Your details are a bit vague, but let's pretend "your pipe" is a single DS3 (45 megabits) out in the boonies somewhere and you are offering a mix of plans that average out to 7.8 megabits per customer (400 * 7.8 / 70 = 44.5).

Assuming you are in the US, 45 megabits of transit is unlikely to cost you more than ~$2k/month ($50/megabit transit is easy to come by, you can do way better if you shop and have access to many carriers), but due to the amazing power of phone company pricing, the DS3 to carry it could easily run $10k-40k/month depending on how far out of a major city you are. (Within a major city, DS3s are closer to $3k/month.) Let's use the low end of that range and call it $10000/mo for the DS3 and $2000/mo for the bandwidth, or $12000/mo total for 45 megabits or your total cost of ~$267/megabit.

If your customers were to demand no oversubscription (as most Slashdotters seem to), delivering a 10 meg cable connection would therefore cost you $2670/month to deliver to your customers. At standard retail markup (including maintaining the cable lines, buying routers, paying rent, paying salaries, etc) of ~2x, let's call it $5k/month per customer. This poses a problem, since no residential customer will pay $5k/month.

If you work it from the other angle, starting from what your customers will pay, let's pretend they are comfortable paying $80/month for their 10 meg cable connection. (This is high if they were in a city, but if this is their only option vs dialup, they'll buy it anyway.) Assuming you have some overhead and only half that can pay for bandwidth, you have $40/month for 10 megabits or $4/megabit.

How do you reconcile that your customers will only pay $4/megabit when your costs are $267/megabit? The magic of oversubscription.

These customers need to be willing to live with the idea that they are expected, on average, to use only 143Kbit/sec on their 10 meg pipe. If on average they want more than that, they have to be willing to pay for it, otherwise the ISP is just going to fold, and they can go back to dialup.

For some reason, Slashdotters see this as evil. Is it? How else can you make the numbers work? (Most of these numbers are ballpark since the posters details were so vague, but they real-ish.)