[10716] in Commercialization & Privatization of the Internet
Re: Re: CCN's Clarification re: Internet Local Loop
daemon@ATHENA.MIT.EDU (Karl Denninger)
Sun Mar 6 21:26:05 1994
From: karl@mcs.com (Karl Denninger)
To: thosstew@aol.com
Date: Sun, 6 Mar 1994 15:59:07 -0600 (CST)
Cc: com-priv@psi.com
In-Reply-To: <9403051813.tn271114@aol.com> from "thosstew@aol.com" at Mar 5, 94 06:13:17 pm
> I agree, regulated access isn't the way to go, certainly as long as access is
> growing so fast, prices continue to tumble, and competition is so--how to
> say?--enthusiastic. But necessity, or something awfully close to it, is just
> around the corner. Finding a way to acknowledge it without regulation--that's
> a challenge that needs to be met by some other means than denying how
> imminent necessity is.
>
> Tom
The nice thing about necessity is that the free marketplace WILL fill the
demand. It might not do it at a price you'd like, but the "invisible hand"
of competition makes sure that services are available at or near marginal
cost.
The only way you can ever legislate the provision of a service at less than
the marginal cost is through a general tax on some other part of the populace.
My argument is that if you need to do that, then your "price point" you're
trying to hit is not a necessity -- its someone's private agenda getting in
the way of the real world.
The reason for this is simple. In an unregulated environment, the cost of
entry to these kinds of markets (IP provision, etc) is relatively small.
For $100,000 you can easily set up an IP provider business and run it
for a year. This compares favorably with a McDonalds (way more than $100k
required) or a corner grocery store (~120,000 required) and is extremely
cost competitive with most other business ventures. If you know what
you're doing you can be profitable within that year, after which the
numbers are pretty irrelavent.
Those who squawk about the $10k CIX membership cost should look into the
cost of starting a traditional small business. When you get done blanching
at the numbers on the spreadsheet, come back and talk to us again.
No, doing it right isn't cheap. Neither is anything else, and in this
vein the cost of starting an Internet Service Provider company in a given
location is not only reasonable -- it is downright inexpensive.
Like all such ventures, if you lack the technical or managerial know-how to
do it right you <will> lose your shirt. But that is the very nature of the
entepreneur; you take risk, and if you're right you get rewarded -
otherwise you get punished.
--
--
Karl Denninger (karl@MCS.COM) | MCSNet - Full Internet Connectivity (shell,
Modem: [+1 312 248-0900] | PPP, SLIP and more) in Chicago and 'burbs.
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