenue from the network(50%), and apply that towards the existing bond debt, with any amount above that likely being applied to buying down the utility fee.

    And even pessimistic take rates(35%), would cover the existing bonds, with more realistic take rates(50%), buying down the utility fee to around where existing bond debt is costing everyone already.

    In the Utility fee model we get a fiber network to every address, and basic service as part of the Utility fee. Where as the existing model is getting us no where, And most other proposals look more like unicorns farting fairy dust then a practical solution to anything.

Leave a Reply to Jesse Cancel reply

Your email address will not be published. Required fields are marked *