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January 21, 2008


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When I worked at an ISP several years ago, bandwidth (wholesale) was $10/mbps in not-so-large quantities. If anything, I'm sure it's gone down since then. That comes to 3.2¢/gigabyte of downloads.

Of course, it costs a fair bit to deliver that bandwidth from the core to your home, but a lot of those costs are fixed: maintaining the fiber/copper, etc. So the marginal cost of an extra gigabyte isn't that high.

Assuming pricing per gigabyte of anything near the marginal cost, it's hard to see people shifting their bandwidth demand any more than they shift their drinking water demand.

Lastly, I honestly don't think per-GB pricing is going to happen anyway. I suspect they'll find (again) that the costs of support, accounting, billing, and decreased customer satisfaction far outweigh the per-GB revenue.

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