North American Network Operators Group

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Re: best effort has economic problems

  • From: Vicky Rode
  • Date: Sat May 29 22:25:05 2004

interesting reading....


http://mail.internet2.edu:8080/guest/archives/qbone-arch-dt/log200205/msg00000.html


regards,
/vicky

Edward B. Dreger wrote:
GC> Date: Sat, 29 May 2004 16:53:17 -0400
GC> From: Gordon Cook


GC> The point I am making in my report is NOT that the best
GC> effort network has technology problems but rather that it has
GC> ECONOMIC PROBLEMS.  That it might support 2 or 3 players not
GC> 2 or 3 HUNDRED.

Best effort is cheaper to provide.  Cheaper sells.  Is there
enough of a market to sustain premium services?  IP-based VPNs
haven't replaced FR and PtP WAN links, but FR and PtP haven't
thwarted IP-based VPNs.


GC> That until companies begin to go chapter seven and vanish,
GC> the best effort net will be a black hole that burns up
GC> capital because, for many players, the OPERATIONAL expense is
GC> more than they get for bandwidth never mind cap-ex.

Definitely true about opex and capex... but I'm not convinced
that QoS is the magic bullet that will make the marketplace big
enough and profitable enough.  I don't see service offerings
fixing the woes of screwball pricing.


GC> best effort won't go away.  many best effort players will.

If all best effort players provided QoS/guaranteed services,
would the survival rate be significantly higher as a result?


GC> for the time being, best effort bandwidth prices as an
GC> absolute commodity cannot sustain networks over the long
GC> haul.  A network that can deliver QoS the report hypothesizes
GC> may be able to attract enough revenue to become profitable.

That's where I'm not convinced.  Current IP delineates the lower
reliability boundary and a benchmark price point.  Premium
services won't have a lower cost than best-effort, so they must
sell for more.  Would the incremental service improvements be
high enough to draw customers away from cheap BE _and_ support
"sufficient" margins?

First class hasn't stopped the cycle of airline bankruptcies and
government bailouts.  I don't see "first class data" as much
different.


GC> How to to this my group is still discussing.  We don't
GC> pretend that QoS is easy or any kind of mature collection of
GC> technologies, but increasingly it looks as though the
GC> industry, if it is ever going to be self sustaining, really
GC> needs to look at QoS services and solutions.

Perhaps, but only if the price is right.  DSL sells better than
Internet T1 lines, which sell better than end-to-end private
lines and packet clouds.  There's a reason for that.


Eddy
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