[1st-mile-nm] Broadband to go free in 2 yrs in all of India to everyone
Andrew Cohill
cohill at designnine.com
Mon Apr 30 07:50:56 PDT 2007
On Apr 28, 2007, at 12:27 PM, Dewayne Hendricks wrote:
> [Note: It looks like exciting things are in store for India as far
> as broadband is concerned. So where is this kind of bold thinking
> here in the U.S.? DLH]
>
It is not at all clear that "free broadband" is sustainable. The
longstanding problems with free services (in any market, not just
broadband) include market distortion and low quality service.
Market distortion occurs because "free" services suggest to users of
the service that supply is inexhaustible, and so users use as much as
possible. Not everyone thinks this way, but a small number of users
who hog bandwidth can consume all available supply.
This leads to low quality of service, in part because there is no
pricing feedback to users (see above), and in part because the lack
of revenue makes it difficult to expand capacity as demand increases.
In fact, fees alone do not guarantee a sustainable business model.
In the U.S. and most other markets, the current broadband business
model is upside down. Service providers enjoy maximized profits when
customers, paying a fixed fee for Internet access, don't use the
service at all. Service providers make the least profit if customers
like the service and use it a lot.
From an economic perspective, charging a fixed fee no matter how
much bandwidth a customers uses is exactly the same as giving the
service away for free. Neither one provides the funds necessary to
expand capacity, increase service areas, pay for proper maintenance
and upkeep, and add new services.
A solution is to move to a service oriented architecture (a different
network architecture AND a different business model) that conveys a
clearer relationship between supply and demand to customers.
Customers pay for services, rather than buying a bucket of
bandwidth. Service fees are based on the real cost of providing the
service, thus providing information to customers about supply and
demand. This can be done easily with both wired and wireless networks.
Andrew
-------------------------------------------------
Andrew Michael Cohill, Ph.D.
President
Design Nine, Inc.
Design Nine provides visionary broadband architecture and engineering
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