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ISP economics

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roseway:
An interesting post here from the CEO of Newnet, concerning the economics of an IPStream-based ISP. It makes it pretty obvious that the apparently generous download allowances of some ISPs would be completely unsustainable without strong traffic management, and that all ISPs depend on light users to effectively subsidise the heavy users.

UncleUB:
I'm doing my light user bit.   :angel:

kitz:
I have no qualms with what Peter says - it makes perfect sense.

I think the earlier adapters to adsl may be more aware of the economic cost of adsl than some of the more recent newcomers who want it for as cheap as possible.

If its cheap then there will be a compromise to be made.  The longstanding ISPs who used to provide decent good service just simply cannot compete with the likes of some other ISPs who appear to give it away.  I cant recall the exact figures now but TT adsl in the first few years lost millions.

Many years ago I said that I suspected that the TTs and Sky type ISPs were able to provide cheap adsl by being subsidised by their other financial ventures (CPW or Sky TV).  They will grab a pile of customers, the decent ISPs will not be able to compete on price and will either have to subsidise from some other venture/ sell/ merge/ be bought out.
Then once the likes of Sky/TT have the monopoly and theres hardly any decent ISPs left.. then watch them put their prices up.


Weve already seen many decent ISPs having to have been taken over by the likes of Tiscali/TT etc because they cant afford to stay in business..  and already TT and sky are no longer doing the 'free broadband'.

Several years ago I also did a capacity report for another site which outlined the true cost of adsl in the UK.
Pricing has slightly changed now that more exchanges are LLU'd  and we now have 'market 3' exchanges...  but the pricing isnt that much different.
http://www.kitz.co.uk/adsl/adsl_cost.htm

My fear is that home adsl will at one point only be available via the likes of sky/TT and that there will be no decent ISPs left for those users that are prepared to pay a little bit more for a decent service.

waltergmw:
Kitz et al,

To this scenario we will need to add in the future the introduction of FTTC and FTTH probably at significantly higher costs.
(Note the prices Virgin have announced for their 50 Mbps services.)

Another point to question is for those ISPs who have totally independent LLU services; how are they to be integrated back into a fibre-based topology, either still staying isolated but perhaps sharing ducts or re-joining a BT O type network again, and also whether or not the "Last mile" supplier is still closely linked to one major CP - at least for the 40% by 2012 so far announced? Similar questions also need to be asked for the use of Virgin Media and H2O fibre?

There are those who hope (pray ?) that the commercial world will provide most of the services required by both business and domestic users.
There are others who are far from convinced that these matters are being adequately addressed at technical, financial or regulatory levels.
Some even question the long-term effects of privatisation, particularly when compared to those countries with far more advanced fibre networks using a single CP solution.

Kind regards,
Walter

MollyCoddle:
Firstly, I admit to not being biassed towards the Industry.

It would be a much fairer system of charging if the customer paid on a consideration of download and an average of their IP profile for the month.
This may motivate ISP's to fix problems and more efficiently so, so they could raise their customers profile.

As stated earlier, an unfair system is currently used, with the light users subsidising the heavy.

If you are fair, you can then let the market decide which ISP's are inefficient -- good for the consumer, good for those ISP's with real skills.

MC

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