From: Eli Brandt <ebrandt@jarthur.cs.hmc.edu>
Date: Sun, 24 Apr 94 23:38:29 PDT
To: cypherpunks list <cypherpunks@toad.com>
Subject: Re: The un-BBS
In-Reply-To: <199404250422.VAA17668@mail.netcom.com>
Message-ID: <9404250638.AA08925@toad.com>
MIME-Version: 1.0
Content-Type: text/plain


> When the costs are underwritten by others, and the marginal cost to an
> employee or student is zero or near zero, I call that a subsidy.

I call that "flat-rate".  Netcom charges $30 a month (I think) with
no marginal costs (right?); Harvey Mudd charges $20K a year with no
marginal costs (and certain other benefits, to be sure).

> The point is that this "free" (marginally, at least, and largely free
> even in overall terms) service will generally outcompete one which
> offers similar services but which requires the user to pay for his use
> in a standard sort of way.

The reason that most access providers don't charge by the packet for
Internet traffic is that it's not economical to do so -- a T1
doesn't care how much you put across it.  As a result, they do flat
rate service, users generate more traffic, and users see a slower
network connection.  But until people aren't willing to pay
per-packet fees in order to deter excess traffic, this will continue.

   Eli   ebrandt@hmc.edu
         finger for PGP key.
The above text is worth 
precisely its weight in gold.