Thread: Moon Laws
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Old October 12th 07, 02:10 PM posted to sci.space.policy,rec.arts.sf.science,sci.space.station
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I quoted 2007 purchasing power parity of India, China, US and Russia
as an estimate of what might be spent on a global telecom system for a
reason - it is the best estimate of how much purchasing power people
in different nations have when buying the same thing.

All your commentary and talk in an effort to undermine what I've said,
reflects your total and abject lack of knowledge on the subject.

The purchasing power parity (PPP) theory was developed by Gustav
Cassel in 1920. It is the method of using the long-run equilibrium
exchange rate of two currencies to equalize the currencies' purchasing
power. It is based on the law of one price, the idea that, in an
efficient market, identical goods must have only one price.

A purchasing power parity exchange rate equalizes the purchasing power
of different currencies in their home countries for a given basket of
goods. These special exchange rates are often used to compare the
standards of living of two or more countries. The adjustments are
meant to give a better picture than comparing gross domestic products
(GDP) using market exchange rates.

Market exchange rates fluctuate but PPP exchange rates reflect the
long run equilibrium value. The distortions caused by using market
rates are accentuated because prices of non-traded goods and services
are usually lower in poorer economies. For example, a U.S. dollar
exchanged and spent in the People's Republic of China will buy much
more than a dollar spent in the United States.

The differences between PPP and market exchange rates can be
significant. For example, the World Bank's World Development
Indicators 2005 estimates that one United States dollar is equivalent
to approximately 1.8 Chinese yuan by purchasing power parity in
2003. . However, based on nominal exchange rates, one U.S. dollar is
currently equal to 7.6 yuan. This discrepancy has large implications;
for instance, GDP per capita in the People's Republic of China is
about US$1,800 while on a PPP basis it is about US$7,204. This is
frequently used to assert that China is the world's second largest
economy, but such a calculation would only be valid under the PPP
theory. At the other extreme, Japan's nominal GDP per capita is around
US$37,600, but its PPP figure is only US$30,615.

Estimation of purchasing power parity is complicated by the fact that
countries do not simply differ in a uniform price level; rather, the
difference in food prices may be greater than the difference in
housing prices, while also less than the difference in entertainment
prices. People in different countries typically consume different
baskets of goods. It is necessary to compare the cost of baskets of
goods and services using a price index. This is a difficult task
because purchasing patterns and even the goods available to purchase
differ across countries. Thus, it is necessary to make adjustments for
differences in the quality of goods and services. Additional
statistical difficulties arise with multilateral comparisons when (as
is usually the case) more than two countries are to be compared.

When PPP comparisons are to be made over some interval of time, proper
account needs to be made of inflationary effects.

Now in this instance we're attempting to determine how many might use
a unversally available telecom infrastructure under conditions of
falling price? The PPP theory gives one answer, which is likely to be
very close to the actual events. It also gives an order of battle and
a pricing structure.

Having 50 billion channels universally available across the planet is
akin to owning a large movie theater. Movie theater owners frequently
have discounted pricing. For students, seniors, early bird (monday
through wednesday pricing discounts) Why? Well its not because they
want to give students a break, or because they want to honor seniors.
No, they do this because they know that there are different demand
curves in different populations and each demand curve produces a peak
profit price.. Same here. There will be a price that people who now
have service will pay which will produce the most profit from that
population, and then there will be lower pricing for other populations
to maximize profits available from them. Since for strategic reasons
we've built a huge theater so to speak, pricing and features will
change over time as the market responds to it so that the owners will
receive the greatest return on investment. The return is likely to be
very high and grow higher over the years.

Put differently, the world today spends $3,200 billion on food. The
world spends $2,000 billion on fuel. Everyone eats. Everyone uses
fuel. Now, today the world spends $90 billion on telecom services.
Not everyone has them. By building a universally accessible wireless
broadband service from space as described, for $40 billion - providing
50 billion channels - a careful analysis indicates that total demand
could grow to between $300 billion and $400 billion per year in 20
years - the lifetime of the equipment. Since the telecom industry
today spends $50 billion per year and obtains only limited geographic
coverage and limited bandwidth for their owners, its clear that even
the service providers active today would add the proposed system to
their existing systems, and eventually ditch their existing systems to
reduce overhead. By charging rates that gather $25 billion per year
from existing providers, and competing head to head on features, not
cost, with these providers, another $10 billion a year can be
obtained. Even so, because of reduced overhead for the providers,
EVERYONE is making more money.

Further, since the cost of delivering telecom services has fallen, the
price point where profit is maximized is also lowered. By lowering
competitor overhead while lowering price and increasing bandwidth
services, the numbrer of users will increase and the bandwidth they
use (in terms of channel count) will increase as well.

So, sales would rise to $35 billion per year in 3 years with only
modest increases in usage to 4.5 billion channels, and then pricing
would fall and as it came down and new services were introduced, total
volume would increase to $360 billion per year with 48.5 billion
channels.