iansltx
join:2007-02-19
Golden, CO
kudos:2 Reviews:
 ·Comcast
| reply to patcat88
Re: typical graft If the ISP has a 100 Mbit pipe when it had 45Mbit before, maybe it can introduce a 20 Mbit tier for $70 where their previous fatest tier was $60. Additionally, lower startup costs for bandwidth may lure competition into the area, which will either compete on price, features (speed) or customer service. If the ISP just pockets the profits (and they usually don't, because they have to live with their own internet nine times out of ten) then the profit margin for their service is higher than the norm. Economic theory (and practice) dictates that economic (above average) profit tends toward zero as barriers to entry tend toward zero. Lower bandwidth costs represent a lower barrier to entry; people are more likely to start a WISP if they can get a resellable 50/20 FiOS connection for $200 than if they have to pay $300 for a T1.
Alternately, the ISP can preempt competition by...wait for it...lowering prices or raising speeds so a potential competitor wouldn't have a leg up by default.
For example, when Texas Lone Star Network came online (really online) recently, a nearby telephone cooperative switched to it and doubled DSL speeds for the same price, adding a low-end tier for those who needed it. |
