An Internet Service Done the Way It Should be.. Coop!

I’ve been reading alot about bandwidth caps, p2p throttling, etc.  It’s all over the news and it’s just not getting any better.  So.. being the business-minded individual I am, I started looking at / pricing out just what it would really cost to offer relatively decent Internet that was free and untethered.  Here’s what I came up with and surprisingly… It’s doable.

Let’s look at some numbers shall we?  From Wikipedia, I gathered some data:

Population: 1.6 million people living there
Length: North to South ~13.7 Miles
Cost to run Fiber I’m going to estimate at 4 million per mile. (Assuming Union Labor)
$10000.00 for a 5 Gbps cross-connect (per month) at a NAP
Core Routers x 2 – Optical Networking (fiber) Switches, etc. – $5 Million
Edge Routers Metro Access: $10 Million (should be plenty to run fiber into buildings

Access Switch – Cost Absorbed by buildings

Core Network Admin Staff (Technical) – $1 Million per year

Service Maintenance and Install Contract for Fiber: $5 Million per year + (balance of installs to be paid by customers)

Misc. Data Center and Hosting Expenses: $1 Million per year

I know these number are high and I’m just rounding up, but there’s a reason to this madness.  Assuming a loop of fiber around Manhattan (OC-192).  Now keep in mind that when laying fiber, you’re not laying 1 strand, but rather a bundle (let’s say a small bundle of 50 strands) @ 4 Million per mile.  So let’s assume a total fiber loop of 35 miles @ 4 Million a mile.

Fiber Loop Cost: 140 Million

Premium Bandwidth Cross Connect: $30k per month x 12 = 3.6M (I know I’m shooting high) bear with me.

Equipment and Switches: $15M for initial install

Data Center: $1M per year

That comes to a total of $155 Million Infrastructure Cost (one time)

10 Years of Maintenance and Expenses: $300 Million and add 50% to adjust for inflation, expenses, and infrastructure upgrades = $450 Million

Total Cost to Build and Operate this network for 10 Years: $550 Million

OK.. This seems like a lot of money, but it’s not.. Let’s take a look at things.  Assuming only 10% of the people living / residing in NYC are subscribers to the network (160,000 people) @ $50.00 per month = 96M per year in revenue and if we were to halve that number to account for people that didn’t subscribe, that would be 48M per year x 10 years = 480 Million in revenue from just Residential Internet Subscribers

Now.. let’s say that 50% of the bandwidth is allocated for Residential Subscribers and the other Half for Commercial Subscribers that will pay $100.00 per month, because it’s commercial.  So the business revenue is: 960 Million in revenue for commercial subscribers

This works out to: $1.44 Billion in Total Revenue

Now Let’s do some more math.  Assuming we only turned up four OC-192s and there are 320000  using the internet at full speed available to them 25% of the time (which is completely ridiculous) customers that = 1 Mbps for everyone.  So what does this mean?

It means that if we charged what the local cable co charged, each subscriber could upload or download 328.7 GB per month.

Here’s the reality.. I assumed a grossly mismanaged organization using nothing but Union Labor in NYC.  The job can be done for 1/2 this.  Keep in mind that the network still has an additional 800% capacity that can be turned up very little additional cost.  So… If we were to turn it all up at the same time, we’d be looking at everyone being able to upload or download 2.6 TB of data per month for roughly $50.00 per month.

Buildings would pay for their port on the edge concentrator that would bring fiber to their basement where they would just cross-connect 10/100 Fast Ethernet switches into their customers.  Each building can segment and prioritize traffic on their port to the Internet Backbone.  Commercial buildings can make a modest markup on the internet services (voice if they’d like as well) from their tenants and still beat the local carriers.

The Network is owned and managed by the subscribers.  Equipment upgrades are done every 5 years (the fiber’s still good.. just the equipment gets better).

Do the math people.. This needs to happen.  Basically, we’re getting raped by the Communications Carriers.  Keep in mind that there would be no throttling, no policing, no limits, caps, etc. and people would have full unfettered access to the internet the way it was meant to happen.

If anyone’s actually interested in trying to get something like this going in NYC, I’d love to be a part of it.  I guess what I’m trying to point out is there’s no reason why bandwidth should be as restrictive and costly as it is today.

Comments are definitely welcome.