The expense of upgrading from DS3 to OC3 increased as did the expense of moving from OC3 to OC12. The large companies have begun to grumble that the line of income from network growth under the current pricing scheme was now beginning to fall towards the level of money necessary to spend on increasing capacity. Corporations have begun to notice that they could weave their intranets together via the public Internet for a fraction of the price of using their private frame relay or SMDS network. Thus the big five are given additional reasons to want to continue their present experimentation with usage based pricing. BBN offers flat rate pricing for 56K, educational customers.
New customers get flat rate but only for the first year.
The free lunch is ending. Right now an ISP can buy a T-3 and resell it ten times, or even more, with no cost penalty from his upstream provider. MCI's changes are likely to end this and, in so doing, end what has been a source of profit for many local ISPs . With considerable competition at the local level, there will be much pressure on ISPs not to raise prices when their costs are increased. There will surely be consolidation.