I agree that 70x over-subscription is likely too high, and the request
makes it clear that it is to high, but your pricing
estimates are too low to guide any discussion.
A quick Google search for "DS-3 pricing" shows a full DS-3 for $2200. That means 45 Mbps, so overselling that based on 5-year-old usage data means an ISP could sell 1080 Mbps. Across 400 customers, that's 2.7 Mbps each for $2,200 a month.
That's internet bandwidth pricing, which is not the most expensive
piece, oddly enough. Nor, for a small operation, is it the main
component in pricing.
What does it take to actually implement this?
Well
- A port charge. You are usually charged rent for using up the
physical port. With the lowball quote you gave, the provider is almost
certainly going to hide some charges here - A datacenter. Depending on how well done this is, the costs can vary
widely. It's clear the original querier's operation is lowball, but even
a mediocre data center has significant cost associated with it. Think
power, UPS, Generator, Air-conditioning, rent... Doing this right will
be the major cost, even ignoring buildout. - Loop charge. This is likely to be significantly more expensive then
the bandwidth. Unless you are right next to the provider, the charges
are high. In no way will it be less then $2200, and could easily top
$10,000 - buildout. Typical DS3 trenching charges will run you $100,000 -
$300,000, payable up front. DS3 capable router will run you at list
$5K, The telco will usually lease you termination equipment for a few K,
or you could purchase, adding another 100K. Most of this is one-time,
but that still needs to be factored into the total cost, and it can be
very substantial - support staff. Even a minimal staff will cost a whole lot more then
the DS3
Running an ISP is not a way to get rich.
It bothers me when I read the grandparent post implying that ISPs rip
people off by not selling them dedicated bandwidth. Dedicated is an
order of magnitude more expensive. I remember trying to get access under
models that harkened closer to dedicated access, and it was bloody
expensive, I remember a $300/mo pricing for dialup.... Oversubscription
is good for all of us. The provider in question is not doing the right
thing (ordering more bandwidth) but it bothers me to see un-hinged rants
(grandparent post) suggesting that dedicated bandwidth is a reasonable
expectation.