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When the costs are underwritten by others, and the marginal cost to an employee or student is zero or near zero, I call that a subsidy. The pencil example is indeed a subsidy, just as when we often hear things like "Intel is subsidizing the costs of lunch for its employees."
(Subsidies occur for various purposes.) ... The point is that this "free" (marginally, at least, and largely free even in overall terms) service will generally outcompete one which offers similar services but which requires the user to pay for his use in a standard sort of way.
And, yes, these same arguments apply to why corporate and government users, whose access to the Net is provided by their employer, will also pick a service that has zero marginal cost to them over a service (like FidoNet) that may cost them hundreds of dollars a month for a feed (I won't get into the range of FidoNet connections, or what telecom pricing trends will means, etc.).
(Again, I am making no arguments here for or against the subsidization of students or employees. Merely commenting on a competitive fact of life about the Net.)
--Tim May
I yield... I was overly sensitive to anything that might be construed to be continuing the idea that the Internet is mostly Gov. funded... I should have known that you knew better. (I'll plead cronic exhaustion: 15 hour days for the last week to finish a project... slippery fingers deleted 1500/5MB worth of email last night... One way to catch up.) I agree with your point. sdw -- Stephen D. Williams Local Internet Gateway Co.; SDW Systems 513 496-5223APager LIG dev./sales Internet: sdw@lig.net OO R&D Source Dist. By Horse: 2464 Rosina Dr., Miamisburg, OH 45342-6430 Comm. Consulting ICBM: 39 34N 85 15W I love it when a plan comes together Newbie Notice: (Surfer's know the score...) I speak for LIGCo., CCI, myself, and no one else, regardless of where it is convenient to post from or thru.