Economics of the Internet

• It Adds Up (and U[, and Up) (NY Times, April 10, 2003)

  An analysis of government data by academic researchers over the last 25 years shows that from the 1920's through the 80's, the average household spent about 6 percent of its disposable income on "information and entertainment," a category embracing everything from newspapers and movies to telephone service, radios and television sets. In the 1990's that figure jumped to 8 percent. Today, "it looks like it's more than 10 percent,'' said John Carey, who teaches courses in new media at Columbia University's graduate school of business

• Phone Companies See Their Future in Flat-Rate Plans (NY Times, May 23, 2003)

  These unlimited-use plans offer callers the advantage of predictability and less time spent checking monthly bills. They commonly cost $50 to $60 a month with services like voice mail and caller ID bundled in, making the price only slightly higher than the $48 that American households typically spend on local and long-distance calling, according to the Federal Communications Commission. ... No one is certain how customer use will change as people switch to these plans. But evidence from other industries suggests that it will increase significantly. "Usage more than doubles on unlimited wireless-calling plans," said Berge Ayvazian, a senior research fellow at The Yankee Group, a market research firm, "and if broadband is always on, the Internet is always in use."

• MSIX: Metered Service Information Exchange
• IP Telephony Versus Circuit-Switching: Service Revenue and OSS Expenditures in Voice Over Packet Networks 2000-2004: "From a mere $870 million in 1999, VoP-based services will grow to just over $98.7 billion by 2004."
• Cable & Wireless annual report 2002: voice 2,009 £m, data 823 £m, IP 883 £m.
• "The UUCast [multicast] service is available now. Pricing varies from $2,200 per month for a 5Kbps stream, [$10,000 per month for a 25Kbps stream,] to $54,000 per month for a 128Kbps stream." InfoWorld 250,000 users simultaneously
• "There's widespread agreement in the telecom industry that the allocated network costs on a per minute basis is about 2 cents. Sprint has won several RBOC wholesale LD contracts with bids of 1.25 cents per minute. Given that those prices include profit margin and non-network costs built in it, one can safely say that the long run incremental network cost of a minute is well below 1 cent."

Monthly ISP costs

Last updated by Henning Schulzrinne