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let-there-be-light
let-there-be-light
12/4/2012 | 10:23:15 PM
re: Solution for the Fiber Glut: Turn It Off?
trixie said:

"Telcos are not OPEC; they won't cooperate to underproduce to raise the price of bandwidth"

I don't think that is always true. Before Global Crossing exploded onto the transatlantic scene, there does seem to have been some collaboration between the big players. GC changed that (at least temporarily), so it got much cheaper for all of us to make that call across the pond.

Now that GC is on its way out, maybe the old players can get back together again.

In other words, they might decide to make peace rather than choose the path of Mutually Assured Destruction, which is the way things seem to be going right now.

PhotonGolf
PhotonGolf
12/4/2012 | 10:23:14 PM
re: Solution for the Fiber Glut: Turn It Off?

Help me here .. call this "for dummies"

True ... there is a fiber glut. Its a lot cheaper to pull 100 fibers once than 10 fibers 10 times, so we put a lot of dark fiber in the ground. The time it will take to consume it is a loooong time because new technology continues to come available which makes more efficient use of the existing fiber, or even better use of a small amount of the dark.

But since most of us aren't in the fiber business ...

True ... there is a surplus (glut?) of bandwidth right now for a number of reasons, not the least of which have been mentioned on this thread. Too many carriers ... no killer app ... more efficient use ... alternatives. But the consumption of bandwidth is growing - by quite a lot. The time to consume this is not so long. This is proven by the fact that there are still some sales of long haul equipment.

True ... there are many routes from point A to point B in a network. This prevents/delays the pain one feels from limited bandwidth, so is yet another factor in extending the time. And might even explain some limited sales, but in time, unless the consumption slows, the surplus will go away and the sun will come out.

So we went nuts for a couple of years and now we're paying for it. I think too many of the posters are overly pessimistic, having no doubt lost credibility being positive as everything deteriorated.

People make fun of the guys investing in the Caspians of the world - call them stupid. Well, I've never seen "a great investment" that everyone agreed at the time was "a great investment". We all could have bought Cisco, Intel, or Micorsoft 7 years ago and still have our 10 baggers - after the crash!. But no ... at the time, it didn't look like "a great investment".

I still believe the killer app is industrial productivity and I still believe these markets will recover and be predictable. But only when the price has been paid for the last couple of years.

Just another dummy.
dave77777
dave77777
12/4/2012 | 10:23:14 PM
re: Solution for the Fiber Glut: Turn It Off?
Now that GC is on its way out, maybe the old players can get back together again.

That's a good point, I meant in the current environment. That scenario would certainly solve a lot of problems for carriers, since de facto price controls become easier to implement as the number of players falls.

As to the linecards, I am probably not as in touch with linecards' relative costs as some others on LR, but I was under the impression that in terms of the overall cost of bandwidth (i.e., all the other stuff that has to already be in place), they are a fairly low percentage. Anyone care to hazard a ballpark guess as to what percentage they actually are?


rjmcmahon
rjmcmahon
12/4/2012 | 10:23:13 PM
re: Solution for the Fiber Glut: Turn It Off?
I still believe the killer app is industrial productivity
______________

The VPN technology and products seem like the way into this market. The companies in that space should give an overall health of how things are going.

The cable cos wrote into their contracts the rights to deny forwarding VPNs. This allows them to charge corporations for the employees working at home. They couldn't figure out how to take monopoly control of our roads, so they picked the next best thing ;-)

high plains drifter
high plains drifter
12/4/2012 | 10:23:11 PM
re: Solution for the Fiber Glut: Turn It Off?
"You canGt party that hard without a hangover," says Scott Cleland, CEO of The Precursor Group, of the current US fiber glut resulting from the late-90's network buildout.
trixie
trixie
12/4/2012 | 10:23:10 PM
re: Solution for the Fiber Glut: Turn It Off?
Let-there-be-light said:

trixie said:

"Telcos are not OPEC; they won't cooperate to underproduce to raise the price of bandwidth"

I don't think that is always true. Before Global Crossing exploded onto the transatlantic scene, there does seem to have been some collaboration between the big players. GC changed that (at least temporarily), so it got much cheaper for all of us to make that call across the pond.

Now that GC is on its way out, maybe the old players can get back together again.

In other words, they might decide to make peace rather than choose the path of Mutually Assured Destruction, which is the way things seem to be going right now

________________________________________________

I wish we had a "quote" feature on the VB....
I did not say that- it was copied as part of my response.

Given the shennanigans we have all witness the past couple of years, I would be surprised if there wasn't price fixing going on at some level..oh yeah, those IRU accounting practices- that's right.....

let-there-be-light
let-there-be-light
12/4/2012 | 10:23:09 PM
re: Solution for the Fiber Glut: Turn It Off?
trixie,

Sorry, my mistake!
trixie
trixie
12/4/2012 | 10:23:09 PM
re: Solution for the Fiber Glut: Turn It Off?
DOE patronized:
I'm just awed by the lack of knowledge of basic supply and demand on this thread.

If supply exceeds demand prices will fall. (I think most of you understand that one.) Prices fall until supply matches demand. So if suppliers see prices are falling they can trim supply a bit which will lead to slightly higher prices and will balance with the slightly less demand at those higher prices.
I think OPEC is the perfect example of how this is done in real life.

_______________________________________________

Um, I think we all get that.

I think we're looking more at the scenario of dumping live customers off these networks to squeeze them for a higher price, and what effects there would be in doing so. the very essence of the supply demand equation.

We've all seen the viscous cycle diagram of more bandwidth, which drops price, which creates more demand, which enables enhanced services, which creates the need for even more bandwidth, yada, yada, yada.

Good luck to you, too....
trixie
trixie
12/4/2012 | 10:23:09 PM
re: Solution for the Fiber Glut: Turn It Off?
dave77777 spaketh:

As to the linecards, I am probably not as in touch with linecards' relative costs as some others on LR, but I was under the impression that in terms of the overall cost of bandwidth (i.e., all the other stuff that has to already be in place), they are a fairly low percentage. Anyone care to hazard a ballpark guess as to what percentage they actually are?

_______________________________________________

reply:

After the first 12-15 wavelengths, line cards are about 70-75% of the total systems costs. This is for a typical 10 GB/s, terabit, DWDM point-to-point transport system. Street price is around $40-50k per wavelength.

The more linecards for a given system, the better your $/DS-3 miles metrics improve, as you amortize your amplifier costs over more traffic. L-band puts a shelf in the curve, as you have to go slot another EDFA in each hut supporting L band.

Common equip is relatively cheap, $80-150K, depending on the node (and discount level)

Think about that when it come time to regen 160 wavelengths- that's at least $8MM dollars in cards alone...hence the push for ULH technology, photonic switching, etc. Line cards are big bucks in the network.
dave77777
dave77777
12/4/2012 | 10:23:06 PM
re: Solution for the Fiber Glut: Turn It Off?
After the first 12-15 wavelengths, line cards are about 70-75% of the total systems costs.

What about the first 12-15?

And if that's the case, how can there possibly be so much unused capacity? Wouldn't they just not have bought as many line cards? Or did you mean incremental cost? That's a very different equation than total cost to build out the network.
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