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We got an interesting email from Jeff Stubbings in Canada.
The point about economies of scale is not one we have pushed much, but it's completely valid. In
fact, it relates to our old friend cultural differences
once again:
There, services are made available cheaply to as many people as
possible; once the inevitable problems are ironed out everyone is better off.
Here, there seems to be a fear of problems; to forestall them
services are made expensive, so few people take them up, so follow-up services and spinoffs appear
in at best an atrophied state.
As former colonialists, and as brothers in the Commonwealth, we on the other side of the pond are
shocked and dismayed by the oppressive policies used not only by operators in Britain but others
all over Europe . . .
There is one point that I have not seen made in some of the discussions (though I have to admit that
I have not read them all), namely economies of scale. Or, more to the point, how can operators
justify such oppressive charges for phone use in a country one-hundredth the size of Canada with
twice the population?
Here in Canada, monthly access charges range from CDN$15.00 (where I live) to $30.00 per month. The
only service that is metered is long distance, 800 and 900 services, and even that service will soon
be offered at a flat rate. Take a look at the size of our country - now think about the cost of
providing telephone and internet service even to the most remote locations (yes even those
communities closest to the Arctic Circle have unmetered access!)
Now compare the growth of Internet-related industries between the two continents. Where else in the
world can a free e-mail service (Rocketmail) fetch US$400 MILLION when sold? Sales and
marketing dollars spent on the Internet are in the hundreds of billions of dollars. Most
importantly, jobs are being created for the youth in our society, where earlier this decade there
were very few.
Nicholas Negroponte wrote an excellent article in Wired magazine about a year ago on exactly this
issue (although he attacked the oppressive practices by operators in developing countries). No,
competition and regulations are the key to the success of filling state coffers with cash. Suffice
it to say that while our investors made hoards of cash investing in these state-run operators, the
people of those countries suffered. Competition and de-regulation are the key to securing the growth
of the Internet and e-commerce, as well as expanding our minds and experience with the rest of the
world.
He pointed out that the telecommunications company he subscribes to started out in 1877 with two
telephones!
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