On Tue, 22 Jul 2014, Phil Pennock wrote:
3.) ISPs simply say "screw it" and freeze the investment in architecture in
place and don't put another dime into it. If you think that's unlikely, ask
yourself "when was the last FIOS city rolled out most recently?" Answer:
YEARS AGO because VZN has already done the math and realized that IP traffic
on FIOS scale is a LOSING PROPOSITION for them. If your town doesn't have
Verizon FIOS today, it never will. EVEN IF they've already run the fiber for
it. Because lighting up that fiber means incurring a customer base that they
lose money on. Better to write off the CapEx than to have to write off the
CapEx **and** take monthly OpEx losses on it as well.
Actually, I live in Pittsburgh, PA, and FiOS is continuing to roll out
here. The explanation I've heard (so no, I do not know this
first-hand) is that the city negotiated the contract for the
rights-of-way competently, so that not only is there a requirement to
reach the whole city, and not only are there penalty clauses, but the
penalty clauses are on a _renewing_ basis, not one-time, so for as long
as the city doesn't have ~complete coverage, Verizon keep paying fines,
hefty enough to actually show up on the bottom line. Apparently, the
deadline is the end of this year, and it was last year that Verizon
realized they actually had to deliver and suddenly started back up the
roll-out.
I know that Verizon's sales people were utterly uninterested in
acknowledging that there was FiOS passing my house and uninterested in
making a sale (which tells you something about the level of market
forces actually in play) and this persisted, until the head of the
redevelopment corp went and shouted at Verizon on our behalf; the city
apparently did not appreciate having the values of property in their
redevelopment project being hurt by Verizon being unwilling to update
their database. (Yes, I had explicitly asked about FiOS availability
when we purchased the house.)
The recent exchange of blog posts with verizon shows that they have the
bandwidth internally, but they are not upgrading the peering point as needed,
it's not a large investment that they need to make (even before the level3 PR
stunt of offering to pay for the router card and cables)
The asymmetrical bandwidth claim is also a red herring, Netflix could change the
client to send data back to the Netflix servers at the max possible bandwidth of
the client and throw it away at the server. This would address the traffic
'imbalance', but would not improve anything.
Think about this in terms of mail delivery. Would it be reasonable for FedEx or
UPS to decide that they are delivering a lot of things to a warehouse somewhere,
so that warehouse should pay them for the privilege of delivering the packages
to them (even though the people shipping the packages already paid the
shipping)?
They would probably try to do something like this if they could get away with
it, but they can't because they don't have a monopoly on the senders.
Some people say that Netflix needs the local ISPs more than they need Netflix
because the customers are on the local ISPs. That's only the case if the
customers can't move away from them because there is no competition. Change
that fact and then the situation changes and if you have the choice between one
ISP that works with everything and another that Netflix doesn't work on, you
would find that a lot of people will move to the one that Netflix works on.
If this wasn't the case, why would Verizon care that Netflix is claiming that
people using their network can't get as an experience? This shows that even the
minor amount of competition that there is is enough to worry them.
David Lang
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