[bjornsing]

Just a quick comment on cost (since OP and these comments seem to have it a bit backwards):

The real cost in a DOCSIS network like Comcast's is actually in the last mile. DOCSIS is sort of like a mobile network in a pipe. The base station in this case is called a Cable Modem Termination System (CMTS) and data is transmitted from there over RF with QAM modulation to all the cable modems on the same coaxial segment. This can be hundreds or even thousands of cable modems. For unicast IP the packet is only received by one of them but they all have to listen.

When the radio spectrum inside the coaxial cable becomes congested the segment has to be split in two parts and a new CMTS installed, very similar to how you split a mobile network cell into sectors to improve capacity. Like with a mobile network this is capital intensive.

Not saying this makes Comcast right. But important to understand where they're coming from.

[zbisch]

Residential networks are actually part of my current research, and, although I don't know the full details of every technology, I am familiar with the basics of how DSL and DOCSIS networks work.

Yes, there is a cost (in terms of performance and congestion) over these links, but this not really relevant in the discussion when talking about the cost of where the traffic is originating. Whether the traffic originates in Comcast's data center in Seattle, from a CDN in Level3's network, or over their peering links with Tata, the cost of it traversing the last-mile is irrelevant. In any of these cases, traffic will still be crossing this link. And yes, this is a significant cost in terms of deploying the last-mile network, but as I said, it has nothing to do with the cost of getting of getting the packets to the DOCSIS network.

What we're saying is that if Comcast is carrying traffic from Seattle to a user in their network, they do not have to pay a transit provider to carry this traffic. If it is from Level 3, Level 3 would actually be paying them to carry that traffic to Comcast subscriber. If the traffic were coming from Comcast's peering link with Tata, Comcast would have to pay Tata (their transit provider) for the traffic.

Yes, the cost of the last-mile network is real and important, however, in this discussion it doesn't really relate, since you would be traversing the DOCSIS network in all cases.

[bjornsing]

Well... Isn't there a fundamental assumption in the network neutrality debate that cost per bit is zero or very low? At least that's the feeling I get from reading this discussion. People seem to think that cost comes mostly from IP transit, and implicitly that last-mile infrastructure cost is constant and sunk.

Well, that assumption is wrong for mobile, and to some extent for DOCSIS. Last-mile cost scales with traffic volume (and completely overshadows the cost of IP transit). That's why I think you'll see MNOs and MSOs fighting the hardest against network neutrality.