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Yeah, the story is usually like this: * People found an ISP $NEWCOMER in an area where $ESTABLISHED has bad service and high fees. * The newcomer invests load
by est31 7y ago
Yeah, the story is usually like this:
* People found an ISP $NEWCOMER in an area where $ESTABLISHED has bad service and high fees.
* The newcomer invests loads of money into cabling the neighbourhood with fiber (or wireless internet) and offers deals with lower fees and better connectivity than $ESTABLISHED
* In a static world everyone would switch to $NEWCOMER and they'd make a lot of money, being able to expand to other places. But executives at $ESTABLISHED aren't stupid. They invest as well and lower their prices, too, just enough to be lower than $NEWCOMER.
* $ESTABLISHED waits until $NEWCOMER runs out of money. They rise prices again. It doesn't even matter if its price reductions mean $ESTABLISHED loses money in that region. The regions where there is no newcomer bring in enough cash to pay for the few regions with (temporary) losses.
Of course even if $NEWCOMER runs out of money, someone will buy their infrastructure and offer similar services, but there are more components in the competitive moats of established ISPs like (local) government granted monopolies in exchange for providing public buildings like school with free internet, or the bundling of streaming services with internet deals. Those moats usually are wide enough that there is no avail for small ISPs to break through. That being said, if you break through the moat, it's an insanely profitable business. DTAG had to invest tons of money until they got there and now they are in the place where the big ISPs can't harm them any more and the american daughter company is now the favourite of the DTAG shareholders.
- ApolloFortyNine 7y agoA WISP, at scale (50 users or more), should have a cost per user of about $10/m. You can oversell bandwidth considerably, more than most people realize. I've specifically seen an 80 customer wisp reporting their peak time is only 230mbps. This largely makes sense as you people streaming video is going to be your biggest usage, and that really only average 15mbps at the worse. A $1/mbit for ISP bandwidth should be doable in most areas, and since it's wireless your costs per user are actually rather low, given a good tower. But WISPs do make the most sense in areas where there is no good alternative (only DSL or Dish).
- lsc 7y agoYeah, the big problem is labor. if you are only making a few bucks a user, making enough money to make up for your opportunity cost (vs. working as a tech for a large company) requires a lot of users. I've got a lot of experience serving the low-margin market, both for ISPs, WISPs, but mostly on the hosting side, (and hosting is actually easier; the less you have the customer on the equipment, the less time you spend fixing stuff they broke.) and let me tell you, low margin does not at all line up with low support expectations. Even if you can charge your customer twice what it's costing you and making ten bucks a month per user, one tech support issue can end up eating all the margin that customer would have given you for years.
- ApolloFortyNine 7y agoI'm certainly not saying to price it so you only make $10/m per user. I'm simply stating what your base cost is. $50/m should be expected with a WISP, as I tend to see rates of 50mbps+ from well run WISPs. I was just pointing out that it's hard to price someone out of market without dropping prices to ridiculous rates.
- chrishacken 7y agoI'd love to know where you can get a fiber circuit for $500/m. (And even if you can, then you probably can't compete with whoever's selling you that circuit anyway.) When we started we haggled considerably.. (had to sign a 20 year deal) and managed to get a 2G/10G circuit for $1,500/m. (A 1G circuit would have been $1200/m)