The real bandwidth numbers.

Stephen D. Williams sdw@lig.net
Sun, 27 Jan 2002 18:07:27 -0500


Burdened cost is a misused and dangerous basis to make decisions.

I agree with Gordon.  The $12.88/GB number at your current rate of 
sales/usage completely pays for overhead.  Additional bandwidth will not 
cost so much, and many factors won't increase at all until certail 
plateaus are reached.

Even the $1.75/GB for external traffic is negotiable because everyone 
has the same kind of cost structures where salary, buildings, 
electricity, etc. don't cost linearly more.

Additionally, $1.75/GB seems fairly expensive for T3+ if it is based on 
total possible bandwidth.  That works out to $852/mo. for a T1 and 
$25567/mo. for a T3.  (2592000 seconds, 1.54 bits vs. 1.54*30 for T3.)

An interesting analysis would be to determine how much available 
bandwidth goes unused and the resulting inflation of used bandwidth.

sdw

Gordon Mohr wrote:

>Adam Beberg writes:
>
>>So here's how it boils down (in US dollars):
>>
>>$1.75/GB for the bandwidth coming in and out of the cables to the
>>backbone companies - the wholesalers, Sprint, MCI, Qwest, etc.
>>
>>Now, once you add employees, routers, power, AC, phones, etc etc...
>>
>>$12.88/GB.
>>
>
>You're doing this almost exactly backwards; the most important
>number for setting prices and determining the potential for
>profit at scale is the marginal cost of one additional GB.
>That's under $2 and falling.
>
>>I leave for the reader to calculate how many DSL customers you need at
>>$40/month running gnutella to make a profit :)
>>
>>Enduser per-GB rates are coming.
>>
>
>Put your money where your mouth is. My offers from December 24
>(USA) or December 26 (worldwide) still stand. 
>
>At any addresses you choose, and at any timeframe you choose, 
>places which currently have flat-rate broadband options will 
>continue to have better flat-rate options than metered options.
>
>That's what the customers want, that's what the long-term and
>marginal economics demand.
>
>C'mon, you keep repeating the same prediction. If you want
>to make some money off your "insight", bet me a big amount
>of money. If you want it just to be symbolic, bet $1.
>
>- Gordon
>
>
>
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>