For today's tech-savvy entrepreneur, setting up a profitable small e-business must seem like a no-brainer. Fast computer hardware is cheap, and Open Source server software costs nothing.
Best of all, today the average home user can pay just $50 a month for bandwidth comparable to what a business might have paid thousands for, just a few years ago. It's enough to inspire most any retail storeowner to stand up and shed that "brick-and-mortar" stigma.
But do high-speed, low-cost broadband connections really represent a revolution in Internet connectivity for small business? The answer, not surprisingly, is that it depends on your needs. While it's true that fast, inexpensive connections are here today for many home users, businesses looking for a mission-critical Internet solution might do well to stick with traditional dedicated technologies.
In most cases, the current crop of broadband services delivers more than ten times the speed of the average analog modem connection, for maybe twice the cost. In many areas, the bandwidth offered by DSL or cable modems can scale much higher, reaching about 1 Mbps. At that level, throughput approaches that of a T1 line, which until recently was considered sufficient bandwidth for many online businesses.
But while this translates to faster download times, a small-business owner looking to set up a Web site could be disappointed. Both cable modem and DSL access providers often place bottlenecks on the amount of data their customers can publish to the outside world, resulting in public sites that seem more sluggish than users might expect.
One might suppose this is some kind of conspiracy on the part of ISPs. But in truth, the policy is founded upon some basic monetary realities. The pricing of all Internet services, from DSL on up to OC-3 and beyond, is based on the idea that customers aren't going to use all the bandwidth they ask for.
DSL customers who want to surf at T1 speeds don't need the bandwidth of a T1. That is, they won't be transferring 1.54 megabits per second, 60 seconds per minute, 60 minutes per hour, 24 hours a day — not by a long shot. They'll probably each use a shockingly small fraction of that bandwidth, in fact: bursts of a few seconds here and there, a few minutes downloading a file, totaling maybe a half-hour per day at most.
It's this assumption that allows ISPs to price all types of Internet service at affordable levels. Many DSL customers might share the bandwidth of a single, "real" T1. None of them will truly have access to 100 percent of that T1's total bandwidth. But because none of them is likely to need the total available bandwidth for any significant period of time anyway, each will have the perception of accessing the Internet "at T1 speeds."
The more users who share the same "actual" bandwidth, the lower the cost to each. During a panel at the recent Macworld Expo, Brent Chapman, director of network architecture for DSL provider Covad Communications, explained, "What we're doing is introducing economies of scale to drive the cost to the consumer down."
This has its trade-offs, particularly for cable modem subscribers. Cable providers group users together in the equivalent of small LANs that might span neighborhoods or city blocks. But unlike DSL, cable subscribers "see" the network traffic of everyone sharing their LAN.
The more users on a given cable network, the greater the overall amount of network chatter and the worse Internet service becomes. For the cable company reconfiguring the network would be costly, and therefore unlikely. So essentially, the quality of cable Internet service is only likely to decrease as more users subscribe and use up bandwidth.
Both cable and DSL business models break down when a single customer becomes an anomaly, using significantly more than the expected amount of bandwidth — hence the upstream bottleneck. A likely culprit might be someone who's running a popular FTP service, offering pornography or bootlegged MP3 music. But another, legitimate type of user might easily overstep his or her expected bandwidth usage and throw off the pricing scale: an online business.
The usual compromise when a user requires sustained heavy usage in both directions is pretty straightforward: That user needs to pay more. But while the monthly cable or DSL bill might rise to several times what the average home customer pays, it still wouldn't approach the cost of a traditional dedicated Internet line.
Nonetheless, it should come as no surprise to anyone that there's no such thing as a free lunch. Inexpensive broadband services have other tradeoffs besides access to bandwidth. For example, the quality of maintenance and support for Internet service varies widely, and has a close relationship to the customer's cost.
It's generally accepted that any Internet feed is likely to go down once per year; little can be done to prevent it. To an online business, then, the critical issue is how long it takes for Internet service to be re-established following a failure.
Pacific Bell commits to a four-hour response time for a trouble ticket on a T1 line.
The same outage on a DSL line won't be addressed for 48 hours, and in practice it might take as long as three days. That kind of blackout could effectively ruin an e-commerce site.
The reason for the discrepancy is simple. DSL, which works in a similar way to today's T1 technology, has similar maintenance costs. The reason you don't get fast technical support is because you're not paying for it. As Covad's Chapman explains, DSL is "not so much an innovation in technology as it is an innovation in how we package and market those technologies."
"The rule goes, with network service there's fast, there's reliable, and there's cheap," explains Bill Woodcock, founder of Zocalo, a Berkeley-based ISP. "You can pick any two; you can't get all three."
Which two you pick will go a long way to determine what type of service you want. "Cable and DSL are fast and cheap," says Woodcock, who specializes in providing reliable dedicated Internet connections to business. "Reliable and cheap might be a 56K dedicated line. For fast and reliable, get a T1."
Chapman agrees. DSL, he feels, shouldn't be considered where high availability is a requirement. "Every so often one of my salespeople will call me over to talk about some new business. They'll be on the phone with a bank that wants to order 30 lines, to network their branches with DSL. I'll say no, no. I don't want those customers."
But for other types of users, the odd period of instability is more than made up for by the low cost of DSL or cable modems. The services could be seen as particularly attractive to independent contractors, users with home offices, and small businesses with only an occasional need for heavy file transfer. While these customers still won't get more than they pay for, they won't pay for more than they need, as they might with traditional dedicated lines.
Of course, each situation, and each business, will have its own unique needs. Suffice it to say a $50-a-month Internet solution is no magic wand for setting up that garage-based dot-com. But for bringing fast, inexpensive Internet access to the small-business workplace, it's hard to beat — at least, until the next revolution comes along.
