ISDN In Australia (was Re: ISDN is so cheap!!!)

Markus Buchhorn (markus@octavia.anu.edu.au)
Wed, 29 Nov 1995 11:02:54 +1100


This is getting way off topic here, but there is some misinformation
floating around that needs clearing up. My apologies.

> I'd like to see if any one can provide somewhat acurate figures on the
> actual running cost/labour/materials for ISDN, I just don't see how
> Australia's Telstra can justify the colousal pricing.

(i) The $5100(Aus) Set up plus $2000 per month rental (assuming up to 25%
average utilisation over the entire period) is the cost of using Telstra
*as an ISP* to provide a permanent 64k (i.e. single channel).
More on that later.

(ii) If I want an ISDN line (single BRI, 2B+D channels, 128k usable b/w)
in my home it costs $396 to install, plus $960 per annum rental, or
$80 per month (so about $60 US). To that you add the time-charge of
a few cents per minute, depending on distance and time-of-day. Also add
the equipment cost, which varies all over the place, but isn't relevant
to the discussion here. With this set up I can dial whoever I want.

So it's not cheap to get connected and stay connected. Let's compare
the populations though - 18 million vs 250+ million. Much more revenue
to collect, or more profits with much smaller margins. Distances are
slightly relevant, with Australia having a disadvantage (much longer
distances between major cities), but that isn't too big a hit since
a large chunk of the population (nearly 40%) live in two cities,
and the vast majority are either in Victoria or eastern NSW plus the other
capital cities. So within these areas things are affordable. Connecting
these areas to each other though costs.

I'm not trying to justify this pricing (which I think is still too high,
especially given Telstra's *very* healthy profits [$1+bn...]) but just trying
to make sure like is compared with like.

What about the Telstra-as-ISP cost ? The biggest line item in connecting
Australia to the Internet is the international cable link(s) to the US West
Coast. Ballpark-ish it's around $1million dollars per 1Megabit/s per annum,
so we're currently paying $10m per annum for our connection.

$10m/ (10Mb/s * 86400 *365) = 25c/Megabyte

if the link is running 100% of capacity all the time for the whole year.
It's not though - so the cost/MB is higher. Let's say about $40c/MB tops.

Also note that the incoming traffic outweighs the outgoing by around 4 or 5:1.

Now what about that ISDN line ?

(64kb/s * 25% * 86400 * 365/12) = 5.2GB/month
5.2GB per month * 25c/MB =~ $1300/month.
* 40c/MB =~ $2080/month

Note that I used 25c (the lower bound) and 40c (guesstimate), just for the
international link. To that we need to add the Australian internal
infrastructure costs....

So what we have here is something approaching cost recovery ! Ok - Telstra
makes some extra, but we do want that 100Mb/s link one day *soon*,
don't we ? :-)

Note
(i) Telstra doesn't own the international cables - it's a multinational firm
(ii) Telstra also pays MCI in the US as *Telstra's* ISP. Not a small cost.
(iii) Telstra Internet is charging basically per packet of incoming
traffic. This caused a hue and cry when first proposed. It's now
becoming an accepted model, and is also being established in the US
(Telstra didn't invent the idea, but they were amongst the first to
implement it).
(iv) Other ISP's charge differently since they try to have a POP provide
a service for many points, and all their customers fight over the
ISP's Internet connection. If you're on at a good time you might
get to use *their* 64k link all to yourself. Other times it's a battle.
You may have 64k dedicated to your *home*, but beyond the ISP it may be
another story...

So - back to our CUSM diversions, and we'll get into some serious
Telstra bashing on other forums :-) (aus.net.comms ?) They do deserve
some of it ;^>

Cheers,
Markus

Markus Buchhorn, Parallel Computing Research Facility
email = markus@octavia.anu.edu.au snail = CISR, I Block, OAA, ANU
Australian National University, Canberra, 0200 , Australia.
[International = +61 6, Australia = 06] [Phone = 2492930, Fax = 2490747]