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Table 8-9 details the average price per bit for ATM service. The price per bit of ATM access at 64 Kbps is about 2.3 cents per bit. However, the price per bit at 1.544 Mbps is 0.13 cents per bit, a significant reduction in cost. Still, at $2,000 per month access charge, it is pricey for the typical Internet user. But, the $2,000 per month charge is for a 24 hour per day, 7 day per week constant connection. Few consumers are that dedicated to Internet browsing. Let’s say you are on the Internet two hours per day, five days per week, in a four-week month (February?). Then for 1.544 Mbps access in a usage-based billing scheme, your cost would be $187. Still pricey. Okay, let’s go for 400 Kbps access on a 1.544 Mbps port. The price is then $48.50 per month. Now we are beating the socks off DBS access at $150 per month for 400 Kbps access. This example is based on a PVC of 1.544 Mbps.

ATM UNI Port Speed Recurring Price per Month Price per Bit(cents)
DS-0 0.064 Mbps $1,500 2.3
DS-1 1.544 Mbps $2,000 0.13
2xDS-1 3.088 Mbps $3,000 0.097
3xDS-1 4.50 Mbps $3,325 0.074
4xDS-1 6.0 Mbps $3,650 0.06
5xDS-1 7.50 Mbps $3,975 0.053
6xDS-1 9.0 Mbps $4,300 0.048
7xDS-1 10.50 Mbps $4,625 0.044
8xDS-1 12.0 Mbps $5,000 0.042
DS-2 6.312 Mbps $3,500 0.055
DS-3 44.736 Mbps $6,100 0.14
DS-4 274.176 Mbps $24,000 0.0088
OC-3 155.520 Mbps $10,000 0.0064

Table 8-9. Typical ATM port charges

If a faster PVC is used for the analysis, even greater savings will result.A 7xDS-1 (10.5 Mbps) connection costs 0.044 cents per bit. The hypothetical consumer usage would be $10.48 per month for 400 Kbps access. Now we’re cooking! But we really want at least 1.544 Mbps access so that we might overdose on all that wonderful multi-media stuff. Cost per month on an OC-3 PVC? A paltry $5.88 per month. Everyone who is satisfied with a 300 percent gross profit margin (sell price to consumer is $40 per month—competitive with CATV) run to the nearest ATM service provider and purchase your OC-3 PVC now and start shipping video around the nation. Don’t forget to acquire the usage-based billing software from someone. Those of you still reading this book and not dashing off to the nearest ATM store, well, it just doesn’t get any better, for now.

So, the message is, usage-based billing (only pay for what you use) must become a reality for consumer markets to find ATM transport economical and competitive. When resellers realize they can purchase PVCs and resell the bandwidth using usage-based billing, the consumer market will take off.

Network Evolution

Because of the presence of ATM in the global marketplace, networks will evolve under the influence of ATM whether or not any particular group or company adopts the technology. Network evolution follows the path from:

  1. regional to global
  2. separated to integrated
  3. bandwidth inefficient to bandwidth efficient
  4. many platforms to fewer platforms
  5. technology driven to service driven
  6. complex to simple

Crystal Balls

The total ATM market is expected to grow from a $1 billion market to a $7 billion market by 2000. While ATM equipment will comprise the bulk of the growth, network services will see similar growth rates. Leased lines will see a dramatic decrease as ATM and Frame Relay begin to gobble up the leased line market. Between 1998 and 2000 the ATM industry can expect 16 times growth in the total worldwide ATM market.


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