The Iron Laws of Network Cost Scaling

Eric Raymond posits The Iron Laws of Network Cost Scaling (which he applies strictly to communications networks).

  1. Upgrade cost per increment of capacity decreases as capacity rises.
  2. Network costs scale primarily with the number of troubleshooters required to run them, not with capacity.
  3. Under market pressure, network pricing evolves from metered to flat-rate.

I am not sure I buy these as laws, though I don’t necessarily disagree with as general observations,

  1. is economies of scale of capital costs, which I think do operate in telecommunications in a way differently than transportation
  2. is operations and maintenance, which is a function of demand as much as supply. Again telecom differs from transportation
  3. assumes we are on a downward sloping average cost curve. Transportation professionals are trying to move pricing in the other direction (to date, largely unsuccessfully), especially in congested areas, where costs slope upwards.

One thought on “The Iron Laws of Network Cost Scaling

  1. These “Iron Laws” certainly do *not* apply to physical transport networks, where the cost really does scale up directly with link capacity rather than number of interior nodes.


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