Positioning for success in broadband access: the cost of broadband

Positioning for success in broadband access: the cost of broadband published by Ovum, Ltd. in July, 2006. This report consists of 14 PAGES and the price starts from US $ 1365.

Introduction

Abstract

There is an increasing belief that the transportation of data or Internet traffic is 'free' or at least extremely cheap. However, this is a false perception. This report discusses the actual costs involved.

Bandwidth does cost money, and in some cases quite a lot of money. How much it costs depends on a number of factors, not least, what type of service provider the end user is connected to. The most basic of these is the pure retailer. This type of service provider may own very little network technology or infrastructure, but provides more retail functions such as customer service and marketing. The pure retailer will therefore pay a wholesale company to provide its entire network needs. At the other end of the scale is the network operator or the 'full local loop unbundler'. Both of these types of player will certainly own their own network technology, and could own and operate 100% of the network infrastructure, although in some cases the service provider may choose to partner or lease bandwidth from a third-party network wholesaler - a utility company for example. Between these two extremes there are usually a number of alternatives, including shared-unbundling and a number of different types of bitstream interconnect.

Table of Contents

Key messages

Bandwidth costs

• Figure 1 Major cost points
• LLU
• Figure 2 Full and partial-LLU pricing
• Figure 3 Typical cost of the access network
• Figure 4 The DSLAM costs
• Figure 5 The aggregation network costs
• Figure 6 The IP network costs
• Wholesale
• Figure 7 BT Wholesale's IPStream product cost structure inclusive of VAT (capacity-based)

Cost sensitivities

• Wholesale
• Figure 8 Typical residential usage allowances
• Figure 9 Cost per user versus backhaul connection efficiency
• LLU
• Figure 10 LLU Access cost per customer

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