[11456] in Commercialization & Privatization of the Internet
Re: The whole CIX concept is flawed
daemon@ATHENA.MIT.EDU (Karl Denninger)
Sun Apr 3 06:34:49 1994
From: karl@mcs.com (Karl Denninger)
To: bzs@world.std.com (Barry Shein)
Date: Sun, 3 Apr 1994 00:01:20 -0600 (CST)
Cc: jlw@cs.columbia.edu, bilse@eu.net, com-priv@psi.com
In-Reply-To: <199404022336.AA28537@world.std.com> from "Barry Shein" at Apr 2, 94 06:36:52 pm
> >From: James Waldrop <jlw@cs.columbia.edu>
> >Consider a small startup, selling shell accounts to people (or just
> >some sort of internet connectivity). They'd like to offer SLIP, but
> >it means laying out $10K on top of everything else...
> >
> >Some friends of mine are having to lay down $6k for a T1 (that's up
> >front), and probably don't have the cash to also plunk down $10K
> >for a CIX membership. Not to mention that there *are* better things
> >to spend that on...
>
> As I said previously, I have no doubt there exist people on this
> planet who do not have the $10K, or more to the point would rather
> spend that money on something else (including just keeping it in their
> pocket.)
....
> One wonders what they plan to *EARN* from selling this access?
> Nothing? If so then perhaps their business plan needs another going
> over. $10K will barely keep two people paid a modest salary and
> benefits and sitting in an office somewhere with minimal amenities
> such as furniture, phones, fax, copy machine etc. for one month.
> $10K/year is $833/month. That's less than my electric bill and we're
> hardly a Sprint or whatever, we have about 12 employees in rather
> typical office space. Are these people being realistic? Are they
> getting good advice?
I think that's the point that some of us, myself included, are trying to
make. Hell, $10k barely pays the salaries of myself and one other person
around here for a month once you count all that our Dear Uncle Sam extracts.
I hate those damn checks to the bank for 941 payments.... but I digress.
Let's put this in perspective. My <local line> phone bill is more than
twice that $833/month. That's for my <analog> lines; we haven't paid for
the T1s yet. And we're in a part of the country where analog lines are
<cheap>. Where they're $50 a month you're talking about <16> line
charges. (Ghods, how do you folks do it?)
What's $833 buy you these days? Here's some comparisons:
It's about 1/4 of the cost of the T1 backlink to the net, which runs
somewhere around $3200 once you factor in the T1 access charge.
It and $100 is about equal to the cost of ONE of my T1s to connect MCSNet's
remote Chicagoland POPs with my central offices. I have three of these to
pay for at present.
It and $300 buys ONE T1 CSU/DSU (a spare of which I hope you have on hand
for Mr. Lightning Storm!)
It doesn't even come close to covering the rent + electric for my modest
office -- and I'm a cheap bastard when it comes to amenities here,
preferring to put the cash into hardware instead.
It buys 1/8th of a 4T card for a CISCO AGS+ chassis, and about 1/6th of a
4S card (for 56kbps connections). It and $500 will buy a T1 capable card
for a Netblazer.
It buys one and a half 56kbps CSU/DSUs.
It buys three or four CHEAP 14.4kbps modems - or two good rackmount ones
if you can get a deal -- but only one at list price.
It will almost buy a decent (Fuji, etc) 1GB fixed disk drive.
It will also buy 16MB of RAM in 4MB SIMMs for a PC style system -- or quite
a bit less if you're buying for one of the "closed" workstation style
machines.
A lot of money? Perhaps to some people it is. But if you're going out
and purchasing a T1 line to the Internet, it is NOT a lot of money.
You're going to spend 10x than that on hardware alone in the first year,
unless you're doing "Joe's basement access" or you have found a way to
steal hardware from somewhere.
I agree that for the 56kbps customer it IS a lot of money. But the 56kbps
customer isn't shopping for CIX memberships -- the end user doesn't need
one.
> However, one also has to wonder about businesses like this which go
> out and hawk to the public w/o the ability to conceive of raising $10K
> in predictable expenses (unpredictable? you have my sympathy.) Will
> they fold over the first refund or bump in the road (e.g. some
> critical piece of equipment failing)? Are they viable at all? Or is
> there some point at which they're just hawking vapor, the thinnest
> veneer of offering a service to the public?
>
> It's an interesting question, something consumers might have an
> interest in.
I agree.
The first time one of these folks suffer a CSU/DSU failure, or their
CISCO 3102 blows chunks (there goes $4k) or one of their Sun's needs
a $4k motherboard swap they're completely screwed.
If you're in this game and don't have the funds to replace at least one of
<anything> you own (ie: one router board, one motherboard in a server, one
disk drive, etc) you're treading on incredibly perilous ground. I wish you
(and your customers) luck. You're going to need it.
--
--
Karl Denninger (karl@MCS.COM) | MCSNet - Full Internet Connectivity (shell,
Modem: [+1 312 248-0900] | PPP, SLIP and more) in Chicago and 'burbs.
Voice/FAX: [+1 312 248-8649] | Email "info@mcs.com". MCSNet is a CIX member.
