[9135] in Commercialization & Privatization of the Internet
more on Internet buying coop
daemon@ATHENA.MIT.EDU (Miles R Fidelman)
Sat Dec 18 18:14:08 1993
Date: Sat, 18 Dec 1993 17:47:55 -0500 (EST)
From: Miles R Fidelman <fidelman@civicnet.org>
To: com-priv@psi.com, communet@nysernet.org, nii_agenda@civicnet.org
Cc: adamfast@u.washington.edu, pozar@kumr.lns.com
Hi Folks,
Thanks to all who've responded so far, and for the information on
existing Internet buying co-ops.
I guess I should be a little more specific. There are a number of groups
that are buying an Internet feed, operating a POP, and reselling to
smaller users. I have a different model in mind - one that doesn't
involve any operational role:
Its fairly common for municipalities to negotiate a common RFP. For
example, all 351 cities and town in Massachusetts, plus state agencies,
plus university police forces (I believe) are elibible to purchase from a
common contract for police cruisers.
Once a year, through the Mass. Police Chief's Association, a common RFP
is drawn up, which is then issued and negotiated through the town of
Newton's purchasing dept. Once an award is made, usually to a dealer,
purchasers issue their own purchase orders directly to the dealer, take
delivery directly, and are billed directly. But... they get much better
terms than they would if they hadn't negotiated en masse. There are
quite a few of this kind of contract floating around -- some are
organized through city purchasing departments, some through regional
groups -- in some cases the contract manager takes a small fee or piece
of the discount to handle the costs of contract negotiating.
I see a similar arrangement for buying IP service. We negotiate jointly,
but then buy separately. So instead of setting up a private access
network such as The Little Garden, buyers would go directly to whoever wins
the contract. We'd probably want to award two contracts, and we might
want to structure the RFP into geographic areas in order to give the
regionals a chance to bid. We'd also probably want to rebid every two
years or so. Of course, some of the local projects that operate resale
networks could benefit from joint negotation with the regionals and
nationals.
We could also do some things like:
-- representing groups of participants in public utility commission
hearings (for example, Prodigy has been very active in Mass. pushing for
ISDN rates that make ISDN a viable vehicle for reaching Prodigy --
why shouldn't we band together to push for more attractive leased line rates)
-- negotiating for discounts on hardware and software buys
-- possibly joining together to fund and contract for local access
facilities (example: Teleport provides telephone bypass services in the
greater Boston area -- there is potentially a market for them on Cape
Cod, but there's about 30 miles of fiber to run for them to reach the
Cape -- if a group of buyers got together and committed a level of
business, and possibly arranged an industrial finance bond to pay for
laying the cable, Teleport might move a lot quicker than they would
otherwise)
In short: I don't see this coop as an operational entity, rather as a
contractual, negotiating, and possibly financing vehicle.
Happy Holidays,
Miles
p.s. of course the American College of Radiology might benefit from
joining a buying coop :)
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