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  From: Mark Newton <newton@atdot.dotat.org>
  To  : Adam Dixon <adix@camtech.net.au>
  Date: Tue, 5 Jun 2001 17:11:35 +0930

Re: BPA & 100mb / Day Limit

On Tue, Jun 05, 2001 at 05:28:02PM +0930, Adam Dixon wrote:

 > Can anyone tell me though, intellegantly why as of late dialups have lost
 > there 'unlimitability' and broad band as it will be next month has also lost
 > it. Did data traffic and maintainance costs boom or something that in the
 > last 6months - year they have had to resort to almost killing internet
 > usage?
 
Providers offer "unlimited" plans because they want to monopolize a 
particular market space.  So, in an event to be so much stunningly 
cheaper than their competition that you'd be foolish to not use them,
they make a business decision to lose tens to hundreds of dollars
per customer per month.

This isn't limited to Internet access, by the way.  It's currently
rampant through all facets of telecommunications.

Because they're losing money, they can't do it forever.  So, there's
a point where they need to say, "If I haven't acheived something like
monopoly by date XXXXX, I'll need to make a decision about whether I
stop doing it or go bankrupt."  Date XXXXX looms faster as more time
goes by, because if you're losing a certain amount of money per customer
your burn rate increases as you get more customers.

Hidden in there is the expectation that the costs of offering the 
service will drop as time goes by, so your cost structure might be
sustainable one day if you wait for long enough.  But you can't
wait for ever, because you only have a finite amount of money to lose.

One.Tel is an example of someone who went bankrupt.  Telstra, Primus,
Dingo Blue, and virtually everyone else who ever used to offer an 
"Unlimited" plan, are the ones who have decided that it's better to
stay in business.  And the way to stay in business is to stop pretending
that it's economically sustainable to offer infinite capacity for zero
dollars.

Why is it happening now?  Because the dotcom frenzy is over.  A year 
and a half ago there was a ready supply of burnable cash, because 
dumb shareholders kept ploughing money into internet companies.  You're
an Internet company and you're about to run out of money?  Sell some
of your shares!  Plenty of cash, right?  Well, not anymore.

   - mark

--------------------------------------------------------------------
I tried an internal modem,                    newton@atdot.dotat.org
     but it hurt when I walked.                          Mark Newton
----- Voice: +61-4-1620-2223 ------------- Fax: +61-8-82231777 -----

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