Michael Pellegrini's Blog and Rants and Stuff

Here’s what I think is going to be big in the near future:

A lot of the commercial software publishing places have immense pipes for software downloads, now. And if the people in the forums are telling the truth, download speeds are mostly not capped (on the software publisher’s end).

The most prominent online publisher right has got to be Valve, with their Steam distribution system (http://www.steampowered.com/ ) which they used to distribute Halflife 2.

I heard that they had a phenomenal amount of bandwidth available for the release of HL2 – something like 1,500 Mb/s. I’m not aware of any download throttle or any other speed limitation they placed on users.

My own experience was that on the day HL2 was released, I bought and downloaded two copies – say maybe 6-8 GB of files, total – and it took all day. Based on the fact that it was on the first day, I was happy that it even just worked – both downloads went without a problem. But it was still a bitch that it took so long. It tied up two computers almost all of the day.

If I’d had a 10 mb/s connection, it would have taken less than two hours. For someone with a 1.5 mb/s connection, it would take about 12 hours.

Time is money.

The HL2 launch was a real test for Steam and they came out of it smelling like a rose. No real problems at all. The best thing for Valve was that they cut their CD publisher (Vivendi) out of the equation – making them significantly more bucks. As well as giving them complete control over the distribution.

Because of their success, this is a business model you can expect to see a lot more of in the coming years. Not only for games, but for all other kinds of software.

Another big coming download item will be movies.

A typical movie weighs in at around 6-8 GB. With pokey 2.5 mb/s connections, an 8 GB download takes maybe 7.3 hours. Obviously that isn’t something that will appeal to many people – tie their computer up for over 7 hours just to download one movie? Nah. Just too damned long.

But raise the download speed to 10 mb/s and that same download now takes only 109 minutes – now that’s almost workable.

If you live in Korea or Japan and have a 25 mb/s connection – as most people there do – you can download that movie in 45 minutes.

Or, if you live in Sequim or Shelton, Washington (which have F-T-H with 100 mb/s connections) that same download would take 11 minutes.

When the download’s complete, you slip a blank DVD in your burner, presto chango, you’ve got a copy of Ocean’s Twelve that you can watch three times, after which it becomes unplayable – all for $2.50 and you never had to leave your house.

And then there’s streaming video, which is also destined to become very popular.

How long will it take to have companies available to deliver movies over the internet in the US? That’s completely dependant on how fast true broadband is deployed.

I’m guessing that the threshold for movie downloads to become popular will be around 10 mb/s – that is, when a 10 mb/s connection becomes the standard, then downloading or streaming movies over the internet will start to become common. If people have to wait longer than a couple of hours for a download, or play a streaming movie in a screen that’s 80X60 pixels wide, then no one’s going to want it.

10 mb/s is the appropriate threshold for both downloads and streaming video.

There are already a number of companies positioned to make the move to downloads as a business model – like http://www.netflix.com/ for example. I actually found one company that already offers downloads: http://www.cinemanow.com/home.aspx
(they offer both streaming and downloads). But I can’t believe that they get much business – at least from the US.

Korea and Japan – the countries that lead the world in broadband deployment – are beginning to build-out a network that can deliver between 50 and 100 mb/s to homes – they’ve already outgrown their 25 mb/s connections. See: http://www.lightreading.com/document.asp?site=lightreading&doc_id=62280 or
http://www.iht.com/articles/541830.html

Yahoo Japan and their partner Softbank now offer 100 mb/s fiber-to-home service costing just $38 US per month!

Everyone knocks Optimum Online because they’re losing money with their 10 mb/s down, 1 mb/s up service. My response is, yeah, sure, they’re losing money, but whatever their bottom-line, they are apparently happy with it. They’ve stuck with their business model and didn’t even raise their rates this year. And they’re expanding, even.

Has Amazon.com made money yet? Or yahoo.com?

OOL has the correct vision of where the country will be heading (all you really have to do is look at Korea or Japan). OOL’s just ahead of the wave here – they had the balls to get out front and lead, rather than waiting timidly on the sidelines to see what the “big boys” were doing. They know their business model is sound. They’re just waiting for the rest of us to catch up/

According to news reports, bandwidth costs have dropped over 50% compared to last year’s prices.

Here’s a report out of Light Reading, a telecom industry trade journal:
“The average price that the companies pay for STM-1 (155 Mbit/s) connectivity to global Internet fell by 55 percent in U.S. cities and by 49 percent in Europe over the past 12 months, TeleGeography says. In Asia, prices declined at a comparable rate, but are still twice as high as those in the U.S. and Europe.”
Here’s an url for the whole article: http://www.lightreading.com/document.asp?site=lightreading&doc_id=59445

And an article from Wired on the same subject: http://www.wired.com/news/business/0,1367,65121,00.html?tw=wn_tophead_5

Did you read that? “[Asian] prices declined at a comparable rate but are still twice as high as those in the US…” But yet Japanese companies can offer 100 mb/s connections for $38 US? How the hell you suppose that works?

I don’t know what Comcast pays for bandwidth. But because they’re the largest ISP in the country, I’m guessing the pay substantially less than anyone else. So if the average price for wholesale bandwidth fell 55% in the US, then Comcast has got to be rolling in dough because of the vast quantities they buy – I’m sure they get the very best prices anywhere.

Our own local municipal broadband internet utility, Click, buys from various sources: Internap, Electric Lightwave and Global Crossings to name three. If wholesale prices have fallen 55% on the average in the last year, then unless Click management is dirt stupid (which may very well be true) then they are also paying, on the average, 55% less than last year. It wouldn’t even be as sweet a deal as what Comcast gets for bandwidth; they’re worlds apart. But it should be about half whatever it was they paid last year.

Thus, if Click was making a reasonable profit last year, then this year they should be making, on the average, 55% more. Meaning, they could chop their rates or offer more bandwidth and still be making good money. Q.E.D.

Which is why I am pushing them so hard to provide more bandwidth.

The kinds of applications I want are, at least right now, mostly only available in Korea or Japan. And I’ll tell you what: that pisses me off!

Why the hell should Americans take a back seat to all these different kinds of great new technology, to the Koreans and Japanese?

I want to talk with my mom by videophone. I want to download movies and music. I want to download games that take up three DVD’s of space. And I want it all right now at the same time, while I’m playing an online game on my own server with 64 other people.

There’s only one main thing holding all this back: greed.

It’s all the small-minded, greedy ISP’s in the US that keep pinching pennies, trying to milk the last little dollar out of every drop of bandwidth. By them keeping prices high and limiting our bandwidth, they’re turning us into a third world country.

It’s that AOL mindset. 56k is all anyone needs!

I’ll tell you what: AOL is mostly dead already, and they’re too stupid to know it. Unless they take some really aggressive steps to change their business model very soon, they’ll be history in short order. And then in 20 years, no one will even remember what the hell AOL stands for. “Was that Absent Over Leave?”

Click has much the same mindset, and it really bothers me.

They have no real understanding of some of the very most fundamental aspects of the broadband industry. And I find that very troubling.

So what’s my bottom line?

All I’m saying is that real broadband, with connections in the 10-25 mb/s range is coming and very soon – so why fight it?

Fourteen years ago, I had a computer with a 20 MB hard drive – an HP 150 Touchscreen. It ran a proprietary version of MS-DOS – version 3.10. It had Word version 1.3 on it – the exe file for Word was a whopping 64KB. The machine had 640 K of RAM. Back then, a modem that really screamed ran at 2,400 baud. The computer was great for everything I needed at the time. I never actually did fill-up that 20 MB drive.

Last week I had to buy a new hard drive for my current computer because I was having space problems – I had two drives with a total of 80 GB. I replaced the second 60 GB drive with a new 200 GB drive and now I have extra space again – at least for a while.

But if you’d tried to tell me back in 1991 that I’d ever even need over 200 GB of HD space, I’d have called you a retard. Who the hell could ever use that much space? Gimme a break!

No, just as the size of hard drives has increased, the need for bandwidth will always go up as well.

And as soon as a certain level of bandwidth is available, there will always be applications ready and waiting to fill up that bandwidth. Every time.

It’s like the movie Field of Dreams. You remember, “Build it and they will come.”

The ISP’s make the bandwidth available, it will be used. I guarantee it.

Below is an open letter to Click! Network management.

For nearly six months now, Click! Network subscribers in the City of Tacoma and surrounding areas have had to pay 33% more for their broadband Internet service than similarly situated customers of Comcast and Qwest.

Why is this? There really is no rational answer.

How could anyone have failed to notice that Comcast and Qwest had changed their product offerings, effectively lowering their prices? How could anyone have thought that Click could be competitive with the “big boys” by allowing their rates to remain 33% higher than everyone else?

Click’s management decisions defy logic.

I sent Mayor Baarsma and the Tacoma City Council a letter outlining these and other problems in great detail, about a month and a half ago. Councilmember Julie Anderson sent me back a note thanking me for the information, then later I heard from the Mayor that three council members were going to meet with Click management to hear their response to my charges.

And since then, nothing.

In all fairness, we’ve had a bunch of holidays in the interim.

But metro Tacoma citizens are still paying 33% more than Comcast and Qwest customers for the same exact service – and I for one, am getting tired of it.

My big gripe is that the only reason municipal utilities exist is to provide citizens with essential services at prices the same or less than the competitive market rates.

If Comcast or Qwest charges 33% less than Click for the same exact service, then what’s the point of having a city-owned internet service? So we have an option to pay more to get the same service? I think not.

Maybe it’s to help pay for the Tacoma Public Utilities executive’s recent raises? Or if not that, then what? I really don’t have a clue.

In Into to Business 101, they teach you that for a business to be competitive, it needs to set its prices in accordance with the going market rates. If you set the prices too high, you’ll eventually lose all your customers. Likewise, you need to have a similar range of product offerings if you want to attract and retain customers. These are some of the most basic concepts in marketing. Very, very basic stuff.

But apparently Click management does not comprehend.

BellSouth and a few others telecos have recently started advocating a “pay-by-the-byte” type of pricing scheme. Under those proposals, consumers who access high-bandwidth applications, like file sharing or VoIP or online gaming would pay more than people who just web surfed or read email.

An example of the current justification for the proposed pay-by-the-byte pricing was given by BellSouth Chief Technology Officer, William Smith.

As reported in the Wall Street Journal, Smith, they said, “often laments the fact that his parents, who use the Internet for only low-capacity activities such as Web surfing and email, pay fees similar to those of heavy users who suck up capacity by downloading music or using BitTorrent, which is used by millions to download movies and other material off the Internet. Overall at BellSouth, 1% of broadband customers drive 40% of Internet traffic, he says. "People who drive cost in the network create additional charges in the network," Mr. Smith says. "If my elderly parents don't use a lot of traffic we ought to be able to create a service plan that meets their needs."”

Oh, my heart goes out to those poor people! What philanthropy! What humanitarians!

This development follows the recent proposals by the telecos to make Google and other high-bandwidth content providers pay extra in recognition of their popularity – and the extra bandwidth people consume accessing those sites.

I don't believe wireless and fiber will ever really compete. I think there will always be a place for both. They both have unique attributes: wi-fi’s portability, and fiber’s speeds. Each has it’s own place – they compliment each other.

The main problem with wireless - at least at this early stage of the game – is that it just can't provide enough bandwidth to effectively compete with fiber.

I haven't really kept close tabs, but it seems like most of the metro wi-fi projects are advertising speeds ranging between 1-3 mb/s.

Now 3 mb/s may be just great for web browsing, email and light gaming (assuming the latency isn't too terrible). But that's about it. I wouldn't go downloading the latest Linux distros or anything on a connection like that. Much less downloading a movie or loads of mp3's or programs.

It never fails to amaze me how the telcos shills populate user forums.

There was a story on broadbandreports.com: http://www.dslreports.com/shownews/81287

5% of ISP Users Generate 45.3% of Traffic
On the flip side, 40% generate just 3.8%...

Posted on 2007-01-29 15:44:04 by Karl · tags: [stats] [networking] [business] [bandwidth]
Ellacoya is a supplier of network hardware that can monitor and shape network traffic, and they recently shared some of their findings with ISP Planet. The company notes that 5% of users (aka "bandwidth hogs") generate 45.3% of traffic, whereas at the other end of the spectrum 40% of users (aka "barely users") generate just 3.8% of traffic. VoIP use spiked in 2006 for those light users, but online gaming exploded, with 22.3% gaming in August jumping to 66% in December (of course, it got cold, too). Meanwhile, 41.9% of bandwidth hogs use VoIP, whereas 95% play online games.

If a “pay-by-the-byte” pricing scheme is necessary for the economic survival of US ISPs, then how on earth are the ISP's in Asia and elsewhere making it? Here are some current prices from Asia:

Japan:

100 mb/s symmetrical FTTH - $51/ month US
47 mb/s down, 5 mb/s up ADSL - $6.00 / month

https://asahi-net.jp/en/

Korea:

100 mb/s symmetrical FTTH - $36.63 / month

50 mb/s symmetrical FTTH - $30.22 / month

10 mb/s symmetrical FTTH - $27.40 / month

http://www.megapass.net/service/megapass/IN_PImegftth02W.php

Then Hong Kong Broadband Network offers FTTH with symmetrical speeds ranging from 10 mb/s all the way to 1 gb/s (1000 mb/s), with prices topping out at about $258 per month for the symmetrical gigabit FTTH.

www.hkbn.net/bb1000/index.html

If these companies are making money at those prices - with no bit caps - then why can't American companies offer the same packages at equivalent rates?

A Sneaky Assault on the Future of the Internet

Comcast recently announced it was considering extra charges for users who consume more than 250 GB of bandwidth per month. After 250 GB, users could purchase additional bandwidth in 10 GB amounts for $15 each.

On its face, this plan sounds very reasonable. I’ve monitored my bandwidth usage before, and I’m what many would consider a fairly heavy user. In a good month, I generally wouldn’t exceed 30 GB of bandwidth. That’s a little peer to peer file sharing, a lot of music streaming, occasional software downloads. Maybe a Linux image here and there.

But if you look closer, this is nothing more than an insidious attempt to hijack the future of the internet.

Jim Lynch over at ExtremeTech called it:

“I suspect that Comcast is making a preemptive attack to hurt Apple and other downloadable content companies. In effect, Comcast is trying to kill the downloadable content market in its infancy. It sees the future and in that future Comcast may be nothing more than the owner of some dumb pipes that carry everybody else's valuable content.”

ExtremeTech Story

Downloadable movies and other similar sorts of content delivery systems are just right over the horizon. The only thing that’s holding off deployment of downloadable movies is bandwidth.

I was looking at file sizes of Blu-Ray movies today. The average size of 320 current titles was 27 GB – for just the movie alone. You add in all the extras and what not that usually come with a DVD (deleted scenes, extra content, etc) and the size jumps up to an average of 35 GB per movie.

Looking at Comcast’s proposed threshold of 250 GB before they bill you extra, that translates into viewing just nine Blu-Ray movies before you hit your limit – not to say any other internet activities. Just watch nine movies and you’ve blown your cap for the month.

Present Day

Right now, people might watch 2-3 movies a week – mostly rented and viewed on a TV, not a computer – along with maybe some HD sports and other HD content as well (concerts, news, TV shows or whatever). You can stream video content to your PC (from Amazon or iTunes for example) but it’s all small format and not portable to your HDTV.

I don’t know about you, but I hate watching movies on my computer – I have a small 42” HDTV and a good 7.1 surround system. If I want to watch a movie, that’s what I use. Screw the PC.

Other current uses of bandwidth might also include streaming a few hours of music, or buying some songs at iTunes or Amazon.