[9342] in Commercialization & Privatization of the Internet
Re: Cost vs benefit of internet services
daemon@ATHENA.MIT.EDU (Dick St.Peters)
Wed Dec 29 18:52:14 1993
Date: Wed, 29 Dec 93 18:47:06 EST
From: stpeters@spare-parts.crd.ge.com (Dick St.Peters)
To: martinea@hawk.nstn.ns.ca
Cc: com-priv@psi.com
Reply-To: <stpeters@dawn.crd.ge.com>
> From: martinea@hawk.nstn.ns.ca (Michael P. Martineau)
>
> There are costs associated with providing Internet access. Many
> organizations, such as ours, price their services based on single
> organizations or individuals (in the case of dial-up services). Assumptions
> are made as to the number of customers we can get. If apply the same prices
> to others who wish to be resellers we would not be able to stay in business.
I don't think anybody's saying you should be required to sell to
resellers at the same rate, but using a fixed CIX fee as a startup
barrier for small providers is, in effect, a form of partial price
fixing.
Try this on for size: amend the CIX rules so that each national carrier
and CIX member pays the CIX $10K/yr for each reseller to which it
provides service. The CIX gets the same amount, but the money is owed
by the big CIX-member carrier, not the reseller. The national carrier
is free to charge the reseller $10K, $2K, or even $15K for CIX routing.
If Brand X national carrier thinks of itself as a wholesaler and wants
to see the retail market flourish, it can absorb some of the cost for
new retailer accounts, as an investment in developing the market. It
can also offer a discount on CIX routing to compete with other national
carriers. Competition in the market will soon price CIX routing at
what it's actually worth.
This way, the entire price of service, both connection and routing, is
set by the market instead of having a large chunk of it (for small
providers) fixed as a tax by the CIX.
The large carriers would be freed of Matthew's charge that they're
using a $10K/yr up-front charge as a barrier to competitors forming.
That should please them, unless the charge is true.
--
Dick St.Peters
GE Corporate R&D, Schenectady, NY stpeters@dawn.crd.ge.com
