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Re: best effort has economic problems
- From: Edward B. Dreger
- Date: Sat May 29 18:49:27 2004
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
First class hasn't stopped the cycle of airline bankruptcies and
government bailouts. I don't see "first class data" as much
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.
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