🚀 go-pugleaf

spr@ozemail.com.au (Stephen Reynolds) wrote:


<snip>

> Why is Internet access so much more expensive in Oz?


On the figures you provide it seems to be about double the price here,
plus os they have unlimited after you pay your $25/month.

$US20/month is  ~$A26/month
10 UK pounds is ~$22/momth

The only three things I can think of are:

1) Telecomms costs are higher in Oz (Telstra's ISDN is at least double
US prices as I understand it), and these are a good part of any major
ISPs costs (all those lines between points of presence and the main
site). And other equipment costs (modems and computers) are also
higher (compare US computer prices with Australian).

2) Bigger markets = economies of scale.  A US 'phone company opening
in 250 cities at once clearly has much greater scope for economies of
scale. Economies of scale refer to the fact that in most businesses
there are costs which increase less than one for one with the size of
the business, so the bigger the business the cheaper the average unit
price (in this case $ per time).

3) Pricing is based on supply and demand.  You charge as much as the
market will stand, and as low as necessary to avoid losing share to
the competition.  There is presumably much greater competition in US
and UK because the market is larger = more players.  It'd also be
interesting to know whether there's any cross-subsidisation going on
in the US 'phone companies as they try to capture initial market
share.  They would have such huge revenues from their phone business
that they could probably give internet access away free if they
wished, and in the early days its a nice way of growing both the
overall market and one's own share.

PB