Thursday, 25 June 2015

Back-haul

We have had many years now with very much the same prices for back-haul.

It is worth trying to explain to my less technical readers... One of the key things with the services we sell is connecting things. This means that you get data from one place to another. This is the crux of the whole telecommunications industry. Ultimately the costs of connecting stuff is the cost of digging up the ground and putting things in ducts. This is what allows the monopolies and major carries in countries to sell their communications services.

There are many ways the make this work, and there are some shortcuts by way of radio microwave links, and even people considering balloons and satellites. But for a long time the underlying issue is stuff in the ground.

Now, the copper in the ground is one of the key issues with broadband. There is copper from exchange to home and office and that is used for broadband (ADSL). Getting closer to the home or office by running fibre to a cabinet and then using the copper from there with VDSL (FTTC) is faster. Ultimately there are moves to get new connectivity to people's homes and offices using fibre.

But whatever the "last mile" is, whether coax, copper pairs, fibre, hybrid, radio, or what, there is also the issue of "back-haul". This is where the data goes from exchanges and similar concentration points locally to ISPs connection points and on to the Internet.

As an ISP we are in the middle - on one side we connect to peering points and transit providers that connect to "the rest of the world", and on the other we use carriers like BT and Talk Talk to connect via "back-haul" to the various local exchanges and "last mile" connections such as broadband. We join the two together.

There are costs on both sides.

When connecting to the "world", there are transit providers that buy capacity on (or run their own) transatlantic fibre links, and national fibre links in many countries. For as little as £1/Mb/s/month (that is £1 per month for a megabit per second) I can buy transit that connects to thousands of connection points around the world using national and international fibre links.

When connecting to the "UK", I am using back-haul carriers. Now, these have a simpler job in many ways, they are all on land and connecting to several hundred telephone exchanges. The "last mile" from the exchange to homes and offices I pay for separately. So this back-haul is simpler and smaller than the challenges of "transit" to the world, but the cost is anything up to 50 times that of transit! And for no good reason than "It has always been so".

The good news is that there is competition. The good thing about fibre back-haul is that you can simply change the transceivers on the end of the fibre and go from a gigabit to 10 gigabit to a terabit. It is a cost for the technology on the fibres, but the real cost is digging up the road, and that is not needed to make more and more use of the fibre links.

The good news is OFCOM are trying to get BT to open up "dark fibre" links to other operators. This is a big step as the existing way to buy from BT is by link speed. If you buy dark fibre you can choose to invest in later transceivers and get more out of it. If you buy by the gigabit than you are stuck with that.

Third parties can do this themselves if they have the fibre and can upgrade, so we really hope back-haul will finally start to come down in price.

I really hope that it will get cheaper. We are starting to see some clues to this with some carriers. We may even be able to offer new services soon. But what we really need is the major carriers like BT lowering the back-haul pricing to something a tad closer to transit. After all, transit providers link to the world, and BT link to the UK - surely BT should be cheaper!!!

14 comments:

  1. I don't see why. Linking to the UK means a vast number of tiny connections that cannot be easily upgraded. Transit linkage means a small number of (huge) connections that can be relatively easily upgraded. It seems obvious to me that the cost in total to provide local connectivity within any locale is higher than the cost to provide transit, even if the cost *per unit* is much lower (which, as it moves to fibre everywhere, it will increasingly not be).

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    1. It is still just installed fibre which can be upgraded by putting on new kit at the ends.

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    2. Yeah, but it's thousands to millions of runs of installed fibre and/or copper, plus they're still installing more fibre so they can get rid of that awful copper. That's hugely more than the few dozen to hundred which are used for major backhaul links, more than enough to compensate for the higher cost of the larger links.

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    3. "Yeah, but it's thousands to millions of runs of installed fibre and/or copper, plus they're still installing more fibre so they can get rid of that awful copper."

      No, no copper involved in the backhaul network - you're still only connecting to BT's couple of thousand exchange buildings (if you want total coverage, which even BT's own 21CN doesn't do yet). The connectivity from exchange onwards, usually over copper, is charged separately at even higher prices, but with better justification.

      As I recall, there was a drastic drop in price moving from 20CN to 21CN - perhaps time for the next such step, before the likes of Sky and Talktalk eat BT's lunch there?

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  2. The local loop costs an incredible amount of money. I think most competitive markets will reflect that the local loop is more expensive per Mbps than transit. And being a wireline provider, that matches our experience, too.
    And local loop is not simpler -- I'd much prefer regional transit. Local loop requires locating (for underground), replacement drops, road constructions, etc.

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    1. I agree that the local loop costs - but we pay for that separately. The back-haul we pay for at this expensive rate is the link to the exchanges, not the local loop.

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    2. Oh right. That *is* ridiculous, then. I assumed this was at least in part the cost of getting all the way to the premises...

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  3. How do Zen deal with this? Apparently their 'unlimited' deals became available once they changed their backhaul arrangements - what are they doing and what is it that prevents A&A doing the same?

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    1. Scale and cost - what some larger ISPs do is run or contract their own fibre links to the main 20 metronodes and then pay for back-haul between them and the exchange at a lower rate. Ultimately one could run links directly to each exchange and unbundle, but that is a massive investment to do from scratch.

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    2. Could a number of smaller ISPs come together and jointly do the first stage of what you suggest - run fibre links to the main 20 metronodes?

      Give each partner shares in a holding company proportional to their initial investment, charge the partners for usage a percentage less than BT do for the current setup, then profit back to the investors in dividends.

      You might not directly save on the backhaul but the profit from it would go to your pocket not BTs, saving you overall.

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    3. Tricky, and it is possible BT and others will drop prices soon. I would hope so - they must be under pressure from their won retail arms as customer usage is rising and they are racing to bottom on price. That would be a bugger if you had just invested in infrastructure yourself.

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  4. I hope something does happen at sometime, I'd consider AAISP if it was possible to get a high usage cap for a reasonable price, racking up massive charges for usage is one of the things that stops me using you.

    When ISP's are stupid enough to offer "Unlimited" for £50 It's easier to deal with the occasion when they're crap than it is to pay per GB.

    It's a tough one as an ISP for sure.

    Have you considered just throttling the connection down to a speed that allows for basic use once the allowance is used up rather than billing for extra units?

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    1. That is one of the options on Home::1

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  5. Dark fibre is a nightmare waiting to happen. At least with current products They can be owned and faulted end to end, especially with the fibre products, With dark fibre you'll have god knows what being connected up and arguments over what is the cause when things have intermittent issues. No doubt there are ways around this but I can envisage it getting worse before it gets better and probably not a lot cheaper since not only do costs for backhaul not fall, they also don't rise so really they are falling in real terms.

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