Ultra Fast Broadband (UFB) is here if you live in Whangarei, where local lines company NorthPower started building a gigabit passive optical network (gPON) in 2008 and recently signed with Crown Fibre Holdings (CFH) to be the area’s Local Fibre Company (LFC). Circuit speeds start at 30mbps download / 10mbps upload, with a Committed Information Rate (CIR) of 2.5mbps symmetric (up/down). While an end user may get 30mbps (or higher for some plans) sometimes, CIR is what they’re guaranteed to get at all times between their homes and the local exchange. Once traffic gets to the exchange and is handed over to an Internet Service Provider (ISP), Committed Information Rates are unlikely to be preserved. It’s simply too expensive for a regional ISP to preserve CIR . The diagram below shows a minimal one-POP ISP networks with 1000 subscribers, preserving 2.5mbps CIR from the subscriber to the Internet. It makes the assumption that 80% of traffic will be national and 20% will be international. This assumption takes into account the availability of various Content Delivery Network caches on both peered and unpeered national networks.
The network has no redundancy. If any one element or circuit breaks, service will go down for all subscribers. It assumes the minimum possible equipment specifications for the amount of subscribers and traffic. It does not include web hosting, email provision, or in-network caching. An operational assumption is that one spare unit will be kept in the ISP office for each active element – a “cold spare”. The table below explores the monthly costs involved in maintaining our example ISP. The pricing assumes that for negotiable costs, such as backhaul, transit, and equipment finance, the best possible discount is achieved for a company of this size. It assumes contracts start today, and that the ISP is not locked in to existing long-term contracts which could be at several multiples of current rate card pricing. It assumes a manager, an engineer, and a junior employee on helpdesk. It assumes both the manager and engineer will cover helpdesk as necessary, and that all three employees will work at below-market rates. It is clear that in order to provide 2.5mbps CIR to the Internet, assuming that 80% of traffic remains domestic, a regional ISP would need to charge $154/month per subscriber in order to break even. Even then, the three staff would have to rotate on-call duties to satisfy help-desk and upstream transit provider requirements of 24 hour reachability. Maintaining the 2.5mbps CIR (already a 20:1 oversubscription of the 50mbps peak rate) would break the business.