[9150] in Commercialization & Privatization of the Internet
Re: an Internet buying coop?
daemon@ATHENA.MIT.EDU (Karl Denninger)
Sun Dec 19 15:49:56 1993
From: karl@mcs.com (Karl Denninger)
To: stpeters@dawn.crd.ge.com
Date: Sun, 19 Dec 1993 14:48:50 -0600 (CST)
Cc: tenney@netcom.com, com-priv@psi.com, communet@nysernet.org,
In-Reply-To: <9312192026.AA03747@spare-parts.crd.Ge.Com> from "Dick St.Peters" at Dec 19, 93 03:26:37 pm
> > From: tenney@netcom.com (Glenn S. Tenney)
>
> > Why don't we push the CIX to add something to their member agreements that
> > would require their members to allow their subscribers to re-sell access or
> > somesuch. Of course, it would likely also have to say that doing so would
> > only be allowed if the subscriber also joined the CIX, but we could also
> > push for membership fees based on number of expected annual resales (why
> > should ANS pay the same $10K as XYZ Coop reselling to three users?).
>
> Ah, there we have it. I was wondering how long before someone argued
> that these coops would be resellers that had to join the CIX. That's
> of course precisely the problem I've been complaining about on com-priv
> for weeks.
>
> Why not just go all the way? CIX members become only those providers
> that physically attach to the CIX; the CIX charges them enough to
> support the CIX; they recover that in the price they charge their
> customers. This way, what the coop pays to support the CIX is
> determined by the free market - by what deal it can get from a provider.
>
> Why are people agaqinst this? What is wrong with it?
How does this differ from the current arrangement? I don't get it.
If you want to become a coop nothing is preventing you (other than the
roughly $3k/month cost of a T1 across the country) from doing <exactly this>
-- connecting directly to the CIX. Nothing, that is, other than economics,
which is exactly what prevents it in the current situation.
If there is a coop out there that thinks they can make a go of it, pull the
line and do your own resale deal with whoever. This is a ~$30k + $10k (CIX
membership) annual proposition. If you can make it pay with $50,000 a year
in direct costs then more power to you. That is exactly what anyone else
can do.
Doing this means that your cost of doing so as a coop is <reasonable>. If
the CIX becomes a small members-only club then the cost is going to rise
astronomically and shut out the coops and other "nontraditional" members from
participating at all. It also sets the stage for a really ugly monopoly
position to develop where a very small number of providers end up basically
pricing CIX membership out of reach for all except a few. This is NOT a
good thing.
--
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