Level 3 was offering to transport the data all the way to Comcast's "internal" network and willing to pay for the equipment required for the high-speed interconnect. How can Comcast complain about not having enough bandwidth for delivery in their last mile (or least need compensation to build out more bandwidth), but then turn around and offer a very similar service and not even have it count against their bandwidth caps? Is there a bandwidth issue in their internal network or not?
I doubt Comcast put in data caps because of interconnect costs. I would love to see what a gig of interconnect data costs them.
A September 2008 price sheet for Level 3 priced 10 Gbps at $6/Mbps [1]. The same group projects 2012 transit prices at the minimum commitment around $2.34/Mbps and decreasing at about 60% a year [2]. Another source pegs this at 30% a year for the single price blended rate [3].
In the US we pay about $3/Mbps [4], suggesting a healthy minimum 1/5 profit margin. This happens to be around CMCSA's 1/5 operating margin (suggesting the transit price is lower) [5].
I couldn't find data for internal transit prices, but assuming everyone runs with about a 1/5 margin on transit costs as well (likely too dear) we can take $1.9/Mbps as being a decent relative estimate of internal costs. This is a $0.45/Mbps or 15 percentage point to revenue difference.
Thanks for the links. The problem with your profit margin calculation is it assumes 100% of consumer traffic is going out to a different network and that Tier 1 ISPs have arrangements where incoming and outgoing traffic on their networks cancel out so they usually end up paying each other very little money.
What's the duty cycle on those cost numbers? A 250 GB monthly data cap would be 0.8 mbps at 100% duty cycle, which suggests that the interconnect bandwidth costs are a very small fraction of the price of a 20 mbps plan.
it's total bullshit on Comcast' part. If you remember, the argument was that the top 5% were causing issues for the remaining 95%, and the issues were stated, at the time, to be with the 'last mile' pipe. Just another example of a monopoly being a monopoly.
I doubt Comcast put in data caps because of interconnect costs. I would love to see what a gig of interconnect data costs them.