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Non-Tech : Proposed $.10 per Minute Internet Charge
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To: John Grandy who wrote (39)2/9/1997 5:49:00 PM
From: John Grandy   of 112
 
This is excerpted from the latest Hambrecht & Quist report on the internet. Pay special attention to the last paragraph.

<<<<<
In the two years since the Internet became the latest technological and
commercial overnight sensation, investors have regained their senses
and are once again skeptical of promises of "free" anything. Internet
traffic traverses public networks that are built and maintained with
shareholder capital. Not surprisingly, shareholders expect a return on
that invested capital. Considering the substantial cost of configuring
and installing a simple T-1 circuit (never mind more exotic broadband
technologies such as ADSL and ATM), it should be obvious that
bandwidth is not only not free -- it is not even especially cheap. While
we are enthusiastic about many emerging communications
technologies, it will be a long time before the supply side of the
bandwidth equation catches up with user demand.

That being the case, every service has to pay its way. However, there
are a number of Internet applications that have managed to achieve
customer acceptance through a phenomenon that has become known
as "tariff arbitrage." That is, certain service providers have created
competitive advantages by utilizing price umbrellas and subsidies that
are rooted in regulatory restrictions.

In many cases, a large part of the service cost is borne by someone
else, and therefore the price of the service appears cheap or even
"free." When the regulations change (they always do) or the carrier
figures out what it is doing wrong (they usually do), the game is over.
>>>>>
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