Great Circle Associates List-Managers
(December 1996)

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Subject: Re: Large Mailing Lists
From: Eric Thomas <ERIC @ VM . SE . LSOFT . COM>
Date: Mon, 9 Dec 1996 16:31:51 +0100
To: list-managers @ GreatCircle . COM, Michelle Dick <artemis @ rahul . net>
In-reply-to: Message of Mon, 09 Dec 96 07:17:43 -0800 from list-managers-owner@GreatCircle.COM

On Mon, 09 Dec 96 07:17:43 -0800 Michelle Dick <> said:

>I sent a  message of typical largest digest length  (40k) and it flooded
>the  link  at  full-bandwidth  (...) for  8  hours  straight.  Basically
>rendering my link useless  for any other use. To upgrade  to a 56k frame
>relay would run me, oh, maybe $500/month.

But you are mixing several things here. What you're really saying is that
your  28.8k dial-up  line (which,  given compression,  probably gets  you
about 56k of  usable bandwidth for mailing list purposes)  only costs you
$20/month plus another $20/month for  the dedicated phone line, whereas a
56k flame  delay line  would cost  you $500/month or  12.5 times  more. I
couldn't agree more, and  that's why I have a dial-up  setup at home with
no plans  to upgrade  to flame  delay, but  that just  tells us  that the
$500/month option is not good value for money (at least in your case).

A better  way to look  at the  situation is to  say that you  could spend
another $40/month and have a second dial-up line dedicated to the mailing
list function (let's set  aside the issue of whether this  can be made to
work on  this or that  operating system  - we're talking  bandwidth costs
here). For  $40/month you would  get roughly 56k of  compressed bandwidth
and your mailing would go out in 8h.  This is all list price - no special
deals. The charges are split roughly 50/50 between telco and access.

>The cost of this same usage at my ISP is about $6/month or $72/year.

Ok, so  it actually costs your  ISP $6/month to provide  the service they
are charging you $20/month for. You are  fortunate to be able to buy this
service  at  cost, and  this  is  all fine  and  well,  but under  normal
circumstances the  ISP would still want  to make a profit.  The figures I
used  (other than  being higher  due to  having estimated  300k/day) were
again based  on list price, ie  what you have to  pay an ISP to  get this
bandwidth. I had also included the  telco charge, because you have to pay
for this as  well. Finally, some ISPs have outrageous  profit margins and
there is not all that much competition in this field. Let's just say that
some major  ISPs have been SOOOO  interested in getting a  $100k contract
from us  that in 3 weeks  they didn't manage  to issue a quote,  and when
asked whether  they have any  interest in  the sale, they  just responded
that  there are  so many  people placing  orders that  they can't  always
answer everyone on time. Anyway, we have two issues here:

- At list  price, the bandwidth  costs you $40/month over  dial-up (telco
  included)  and $15.55/month  at  the 10Mbps  volume  level (telco  also
  included). You can more than halve  your costs by getting a fraction of
  a bigger line, as expected.

- The actual  cost to  an ISP might  be just $6/month,  and they  put the
  difference between the access charge (ie  telco excluded) and the $6 in
  their pocket. That's life.

My point here is that the $6  figure is not realistic because there is no
reason for  an ISP  to want  to sell at  cost to  a normal  customer, and
certainly the $500:$6 ratio is not representative of a typical situation.
At list price  you can save say  $25/month = $300/year, which  is not bad
but needs to be  applied towards the purchase of cycles  on a mail server
maintained by a third party that presumably also wants to make a profit.

To put  it another  way, if you  have an existing  PC with  the necessary
horsepower to  run the list and  an existing dial-up connection  that you
need  anyway, and  you can  purchase the  delivery service  for $6/month,
there is no question that you have the  best deal you will ever get. In a
traditional  small/home  business  situation, however,  the  equation  is
likely to be (in parentheses I'll show the costs with the PC amortized on
36 months):

1. Own MLM+MTA: $2500 PC + $40/month ($110/month).

2. Own  MLM, remote MTA:  $2500 PC +  $15.5/month bandwidth +  MTA charge
   ($85.5/month + MTA charge).

3. Remote MLM+MTA: depends on provider, probably $100-150/month.

Solutions #2 and #3 will provide better delivery times due to having more
available bandwidth, and are thus preferable  in most cases. However I am
not convinced that #2 is cheaper than #1. #2 and especially #3 are likely
to be  a bit more  expensive due to the  use of more  expensive hardware.
While it may  not be a big deal  to this or that customer if  his list is
down for 3-4 days while the  local basement PC company fixes his machine,
the provider  will have hundreds  of lists on the  box and needs  to take
steps  to  prevent  downtime.  Whatever  these  steps  are  (more  robust
hardware, backup  machine, on-site  spares, 24x7 support  contract, etc),
they are going to cost money.

In my experience, most businesses do either #1  or #3. I do know of a few
sites that  do #2, but  there aren't many of  them. ISPs don't  seem very
interested in selling deliveries in large amounts, and there doesn't seem
to be much demand  either. We've sold deliveries to a  few customers at a
rate that I thought was very competitive,  and they were happy but in the
end they  brought it  all in-house  because they just  wanted to  have it
in-house for non-technical  reasons. We don't even have a  price list for
this service any  longer because it is  more work to keep  the price list
updated than to issue custom quotes a few times a year.


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