[LINK] What Does a Gigabyte Cost, Revisited

[Tom Koltai]

> -----Original Message-----
> From: link-bounces at mailman.anu.edu.au 
> [mailto:link-bounces at mailman.anu.edu.au] On Behalf Of Kim Holburn
> Sent: Sunday, 31 July 2011 12:11 PM
> To: Link list
> Subject: [LINK] What Does a Gigabyte Cost, Revisited
> 
> 
> An interesting article on the cost of a gigabyte in Canada 
> which is not unrelated to cost of a gigabyte anywhere. 
> 
http://www.michaelgeist.ca/content/view/5952/125/

I noticed though in one of the last comments, this:

> While I haven't been in the industry 30 years, I was there when DSL 
> deployments took off working on engineering, design and costing (back 
> when we did use DS3 and OC3 links to the tier ones). Then I moved to 
> wireless (cellular/3G and up). It is no secret that the average cost 
> for 3G internet access services for North American operators is in the

> range of 1c per served MB. That is approximately 100 times more than 
> in wireline (specifically: dsl - cable is even cheaper).
>
>
>There you have it stated, although not proved, and I would like to see
a detailed study: 
>wireless broadband is 100 times the cost of wired.  Cable and
glass-wire even cheaper.

An anecdotal looksee. 


Unfortunately, the real cost of wireless is not the current cost of
Megabytes from the USA.
(If we calculate PPC-1 at $384 million cost and amortise it's capacity
for an expected lifespan of ten years, then the cost per Megabit is
only $0.000000000000006213.) (Or a Gigabyte is only $
0.000000000049700245 )

The cost of wireless is the cost of maintaining legacy wireless devices
from the UMTS/EDGE/WAP (etc) era.

There are a total of 223 standards that wireless carriers need to
maintain at each cell tower to allow customers with 1994 vintage phones
to still utilise their services.
Added to this the inordinately high cost of real estate that is charged
to carriers for a little antenna and the cost per Megabyte is in fact
quite high.

E.g.: in Australia, the rules prohibit carriers from utilising more than
15 MHz per antenna].
That equals a maximum of 90 MB's per 120 degree sector.

In Sydney CBD alone the 619 [2] sector antennas utilised can cost
anything from 40,000 per install to 1.3 million per, depending on the
range of equipment at each location.

If we do the math, that has cost the carriers $414,730,000.00 in capex
and approximately 2,000 to 20,000 per site per month to maintain. 

A back of the envelope calculation would give us: $138,243,333.33
(annual amortisation
and  6,809,000.00 site costs giving us a break even price of $16,558.49
per hour (24/7) or 
$69,545.64 per hour for the business hours high density utilisation
period.

The Sydney CBD has between 320,000 and 420,000 persons during business
hours (9:00 am to 5:00 pm Mon-Fri).

619 Sectors at 5 MHz each equals a maximum of 30 users per location at 1
Mbits per sec utilisation (or 18,570 users).

Assuming zero cost for backhaul, staffing (help desk), admin or overseas
megabytes, the minimum the carriers could charge for only their wireless
infrastructure per user is $3.75 per hour otherwise the Networks will go
broke [3].

And that ignores the amortisation of the expensive capex cost of the
spectrum.

Suddenly, DSL, Fibre etc start to look a lot cheaper.
In fact, I am confident I can deliver via DSL for a cost of around 3
cents per hour.

Therefore the cost of a Gigabyte is irrelevant in this instance. 

Very different business models requiring very different charging
calculations.
In fact the only way to free up the antennas for ubiquitous utilisation
by everyone is via expensive charging regimes and small broadband Caps.

Unfortunately, the general public don't Grok network economics. Yet it
is these very same network economics that justify and create a defacto
mandate for the continuing implementation of the NBN.

Tom

References:
[1] No person or specified group of persons could be allocated more than
2x15 MHz in any mainland state capital city in the frequency band
1710-1755/1805-1850 MHz; and that Telstra, Optus and Vodafone were
precluded by carrier licence condition from bidding on 2x10 MHz
(825-835/870-880 MHz) of the spectrum offered in the 800 MHz band in
mainland state capital cities and 2x5 MHz (825-830/870-875 MHz) of that
band in other areas. (ACMA)

[2]
http://maps.spench.net/rf/#pos=-33.8663687,151.1913501&zoom=13&type=hybr
id&auto_fetch=true&clustering=true&cluster_level=17&filter=[{%22site_des
c%22%3A%22mobile%20spectrum%20licensing%22}%2C{%22client_name%22%3A%22op
tus%22}%2C{%22client_name%22%3A%22telstra%22}%2C{%22client_name%22%3A%22
vodafone%22}%2C{%22client_name%22%3A%22hutchison%22}]&q=s%20%22mobile%20
spectrum%20licensing%22%2C%20c%20optus%2C%20c%20telstra%2C%20c%20vodafon
e%2C%20c%20hutchison&tiles=[{%22t%22%3A%22u%2Fblack%22}%2C{%22t%22%3A%22
s%2Fall%22}%2C{%22t%22%3A%22s%2Fmobile%22%2C%22v%22%3Afalse}%2C{%22t%22%
3A%22s%2Fmobile-telstra%22%2C%22v%22%3Afalse}%2C{%22t%22%3A%22s%2Fmobile
-spectrum%22%2C%22v%22%3Afalse}%2C{%22t%22%3A%22s%2Fmobile-telstra-new%2
2%2C%22v%22%3Afalse}]

[3]Networks will be losing money on data by 2014 (Tellabs).
http://www.globaltelecomsbusiness.com/Article/2775816/Sectors/25199/Netw
orks-will-be-losing-money-on-data-by-2014.html

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