& cplSiteName &

Carriers Say Bandwidth Glut Is Gone

Raymond McConville
News Analysis
Raymond McConville
12/4/2007
50%
50%

Yesterday's announcement from XO Communications Inc. that it was planning to double its network's capacity in 2008 was the latest example of a carrier realizing that, unlike a decade ago, there really is a need for more bandwidth. (See Cisco Scores Core Wins and XO Picks CRS-1.)

And XO's not alone. In the U.S., AT&T Inc. (NYSE: T) and Verizon Communications Inc. (NYSE: VZ) have both expressed desires to upgrade their transport networks to 100 Gigabit, and Verizon began trials last month. (See AT&T, Verizon Have Optical Wishes, Verizon Keeps 100-Gig Promise, and 100-GigE Not Coming Soon Enough.)

AT&T itself expects to have spent $18.5 billion this year with much of it on capacity upgrades. CEO Randall Stephenson said earlier this week that the demand for these upgrades is for real this time around. "The bandwidth glut of the 1990s, all those companies that took writeoffs -- it's gone," said Stephenson. (See AT&T Parties Like It's 1999.)

So why will 2008 be any different than 1999 or 2000?

"Today, the demand is real," says an XO representative on its latest announcement. "We've been investing very heavily in our networks on the transport layer. As soon as we would put up capacity, it would be sold."

"The other thing to consider too, is that there are much fewer players today than 8-10 years ago," says the XO man. "Today there are only 6 or 7 true national backbones. There were dozens back in the 90s."

The buildout of the 1990s resulted in a lot of excess bandwidth assets and now some startups, like the recently formed Zayo Group Inc. (NYSE: ZAYO), have come along to purchase the assets at heavily discounted prices. (See Level 3 Co-Founder Starts Zayo Bandwidth.)

If Zayo has been purchasing excess bandwidth assets as recently as this year, it raises the question of whether there really is the need to keep expanding next year.

Zayo Founder John Scarano says the demand for capacity upgrades is for real. "The difference now is that you don't see any wholesale buildouts of fiber, but you do see enormous equipment investment to expand the capability of that fiber. I think it's a different kind of investment," says Scarano.

"In general," Scarano adds, "we seem very like-minded with the XO announcement. What we've seen in our networks is a need to make the doubling up of capacity, comparable to the investments XO has made."

Indeed, much of the upgrades planned for the near future are for existing networks and not for new networks. Most of the expansions of fiber on different carriers' networks have come through acquisition of existing assets and not the building of new assets.

"We wonder: Have we not learned anything from the irrational exuberance of last decade? I tend to think the industry has, somewhat," says Scarano.

— Raymond McConville, Reporter, Light Reading

(10)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
Raymond McConville
50%
50%
Raymond McConville,
User Rank: Light Beer
12/5/2012 | 2:57:51 PM
re: Carriers Say Bandwidth Glut Is Gone
I still can't help but feel skeptical about all this bandwidth cheerleading. Everyone in the industry has a lot invested in the demand being as big as the hype. Have they all just talked themselves into believing it?
paolo.franzoi
50%
50%
paolo.franzoi,
User Rank: Light Beer
12/5/2012 | 2:57:47 PM
re: Carriers Say Bandwidth Glut Is Gone

OP,

Cost or Price. The Price of Long Haul has plummeted. Think about your cell phone being long haul voice for free.

seven
OldPOTS
50%
50%
OldPOTS,
User Rank: Light Beer
12/5/2012 | 2:57:47 PM
re: Carriers Say Bandwidth Glut Is Gone
Raymond,

Having spent much time buying/leasing longer haul BW, I have been amazed at those involved in access who believe all BW is free, especially core network long haul. (My posts few years ago) Because there was a glut that was written down, many used it for almost free after write down, so it became a cheap comodity.

You might be amazed at the limited paths of these links. A few North and South and a fewer number of paths East and West. Making Reliablility/Availability an issue.

Then as long haul equipment became improved, money was spent on this equipment doubling and tripling fiber BW. This is still going on, but the end of cheap long haul BW is in sight over a few years. (LR articles on DPI and 100G tests) More fiber will need to be laid in not so ea$y paths.

OP

OldPOTS
50%
50%
OldPOTS,
User Rank: Light Beer
12/5/2012 | 2:57:46 PM
re: Carriers Say Bandwidth Glut Is Gone
seven,
I was really thinking in terms of data (P2P) and video. Yes that additional traffic carried off the internet. But wireless, replaced POTS, still transversing long haul.

I don't think we are there yet.

Also as speeds are faster, even more large individual files take less transmission time, and thus significantly provide less interference with other realtime traffic, statistically blending in better than on those 1.3M links I once thought was fast.

OP
paolo.franzoi
50%
50%
paolo.franzoi,
User Rank: Light Beer
12/5/2012 | 2:57:45 PM
re: Carriers Say Bandwidth Glut Is Gone

OP,

I would argue that the price and cost per bit per second is coming down (well the price is already very, very low). It will never be zero, but the price that folks pay for bandwidth is decreasing.

Now, the question to me is how folks are paying to grow their networks (of any sort) in face of this declining cost model.

seven
Kreskin
50%
50%
Kreskin,
User Rank: Moderator
12/5/2012 | 2:57:45 PM
re: Carriers Say Bandwidth Glut Is Gone


Cost per bit ... nice industry rhetoric. When is the last time anyone bought BW on a cost/bit quote?

The question is how do they stay in business?
Kreskin
50%
50%
Kreskin,
User Rank: Moderator
12/5/2012 | 2:57:45 PM
re: Carriers Say Bandwidth Glut Is Gone

Long haul between major cities is over built and will remain so for at least 10 years. Long haul below that --- 85% Gross Margin business due to rational competition.

The top 10 metro's have lots of fiber, access remains the challenge. Below the top 10 metros 85% Gross margins due to limited, rational competition.

The long haul price competitors are their own worse enemy. They deserve what they reap.

How about another LH price war for market share!!! Geniuses.

OldPOTS
50%
50%
OldPOTS,
User Rank: Light Beer
12/5/2012 | 2:57:44 PM
re: Carriers Say Bandwidth Glut Is Gone
While I a agree price for bit is coming down. This is because equipment has improved to put more bits over same fiber. But the apps require many more bits that has, or soon will fill up these expansions. Can these improvements continue without adding to the fiber?

When I bought long haul links (many years ago before the writedowns), the price was based on BW/1000 miles. Now this was based on the fact that the Cost to provide the link was primarily the cost of putting it the ground and the large amounts of equipment (repeaters/node portions) spread over that distance to deliver the BW.

Has anything changed here, except that there was a glut driving down prices and equipment improvements rapidly expanding capacity?

OP
Scott Raynovich
50%
50%
Scott Raynovich,
User Rank: Light Sabre
12/5/2012 | 2:57:44 PM
re: Carriers Say Bandwidth Glut Is Gone
I agree cost-per-bit is kind of a silly way to measure the bandwidth question.

It's like the government using Moore's law to deliver hedonics on their inflation statistics. The fact is, when describing your laptop, you say how much you paid for it, you don't describe the cost in terms of the processing power and the size of the hardrive ("What a deal, I only paid $X per Hz and $X per byte!")

The fact is that as technology progresses, the applications grow to consume all available bandwidth and resources so you can't really measure the value in terms of the past. If we could still buy a 28.8Kbps connection for only $2.50 a month, what on earth would we be able to use it for? Non of he applications are designed for that pipe. It would be almost totally useless. So the value is somewhat of a mirage.
paolo.franzoi
50%
50%
paolo.franzoi,
User Rank: Light Beer
12/5/2012 | 2:57:44 PM
re: Carriers Say Bandwidth Glut Is Gone

Kreskin,

I buy bw every month at my home at a much lower price per bit than I did 5 years ago. Do I and EVERY OTHER BROADBAND USER IN THE US COUNT?

seven
From The Founder
Kicking off BCE 2017, Light Reading founder Steve Saunders lays blame for NFV's slow ramp-up and urges telecom to return to old-fashioned standards building and interoperability.
Flash Poll
Live Streaming Video
Charting the CSP's Future
Six different communications service providers join to debate their visions of the future CSP, following a landmark presentation from AT&T on its massive virtualization efforts and a look back on where the telecom industry has been and where it's going from two industry veterans.
Women in Comms Introduction Videos
Cisco: Mentoring Critical to Attract & Retain Women

7|19|17   |   6:40   |   (1) comment


Liz Centoni, senior vice president and general manager of Cisco's Computing System Product Group, shares why mentoring in all its forms is important for women and what Cisco is doing that's made a difference for women in tech.
LRTV Custom TV
Gigabit LTE With Snapdragon 835

7|12|17   |     |   (1) comment


At an event in Wembley stadium, EE used its live network to demonstrate gigabit LTE using a Sony Xperia XZ Premium smartphone with a Qualcomm Snapdragon 835 chip.
LRTV Custom TV
Implementing Machine Intelligence With Guavus

7|12|17   |     |   (0) comments


Guavus unites big data and machine intelligence, enabling many of the the largest service providers in the world to save money and drive measureable revenue. Learn how applying Machine Intelligence substantially reduces operational costs and in many cases can eliminate subscriber impact, meaning a better subscriber experience and higher NPS.
LRTV Custom TV
Unlocking Customer Experience Insights With Machine Intelligence

7|12|17   |     |   (0) comments


When used to analyze operational data and to drive operational decisions, machine intelligence reduces the number of tasks which require human intervention. Guavus invested in Machine Intelligence early. Learn about the difference between Machine Learning and Machine Intelligence.
Women in Comms Introduction Videos
Verizon VP Talks Network, Career Planning

7|12|17   |   4:49   |   (0) comments


Heidi Hemmer, vice president of Technology, Strategy & Planning at Verizon, shares how bold bets and the future of tech define her career.
Telecom Innovators Video Showcase
Masergy's NFV Journey

7|11|17   |     |   (0) comments


Ray Watson, vice president of global technology at Masergy, discusses the advantages and challenges in entering the still-maturing NFV market for the past three years.
Telecom Innovators Video Showcase
Mavenir on RCS Cloud Platform & Multi-ID

7|10|17   |     |   (0) comments


Guillaume Le Mener, head of marketing and corporate development at Mavenir, discussed RCS and the recent launch of Multi-ID, which supports T-Mobile's DIGITS, the revolutionary new technology that breaks down the limitation of one number per phone and one phone per number.
LRTV Custom TV
ADTRAN Executive Outlines Trends in Next-Generation 10-Gigabit Cable Networks

7|10|17   |     |   (0) comments


Hossam Salib, VP of Cable and Wireless Strategy at ADTRAN, outlines key trends as MSOs begin to deploy next-generation Gigabit and 10-Gigabit cable networks. In the interview, Hossam outlines the advantages of a Fiber Deep architecture, FTTH options including EPON and RFoG, and the importance of SDN and NFV in building next-generation high-bandwidth cable networks.
LRTV Interviews
Global Capacity: Bandwidth Demand Driving Ethernet Growth

7|6|17   |   6:37   |   (0) comments


At Light Reading's Big Communications Event in Austin, Texas, Global Capacity's VP of Marketing Mary Stanhope talks about how the demand for bandwidth is changing the way service providers deliver broadband services.
LRTV Interviews
Colt's Services Chief on Digital Delivery

7|5|17   |   16:12   |   (0) comments


Rogier Bronsgeest, the chief customer experience officer (chief CEO!) at Colt, discusses the way in which the service provider interacts with its customers these days and his aggressive net promoter score (NPS) targets.
Women in Comms Introduction Videos
BT VP: Women Should Fill Security Talent Gap

7|5|17   |   6:00   |   (2) comments


By 2020 there will be six security jobs for every qualified worker, and Kate Kuehn, vice president of Security for BT in the Americas, says BT wants to encourage women to fill the shortage in jobs.
LRTV Interviews
Colt Sales Exec on Services Trends

7|4|17   |   12:59   |   (0) comments


Colt's sales director for enterprise, James Kershaw, sheds some light on the services currently in demand and how network upgrades are influencing customer demand.
Upcoming Live Events
September 28, 2017, Denver, CO
October 18, 2017, Colorado Convention Center - Denver, CO
November 1, 2017, The Royal Garden Hotel
November 1, 2017, The Montcalm Marble Arch
November 2, 2017, 8 Northumberland Avenue, London, UK
November 30, 2017, The Westin Times Square
All Upcoming Live Events
Infographics
With the mobile ecosystem becoming increasingly vulnerable to security threats, AdaptiveMobile has laid out some of the key considerations for the wireless community.
Hot Topics
Mobile to Power Online Video Consumption – Zenith
Aditya Kishore, Practice Leader, Video Transformation, Telco Transformation, 7/19/2017
Can Mushroom Sprout in Crowded SD-WAN Field?
Carol Wilson, Editor-at-large, 7/18/2017
AI Will Be Ubiquitous in 2020 but Overhyped in 2017 – Gartner
Sarah Thomas, Director, Women in Comms, 7/18/2017
BBC Head: We Must Reinvent Broadcasting for a New Generation
Aditya Kishore, Practice Leader, Video Transformation, Telco Transformation, 7/21/2017
NFV, SDN, Big Data – It's All About Automation
Craig Matsumoto, Editor-in-Chief, Light Reading, 7/21/2017
Like Us on Facebook
Twitter Feed
BETWEEN THE CEOs - Executive Interviews
Following a recent board meeting, the New IP Agency (NIA) has a new strategy to help accelerate the adoption of NFV capabilities, explains the Agency's Founder and Secretary, Steve Saunders.
One of the nice bits of my job (other than the teeny tiny salary, obviously) is that I get to pick and choose who I interview for this slot on the Light Reading home ...
Animals with Phones
Live Digital Audio

Playing it safe can only get you so far. Sometimes the biggest bets have the biggest payouts, and that is true in your career as well. For this radio show, Caroline Chan, general manager of the 5G Infrastructure Division of the Network Platform Group at Intel, will share her own personal story of how she successfully took big bets to build a successful career, as well as offer advice on how you can do the same. We’ll cover everything from how to overcome fear and manage risk, how to be prepared for where technology is going in the future and how to structure your career in a way to ensure you keep progressing. Chan, a seasoned telecom veteran and effective risk taker herself, will also leave plenty of time to answer all your questions live on the air.