Estimating the Value of NCF Dial-up Access

 

In Dec 2000, NCF's dialup is:

 

NCF gets support probably because it is not competing with ISPs, and because it is thought to be doing something good for the community.

 

Some ISPs give NCF old equipment and help NCF otherwise.  Based on a conversation with the president of iStar, an ISP now merged into psiNet, NCF is viewed as helping ISPs, in that NCF helps get people online and trained on using the internet.  Once trained, many NCF members want higher-speed services and decide to become customers of commercial ISPs.  ISPs love already-trained customers because they don’t need much help – providing help is a large expense for ISPs.  Thus it is not a surprise that ISPs help NCF.

 

Conceptually, the access-providing role of NCF can be thought of as an ISP business operating two or three years behind the state-of-the-art.  Instead of offering 56K, NCF offers 33.6K.  NCF can offer this service at lower expense because it gets a lot of stuff for free:  Free facilities from Carleton, free terminal services and computers, free and discounted phone lines, free volunteer labour, free management advice, free software development, etc.  As a not-for-profit, NCF doesn’t pay tax.

 

NCF passes on the savings to its members.  This makes NCF’s service more ‘competitive’ than any commercial ISP that might wish to serve the same market for dial-up access that are two-to-three-years out-of-date.

 

We can get a feeling for what NCF’s slightly-dated services are worth if we think of NCF as a fully-functional ISP, offering access to internet services and a help line for getting started, only at modem speeds that are dated.  If NCF were able to operate its slightly-dated dial-up access reliably, like an ISP (no reason it shouldn’t be able), what would it be worth?

 

For comparison, here's a list of local commercial ISPs and what they typically charge for state-of-the-art access: http://www.monitor.ca/monitor/issues/vol8iss4/ispbase.html

 

As a ball-park figure, since many bandwidth-sensitive internet services have a lower operating threshold of 28.8K, I’d estimate the market value of 33.6K access would be about 75% of 56K access (often 56K access drops back to 33.6K anyway).

 

But NCF is different from an ISP in other ways:  NCF operates with a higher line-to-member ratio than ISPs.  The typical line-to-user ratio for a commercial ISP is said to vary between 1-to-5 to 1-to-10.  NCF’s ratio is presently 1-to-37 (ED report, Oct2000).  NCF achieves this high sharing ratio by enforcing peak period limits when modems become congested, and presumably by having members willing to focus their usage across the full range of the day (and night) in non-peak hours.

 

In previous years, NCF had several times as many people per modem, maybe higher than 100 to 1 (there were about 15,000 members sharing fewer modems than there are now).

 

How much less is the market value of an ISP with high higher modem-to-member ratio?   Presumably it varies, depending on whether a person actually encounters a busy signal.  For someone who wants internet access only at non-peak times, NCF is rarely busy and therefore similar in value to a commercial ISP.  For someone wanting access only at peak times, NCF is often busy and therefore presumably substantially lower value.  Obviously NCF members tend to be people whose usage demands fit what NCF offers.

 

If NCF didn’t exist, people would have to pay a commercial ISP or expose themselves to an advertising-based ISP.  Assuming they went with a commercial ISP, what would they pay?

 

Dial-up Sympatico is $22.95, and local ISPs are in the $10 to $25 range.

 

Given it’s constraints, a reliable but congested 33.6K ISP might be worth about $5 to $10 per month, depending on whether a person was able to use non-peak hours.  From a population of 1m, I suspect an ISP offering reliable but congested 33.6K access might be able to find lots of customers at the $7 per month level and lower – a mix of people who are able to use off-peak hours and people who are price-sensitive.

 

Of course NCF does much more than just provide ISP-like services, and that obviously adds (often considerably) to what people might consider to be NCF’s value.  Lots of people support NCF because of the good things NCF does for the community, and because they like the concept.