[SATLUG] Looking for another ISP

Bruce Dubbs bruce.dubbs at gmail.com
Wed Jan 23 19:16:46 CST 2008


herb cee wrote:

> Bruce can you comment on this referenced article's only comment ...

> I operate a small, local ISP in the US, and the price shown above for
> our country ($3.33 per Mpbs per month) is misleadingly low. The
> wholesale cost of Internet backbone bandwidth in our area of the US is
> $50 to $100 per Mbps per month -- sometimes more.

That IS the problem.  The backbone charges are way too high.  Its the
big guys that are making the profit.  I do understand the need for the
cost of the infrastructure, but that has a high initial cost with a
relatively small maintenance cost.  We just get stuck paying the high
costs forever.

The problem is big companies not offering services at a reasonable cost.
Let me give you an example.  I once checked into the cost of getting
some static IP addresses.  I really only needed one.  The minimum that
was sold was 8.  Of that, 5 were usable, 1 for a router, one for the net
address and one for broadcast.  That was all understandable.  The
problem was that they wanted, at the time, about $60/month.

I checked into the cost for ip addresses from IANA.  The minimum size
for a block of IP addresses was 8K addresses and cost about $16K/year.
That means their cost was $0.16 per address per month and they wanted $8
per address per month.  Thats a markup by a factor of about 50.

I'm all for a reasonable profit.  The point is that because the entry
fees are so high, competition is terribly restricted.  It is NOT a free
market.  I hope Google may inject some competition into the market.
They do have a market cap ($172B) that is almost as big as AT&T ($222B)
and bigger than Verizon ($110B).

  -- Bruce




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