Thursday, July 22, 2004
Value-Subtracted
Dave Hughes, writing on the Cybertelecom list, presents a concrete example of how telcos keep the benefits of Moore's Law from reaching the end user. He writes
In one case I studied for the NSF years ago, a Telco bid $1.5 million up front to connect 25 school buildings with T-1, wired 'service' and then wanted to charge $12,000 a month until the end of time - or $2.9 million over the first 10 years, while a one-man Wireless company bid a one-time purchase and installation cost of $600,000 and that's ALL it took for the same 10 year projection. Today that same school district could be connected up at 10mbps to 45mbps - DS3 speed -for under $150,000, one time. Or do it themselves buying off the shelf radios for under $50,000!Hmmm. Remember the stories about how Soviet factories would take in $1,000,000 worth of raw materials and produce $500,000 worth of product? Here's a telco that proposes to take $2,900,000 and produce $50,000 worth of product. This is called "Value-Subtracted".
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