Everything since June 1 is at fastnet.news. This is just the archive from before June, 2015
|More traffic doesn't equal higher costs TOLL-1|
|Tuesday, 26 August 2014 16:25|
Router/switch $sales actually down. Anyone who says increased traffic is raising carrier costs is misinformed, as I and many other tech reporters have been saying for years. True, wireline traffic and customer counts continue to grow. Wireless traffic is up significantly in the last year. Yet the total dollars spent on service provider routers and switches actually declined in Q2 from last year. This is the largest category of equipment needed for increased broadband bandwidth. Other gear (DWDM, etc.) also came down in price.
Equipment costs have been falling as fast as traffic has been going up for at least the last decade. The net result has been the cost per month of a broadband customer has remained steady or slightly declined on any large network. That cost - less than $1/month - is about 2% or 3% of the price of the service.
Margins on broadband are very high. Wall Streeters Craig Moffett and John Hodulik reference 90% margins based on SEC filings by the cable companies. I attribute to broadband more of the network costs so I see only 70% or so margins. Either figure is far above typical corporate services margins of 25-50%. Broadband almost everywhere is highly profitable, which is why 80-90% of all phone lines in the world now support broadband.
Michael Howard of Infonetics found a decline of 4% in the second quarter from the year-ago quarter. The major vendors of this equipment trust Infonetics with their confidential sales data. Howard has proven accurate interpreting the figures in the past and Infonetics figures generally are echoed by other reliable sources.
T.O.L.L. stands for Tired Old Lobbyist Lies. More to come.
Here's the pr.
Infonetics: Strong sequential growth for carrier routers and switches in 2Q14 masks long-term trend
|Last Updated on Tuesday, 26 August 2014 21:49|