[arin-ppml] simple question about money

Ted Mittelstaedt tedm at ipinc.net
Wed Jun 11 16:00:54 EDT 2008

> -----Original Message-----
> From: arin-ppml-bounces at arin.net 
> [mailto:arin-ppml-bounces at arin.net] On Behalf Of Howard, W. Lee
> Sent: Wednesday, June 11, 2008 8:18 AM
> To: Howard, W. Lee; Randy Bush
> Cc: PPML
> Subject: Re: [arin-ppml] simple question about money
> I said, in response to Randy:
> > > and, in the meantime, we the incumbents use routing table
> > aggregation
> > > as a excuse for creating a barrier to entry.
> > 
> > I still don't see PA space as a barrier to "entry."  It can
> > be construed as a barrier to "exit" maybe, but only for the 
> > very smallest providers.  Current PI policy (4.2.2) says /20 
> > for a single-homed or /22 for a multihomed ISP in IPv4, which 
> > is not very many customers.  In IPv6, it's "a plan for making 
> > 200 end-site assignments...within 5 years."  
> Owen suggested I should also point out that in IPv6, you could 
> also "be an existing, known ISP in the ARIN region" which plans 
> to assign some IPv6 address space, even if less than 200.
> The barrier is low.
> I find it interesting that there are two arguments currently 
> under the subject line "simple question about money":
> * fees are too high and prevent end users from getting space
> * fees are too low and do not encourage conservation
> These two arguments should find each other.  I look forward
> to consensus.

You won't have it.

The same thing is happening to the ISP market that has happened to
a great many markets.

I'll point to the beer market for example.  When you go to buy beer
what do you find on the shelf?  You find some cheap pee-water from the
great, gigantic breweries that are part of multinational food conglomerates.
And you find drinkable-but-expensive "real" beer from the small fry
regional craft brewers.

What you DON'T find is drinkable real beer that is cheap.  Why?
Because that would only come from a mid-sized beer company that
was a standalone business that just made beer, made a lot of it,
distributed it over the country, yet was still small enough that
they actually gave a shit about product quality.

If your a small fry craft brewer your going to think the cost of
getting all the government health certifications to sell your product
is too high and is a barrier to market.

If you're a large conglomerate, these costs are peanuts, and naturally
your main concern is seeing that these fees stay fairly high for the
small fry, so that they cannot compete head-to-head with you on
price.  (and thus, their growth is forever limited)

This is why in the ISP market you don't find mid-sized ISP's who
are cheap yet still care.  You find small ISPs that care, and you find
large ISP's that are more interested in selling television and 
advertising and a whole host of other crap besides Internet connectivity.

The ironic thing is that while the small ISP's bitch about the costs
to entry, what most of them don't realize is that those high costs of
entry help them just as much as they help the large conglomerate ISPs.

I work for a small ISP.  We can compete on the basis of product quality
and support with the large, elephant AOL's and Comcasts of the world.
We can also compete with all the other small fry ISPs like us out there.

What we -can't- compete with are the mid-sized ISPs who because of their
larger size than us can cut deals and buy bandwidth a hell of a lot cheaper
than we do so they can sell connectivity at the same cost as the elephants
can, yet because they are not large enough to be distracted from their core
product, can still offer the same quality and technical support that we do.

Fortunately, the elephant ISPs of the world cannot compete with those
midsized ISP's either.  So, whenever one of those midsized ISPs
appears in the market, one of the elephant sized ISP's buys them out,
and runs them into the ground until their service is just as horrible
as the elephant sized ISPs.


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