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Too Much for Too Little?

TR: A few years ago, the Internet appeared to offer users an almost free lunch. Has that harmed the Net’s development?

CERF: In some ways, it has. Because of its initial sponsorship by the U.S. government, many of the costs of the Internet have been hidden. As a result, some proponents of a cyberspace utopia persist in believing that the benefits of a wired world will somehow arrive at little or no cost. The fact is that technology advances in economically self-supporting increments. As subsidies have eroded, the costs they defrayed must be assumed by someone. That seems to be a lesson that some have conveniently forgotten.

TR: How is that evident?
CERF: One example is the “all you can eat” pricing plans for Internet access. This model works only if Internet access providers can predict total usage and can price accordingly, or if they can place an upper bound on usage to achieve the same effect. It seems likely either that prices for unlimited access will gradually rise-witness America Online’s price hike earlier this year-or that people will start paying some kind of usage-based fee.

TR: What about Internet telephony-that seems like another example of how the Net can provide a kind of free lunch.
CERF: Yes. A small but dedicated cadre of boosters often hail it as a low-cost alternative to long-distance telephony. But any near-term advantage will be temporary.

TR: Why?
CERF: The cost of a long-distance call depends heavily on the access fee that the local telephone exchange has to pay. Right now, long-distance voice carriers pay substantial fees per minute for the use of the local networks. Internet service providers, on the other hand, enjoy a fixed monthly price. These differences are likely to erode with time. Still, there may well be some economies arising from the packet-switched nature of the Internet that allow Internet telephony to operate more efficiently than circuit-switched telephony. And over the long term, the technology curve favors the Internet. The cost of routers and gateways will drop faster than the cost of telephone switches. In any case, the phrase “Internet telephony” is as helpful in describing the changes we’re in for as “horseless carriage” was for foretelling the sea change engendered by the introduction of the automobile.

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