[8298] in Commercialization & Privatization of the Internet
Re: Net Access/Service Providers
daemon@ATHENA.MIT.EDU (Miles R Fidelman)
Fri Nov 12 23:10:01 1993
Date: Fri, 12 Nov 1993 22:56:06 -0500 (EST)
From: Miles R Fidelman <fidelman@civicnet.org>
To: sharilee@aol.com
Cc: com-priv@psi.com
In-Reply-To: <9311122126.tn19106@aol.com>
On Fri, 12 Nov 1993 sharilee@aol.com wrote:
> Agreed. As you stated, it's basic economic life. The primary question is...
> what leads people to believe the apparent profits are high? It's a booming
> field, but the cost to support a user on TCP/IP is not trivial. Does anyone
> know the cost per user? Didn't someone mention that the $20/month for 20
> hours doesn't cover support?
>
just as a benchmark: it costs MIT about $100k per year for their
connection into the Internet through NEARnet (I believe they have two 10mb
microwave links) -- at 10,000 desktops on the campus network, that comes
out to 83 cents/per desktop/month! -- MIT charges internal users a $300
one-time connection fee to the campus net, and $20/month thereafter -- so,
the cost of campus networking is $19.17/month, or just about the cost of a
residential phone line or a basic capble tv service (note: the average
bit rate available to a desktop it pretty low when you divide it out, but
the peak rate is 10mb, which is what really counts)
now: the current cost for a 56kb full-period Internet link to a site is
around $1000/month and a dedicated SLIP port is $200/month plus the
dialup costs ($.90/hour, say $90 for 100 hours - for a total of $290/mo.)
there's a big gap between $20/month and $290/mo. and between $290/mo. and
$1000/mo.
since I don't think it costs that much more to provide metropolitan area
service over campus area service, there's a lot of money from smaller
sites being split right now between local telcos and Internet providors
the entrepreneurial profit is in bringing the cost/user/month for small
sites down towards the $20/user/month currently achieved at larger sites
one example of people getting ready to do this is the Continental
Cablevision / PSI deal, which will bring 24-hour Internet service to
cable tv taps at under $100/user/month
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