North American Network Operators Group Date Prev | Date Next | Date Index | Thread Index | Author Index | Historical Re: Lessons from the AU model
On Jan 21, 2008, at 6:10 PM, Mark Newton wrote: On 21/01/2008, at 10:49 PM, Tom Vest wrote: Hi Mark, So you're saying that if a cable owner/monopolist simply lit another fiber pair, that would cause them to reduce prices? This mistakes a contingent symptom or tactic or mechanism -- i.e., the intentionally misleading public explanation ("we're sold out") -- with the real cause/strategy/motives behind "artificially" high prices... We get that every day in .au (Transmission on the monopoly route between Melbourne and Hobart costs 3 times more than transmission between Sydney and LA; and other potential cable operators have always known that the monopoly has an excess of supply hidden away somewhere which they can roll out at bargain basement prices if a competitor ever arrives in the market) This makes perfect sense for resources that are not subject to "multiplexing effects" -- esp. unanticipated (undiscounted) multiplexing effects. Put it this way: how would you define (much less calculate) "replacement cost" for an asset whose financing was predicated on a useful of capacity of (x), but which, with fractional additional investment relative to the original outlay, can be leveraged to deliver (x)^4-n capacity -- with n yet to be determined? Must every increment of the now vastly larger resource be priced as it would have been assuming the "original" max cap? How much must the "replacement cost" replace? The original (x) capacity? The as-yet indeterminate (x)^n capacity? The originally anticipated/full scarcity-based/monopoly-backed profits? So everyone can extract profits for years, making out like bandits as they grow in to the Once you get acquainted with the power of that ^n, you'll believe ;-) Unfortunately, your location gives you few opportunities to familiarize yourself. Metered charging systems are, to me, evidence of a realization that the business model underlying much of the Internet's last five years is unsustainable. You guys might think they're a novel and unwelcome arrival at the moment, but give it a few years and we'll see what happens :-) If fine-grained metered pricing comes to the rest of the world, it'll be because people roll over for it (you guys weren't given a choice). If/when that happens, I'll be lobbying my local gov to turn over the water infrastructure to me so I can replace it with household Evian vending machines; and I'd recommend you all get in on the ground floor in the air market ASAP. Better be quick though, because the revolution will be just around the corner... TV
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