note that it didn't eliminate the economies of scale of network operation .... there is still massive investment required in things like fiber. some amount of the current pricing could possibly be an "overbuilt" & "over-invested" infrastructure ... some number of operations going bankrupt ... and then some amount of the infrastructure available on a pricing structure that doesn't require full ROI recovery of the original investment (i.e. written off).
the "electronics" revolution moved some amount of the economies of scale into multi-billion dollar fabrication plants that have to be written off every 3-5 years and new ones built at possible 2-3 times the cost of the previous generation. In some sense, the massive investment in the enabling infrastructure has led to fewer, much more massive operations that are required to support the massive cost reductions in other areas. also, much of this is disruptive technology ... either because of technology itself and/or the second order effects of infrastructure cost reduction ... which would tend to have a distabelizing effects on operations that had reached some sort of stabilized equilibrium under earlier cost/price paradigms. One question might be "is the choatic nature of the players in hese market segments a permanent feature or a temporary transition phase as infrastructure attempts to re-establish some equilibrium after significant disruptive influence"? past ref: http://www.garlic.com/~lynn/aadsmail.htm#law dbts: More on law vs economics [EMAIL PROTECTED] at 2/24/2002 7:44 am wrote: The resulting exponential drop in the price of switching completely inverted the economies of scale of network operation, changing its very structure from an increasingly larger, more unified hierarchy with exactly one fixed-price circuit-switched route from any two nodes to a massively geodesic network with a combinatorical number of routes between any two nodes, each route with its own possible auction price depending on latency, noise, and lots of other factors. The result was a dramatic reduction in transaction cost, price discovery, market entry, and of course firm size, and ultimately a dramatic increase in the number of phone companies, even vertically integrated ones, and we haven't even started cash-settlement of network bandwidth yet. (The paradox, of course, is that every "information worker" who sits in front of a microcomputer to work these days, sizeably more than half the female population -- even a MacDonald's cashier -- is doing exactly what a turn-of-the-20th-century telephone operator does, reprocessing and routing information from one part of the network to another.)
