Cost of transit and options in APAC

Thu Aug 12 21:25:43 UTC 2010

+10

Once you pass a threshold of affordability (by breaking the monopoly), then the network use explodes and other issues can be worked out by more or less by consumer pressure (and economies of scale)... You need to reach "Packet Storm" level.

----- Original Message -----
From: "Patrick W. Gilmore" <patrick at ianai.net>
To: "NANOG list" <nanog at nanog.org>
Sent: Friday, 13 August, 2010 6:29:02 AM
Subject: Re: Cost of transit and options in APAC

Back to topic of why prices are high in some places (and it is not just Asia), it is trivial to prove objectively that monopoly power keeps prices ridiculously high.  Before anyone jumps on me, there are many reasons for high prices.  Monopoly power is only one, but clearly and obviously the biggest one.

When I say "objectively", I mean it.  Look at any country which has gone through any type of transition from "gov't owned monopoly telco" to "competition-based market".  South Africa instantly springs to mind.  Prices are still high, but have dropped, what, 75% in just a year or two once the monopoly power was broken?  And this is after a decade or more of little to no decrease.

Of course, this does not mean .za will have $1/Mbps transit like the US any time soon.  As I said, there are other factors - geography, scale, local economy, even import policies, etc.  But getting prices to go from US$2000/Mbps to, say, $100/Mbps is more important than the $100 -> $1 drop.  (Hrmm, I wonder who will say "the first is only 20 times, the second is 100 times!" to prove me wrong? :)  Plus there are a myriad of factors keeping that last step from happening, not just one.  So wich do you think is more important, the monopoly power or the dozens of other factors?

That said, this is not really on-topic for NANOG.  So if you would like to argue the point, please e-mail privately, or let's take it to another list.

End of day, the important thing is to break the monopoly.  After that, prices will almost always drop, then you can work on other stuff.

-- 
TTFN,
patrick