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Re: flat vs non-flat charging

  • From: steven hessing
  • Date: Mon Jun 01 08:53:28 1998


WDM may lower the price per Mbit/s considerably, however many of these
Mbit/s will have to be sold to be profitable as a service. Connecting
two routers using dedicated WDM gear and 5km of fiber to send over
155Mbit/s traffic is more expensive then connecting the two routers
directly using 5km of fiber, even though the first solution would 
give you much more available capacity.

If multiple services need to run over the same fiber then existing
ATM or SDH networks are well capable of multiplexing these services
over one fiber at often lower costs then installing new WDM gear.

There where there is a fiber shortage because there is no further
room for service multiplexing or there is a shortage of capacity, WDM
will be a very good solution. It is much cheaper then installing new

WDM is therefor very real for connecting TEX's together and for
connecting LEX's to TEX's. I expect that WDM needs OADMs or other
up and coming technology for SDH or WDM to become cost-effective for
the MAN/local loop.

To return to the original topic, for the forseeable future (3-5 years?)
bandwidth will remain scarce and therefor expensive. The prices per
MBit/s will drop shortply but this will be compensated in a large
increase in demand. An distance-based pricing scheme could therefor
be an appropriate solution. Personally, I don't think it will happen. 

-- Steven 

PS: if anyone can prove me wrong with some numbers, please show me :)
I've been working on cost calculations for bandwidth for the last
couple of weeks.

In your mail from 29-5-1998 you write:
> Jerry:
> You are absolutely right.  I have pulled together some numbers on public
> pricing for long haul WDM (including right of way) showing that if you ou=
> t
> IP over WDM the cost of bandwidth drops by a factor of 100 to 1000.  On
> local loops it is more dramatic - with new WDM technology from companies
> like Cambrian and Ciena gigabit ethernet or OC-48 SONET on a 5km local lo=
> op
> should cost about $2500 per YEAR.
> A number of our regional networks have already pulled their own fiber and
> our realizing these costs in the real  world.
> Fibre - $4 to $6 per meter
>       20 year economic life and 10% maintenance per year
>       48 strands NZDSF
> Right of way $0 -$10 per meter per year (up to $200 per meter on long hau=
> l)
> but
>     common solution is to offer right way owner free use of a couple of
> strands instead of paying cash
> Installation $25 per meter underground in cities
>       $6 per meter on poles (maintenance costs 20% year)
> Twenty year amortized cost with 10% cost of money plus maintenance plus
> right of way costs at $10/year per meter
>   $17 per year per meter for 48 strands
>   $1.50 per year per meter per strand
>    $.50 per year per meter per wavelength
> A 5 km OC-48 local loop should cost about $2500/year
> Bill
> -------------------------------------------
> Bill St Arnaud
> Director Network Projects
> =A0
> =A0
> > -----Original Message-----
> > From: []On Behalf Of
> > Jerry Scharf
> > Sent: Friday, May 29, 1998 12:07 PM
> > To:
> > Subject: flat vs non-flat charging
> >
> >
> > I think the idea of distance charging is going away in many
> > cases. With WDM,
> > the cost of the WDM and SONET eqiupment on the ends of a fully
> > populated 32
> > channel per fiber, 144 strand pull vastly outweight end-to-end
> > fiber costs of
> > anything pulled through the ground. When you add routers and the
> > like on top
> > of that, the distance issue really goes away and it becomes on of netwo=
> rk
> > topology hops. Can anyone with figures for new intercontinental pulls s=
> ay
> > whether this is true there as well (project oxygen marketing claims thi=
> s,
> > but...)?
> >
> > Using archaic telephone pricing models to argue cost of providing bulk =
> IP
> > services is just not right.
> >
> > jerry
> >
> >

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