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Date: Fri, 15 Oct 93 23:50:53 PDT
From: rdm@cfcl.com (Rich Morin)
Message-Id: <9310160650.AA04031@cfcl.com>
To: pozar@kumr.lns.com, tom@toad.com
Subject: TLG posting (1st draft)
X-Status: 
Status: OR


Guise-

I think that there is a lot of uncertainty about how and why we went from
a basically self-sufficient organization to one with debts, a need for
expansion, etc.  I am not in a position to write up a financial statement
for TLG, and Tim is doing that, in any case.  I think, however, that I
have a handle on some of the general history and finances.  So, here is
my hack at an informal, possibly biased, summary.  First, some history:

Our existing Internet feed was unstable:

  We had no guarantee of a continuing link from AlterNet, and in fact were
  somewhat under the gun to find a different provider.  Rick Adams was very
  iffy about our hook-up, and occasionally went ballistic when he saw
  something posted that he disliked.  He never pulled the plug, but the
  threat was always there.

We were restricted from expanding our activities:

  Setting up downstream feeds (e.g., Santa Cruz, Marin) was not allowable
  under AlterNet.  This restricted our ability to expand TLG's coverage.
  Also, if we couldn't provide these feeds, some of these organizations
  might well be unable to get going at all.

  In addition, higher-speed feeds (56 Kbit and up) were off limits. This
  got in the way of those of us who would like to take advantage of new
  data communication technology (e.g, ISDN, spread spectrum, ...)

So we decided to get a new supplier:

  We had a meeting, voted to opt for expansion, and chartered some folks
  (Gnu, Tim, & Tom) to work out the details.  They did, but it took a
  few months, and things worked out rather differently than we had wished:

    Sprint turned out to be the only reasonable provider, and they aren't
    cheap.  Specifically, they are about $1K/month higher than AlterNet.

    In order to get cheap connections, we have to rent a spot on Market
    St. in SF.  Another $250/month goes bye-bye.

    TIS decided to opt out, cutting our number of big-time members.  The
    WeLL also went elsewhere.  All told, we lost several major prospects.

  So the gang of three continued to cast about, scrounge up prospects,
  etc.  They succeeded in retaining the North Bay and Santa Cruz folks,
  both of whom will add significantly to our cash flow.  Cygnus agreed
  to start paying a higher (T1) rate, and Gnu agreed to keep paying for
  his Toad Hall connection (albeit somewhat cheaper, being far shorter).

And then there are the start-up costs:

  High-speed links have substantial installation fees.  Our topology is
  changing totally, so we're setting up several new links at once.

  We need some new hardware on the backbone, and we also need to replace
  some crufty old stuff that's keeping Tom far too busy (e.g., NOS boxes).

  John made TLG a one-year loan for about half of the start-up costs, and
  a short-term loan for the other half.  The latter is what several of us
  are paying off by loaning new money into TLG.

Adding it all up, we still have a cash flow problem:

  Not counting the start-up costs, we will start losing about $1K/month as
  soone as we switch over.  One way of thinking about this is to say that
  the net gains and losses in member income and backbone charges balanced
  out, leaving us with the added fees for the Sprint link still unpaid.

  Adding in the start-up costs, of course, things get a bit worse.  Both
  Gnu and the more recent benefactors want to be paid off in about a year.
  In round numbers, this works out to another $1K/month that we're losing.

  So, the result is that we need to find about $2K/month of added income,
  or we'll be unable to pay our bills.  We can't raise our dues to cover
  the loss, even if we wanted to: competitive pressures would make many of
  our members bail out.  So, we have to find some new members, and soon.

  The short-fall could be met by about three dozen SLIP feeds, several 56K
  feeds, or a few T1 feeds.  Probably, it will be a combination of these.

Peculiarly, this isn't all that much of a problem:

  We've seen the groundswell of interest in Internet connections gaining
  momentum.  We're going to be in a very good position to help meet the
  demand.  In fact, if we hustle a bit, January may see us figuring out
  how best to deal with our surplus funds.

  But right now, the problem is to (a) give Tom enough slack to get all
  this mess reworked, (b) rack our brains for folks that might want to be
  part of TLG, and (c) hustle those folks as soon as we have a clear party
  line to present.

At least, that's the way it looks to me...

-r