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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

In the UK, don't you pay by the minute for telephone calls ?
so wouldnt this add to your costs, here in Aus it's 25c per call



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


>Recent articles in Robert Seidman's newsletter "Seidman's Online
>Insider" prompted me to think about how much Australians pay for
>Internet access via Internet Service Providers [ISP]

>Below are some quotes from his newsletter referring to ISP charges in
>the USA.

>From the Sun, 2 Jun 1996 issue:

>"Pacific Bell officially announced the availability of its Internet
>service in California.  There is an unlimited plan for $19.95 a month.
>A "Carefree Access Pricing" (I am NOT making this up!) plan which is
>$14.95 for 20 hours, with additional hours being $.50, up to a maximum
>of $19.95 a month.  There is also a "Basic Access Pricing" plan at
>$9.95 for ten hours with additional hours costing $1."

>From the  Sun, 14 Jul 1996 issue 

>"ZipLink will offer unlimited access for $16.95 a month. ...
>Meanwhile, GTE is the latest of the telephone companies to enter the
>ISP market, announcing immediate availability of service in more than
>250 cities (representing 46 states). Users can opt for $8.95 a month
>for five hours of service, with additional hours billed at $1.95 each,
>or $19.95 a month for unlimited service. ..."

>I recently posted a message in a UK newsgroup, asking how much readers
>in that country are paying for Internet access, below is a selection
>of quotes from that newsgroup.

>Gary Jones wrote:

>"I use Demon Internet Services.

>They charge a flat fee of 10ukp [UK pounds] per month plus tax which
>comes to 11.75ukp per month. There is no limit to the log-in time per
>month."

>stalin wrote:

>"Net access is available for 10 [UK pounds] per month unlimited hours
>at 57,000 bps."

>Martin Hunt wrote:

>"I get charged 11.75 UK pounds per month for unlimited access. 
>Cheaper than Australia and cheaper than the amount mentioned for the
>US."

>What's the situation in Australia?

>My ISP charges me $50.00 per month base rate for which I get 10 hours
>connection time, I then pay $2.50 per hour for every hour after that.
>I reckon that's too expensive particularly compared to the prices
>mentioned above.

>I've no complaints about the quality of the service that I get from my
>ISP, [ well maybe just a few minor ones  :-) ] and as far as I know,
>they are no more expensive than most of the other major ISP's.

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


>SR

>-------------------------------------------
>Steve Reynolds - Adelaide - South Australia
>Home: spr@ozemail.com.au - Work: reynoldss@wp.ssa.sa.gov.au
>___________________________________________________________

In article <32094289.152186142@news.ozemail.com.au>, spr@ozemail.com.au
(Stephen Reynolds) wrote:

> While I agree that cost of telephone calls contributes to the cost of
> my Internet access, and in Oz local calls are great value, it has
> nothing to do with my ISP.

But it does!

If you're prepared to spend say $50 per month on Internet access, this is
divvied up between the ISP and the telco. The less the telco charges you,
the more the ISP can charge. Some pies aren't big enough to divide this
way, which is one reason why Viatel was less than a commercial success.

Also, the bigger the local call radius, the fewer POPs the ISP needs,
reducing its costs.

Stephen Withers

rayw@ois.com.au (Ray Whiteside) wrote:

>In the UK, don't you pay by the minute for telephone calls ?
>so wouldnt this add to your costs, here in Aus it's 25c per call

Yes they do, but that's a different issue. I did ask about that in my
post to the UK newsgroup.

I've included a couple of quotes below:

Gary Jones wrote:

"On top of that, I have to pay my local phone bills, which vary with
the time of day and day of week, but at weekends (the cheapest time)
the charge is 1p (ie 0.01ukp) per minute.

Demon has nationwide coverage for local call dial-up, so the above
charges apply nationwide."


Stalin wrote:

"Phone calls from BT cost 1p per minute at weekends 2p per minute
between 6pm and 8am weekdays and 4p per minute all other times.

You get a 10% discount on 6 named numbers of with my POP is one.
Also get a further 25% discount on calls over 10 mins in July and
August.

So 1 hr phone call at weekends costs 39p."


While I agree that cost of telephone calls contributes to the cost of
my Internet access, and in Oz local calls are great value, it has
nothing to do with my ISP.

In fact, a $0.25 local call charge must be a marketing advantage for
the ISP's in this country. If I was paying for timed local calls I
would be even more inclined to keep my online time to a minimum.

SR

-------------------------------------------
Steve Reynolds - Adelaide - South Australia
Home: spr@ozemail.com.au - Work: reynoldss@wp.ssa.sa.gov.au
___________________________________________________________

habedd@users.southeast.net (Beddingfield) writes:

>From what I've read, it seems as though Australian ISP's are in fact more 
>expensive than American ones.  I guess one advantage of living in the U.S. is 
>indeed an excellent telecommunications system.  For example, local calls are 
>always free, calls in the same area code, but outside of the city, are usually 
>just a quarter (US) per call, and interstate calls are usually just around 10 
>cents - 30 cents a minute (depending on the time).  ISP's are also cheap -- 
>you can get one anywhere from around US$13/unlimited access to the 
>more-popular US$19.95/unlimited access.  I just hope telco deregulation 
>doesn't screw it up!

It's so cheap in the US mostly because none of the companies involved
have to purchase trans-oceanic links (or pay other companies onselling
of those costs). Just about everyone in the world pays to connect to the US.

They've also had the advantage of past generous government funding...

tom@iacom.com.au