openbox9
join:2004-01-26
Alexandria, VA | reply to CylonRed
Re: First place
I'm willing to bet that O&M is rising considering the cost of copper, fuel, labor, insurance, etc. |
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CylonRed
Premium,MVM
join:2000-07-06
Bloom County
| reply to openbox9
I would bet the O&M of the centers do not rise a huge amount over time. The vast majority of the copper was paid for long ago (and then some) plus they get rent on those lines that are already paid for, by CLEC's.
I don't half doubt that the ILEC's are not trying to put the squeeze on - especially when the current FCC boss is so lenient towards ILEC's. They could very well be flexing the extra room they may get from Martin... |
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openbox9
join:2004-01-26
Alexandria, VA
 ·AT&T Southeast
| reply to CylonRed
I agree with you.said by CylonRed  :problem lies there as eventually if they want to survive they will have to raise prices in some way. Then people whine and say "but you made money before" when they really have no idea of what they are talking about. The same can be said for ILECs raising wholesale prices. Some people whine and believe the ILECs are doing it to squeeze the little guy without knowing the whole story. Maybe the cost to O&M the ILEC's plant has increased, therefore requiring a cost increase for the wholesale rates. There's always more to the story than what's printed in obviously slanted "news" articles...not that some geeks around here won't understand that if they aren't getting competition from 10 different ISPs over FTTH with at least 100 Mbps synchronous, guaranteed throughput. |
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CylonRed
Premium,MVM
join:2000-07-06
Bloom County
| reply to openbox9
I agree that cost is the most important factor for the vast majority - one reason I pay more and can run servers if I want and have such little downtime I don't remember the last time I was down. And this with 1.5/384 DSL service provided by a CLEC.
Problem is - because consumers seem to want everything for next to nothing (a pet peeve of mine) the profit margins get squeezed so much - that any new startup/ISP has to compete on price at least initially and more than likely the entire time they are in business. Only way to grow initially is offer service below cost - not unlike the loss leaders in a supermarket (soda, milk the 2 biggest ones).
Of course the problem then is - an ISP does not really have other products to sell more of unlike a supermarket and the problem lies there as eventually if they want to survive they will have to raise prices in some way. Then people whine and say "but you made money before" when they really have no idea of what they are talking about.
This is why the business is so difficult to get started in - the easy profits are no longer there because of the price squeeze. The big players (AT&T /Verizon and the 2 big cable companies) can afford to lose more money in the short run than the little ISP that just started up. The cost of entry to the market is very high - especially if any company wants to be a CLEC. |
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openbox9
join:2004-01-26
Alexandria, VA
·AT&T Southeast
| reply to CylonRed
said by CylonRed :You suggested that Sonic can compete on price since their pricing right now is below AT&T - I am simply saying they can't and won't be able to in the long run or possibly even the short run. If they can't compete on price, then they shouldn't attempt to do so. A lot of discussions have taken place around the Internet (many in this forum) about quality of service being as important, if not more so, than cost alone. Personally, I think cost is number one for most consumers, but other competition variables do exist. |
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CylonRed
Premium,MVM
join:2000-07-06
Bloom County
1 edit | reply to openbox9
You suggested that Sonic can compete on price since their pricing right now is below AT&T - I am simply saying they can't and won't be able to in the long run or possibly even the short run. |
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openbox9
join:2004-01-26
Alexandria, VA
·AT&T Southeast
| reply to CylonRed
said by CylonRed :Again - just because they are offering the price does not mean they can compete on price. They just want/need as many customers as possible as fast as possible. Kind of like what some claim AT&T might be doing? The difference is, that T can afford to absorb the loss longer than a smaller start-up. Beyond that, what's the difference in selling below cost?said by CylonRed :I would love to see you do the math to figure out how a CLEC can offer service profitably over a ILEC even if they are leasing pairs or pulling their own. I don't think a CLEC can be as profitable as an ILEC, but then gain, should they be able to? I'd suggest no. |
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CylonRed
Premium,MVM
join:2000-07-06
Bloom County
1 edit | reply to openbox9
quote:
Did you miss the part of my post that discussed anti-competitive behavior? FYI, Sonic's "intro" rate is less than AT&T's offering. Somehow they're able to afford to compete on price.
Because they are offering the service at that price does not mean they will make money off of it. It is SOP to offer price BELOW cost to get customers then raise the prices - especially for internet service. Heck - Covad had YET to make money and they charge more than Sonic - I think there is about a 0% chance that Sonic is making money on the service initially.
Again - just because they are offering the price does not mean they can compete on price. They just want/need as many customers as possible as fast as possible.
I would love to see you do the math to figure out how a CLEC can offer service profitably over a ILEC even if they are leasing pairs or pulling their own. |
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openbox9
join:2004-01-26
Alexandria, VA
·AT&T Southeast
| reply to KrK
said by KrK :They are building out their own network and facilities. Really? Sonic is building their own CO (not leasing space in an existing CO) and pulling fiber/copper (not leasing existing copper pairs) to the market?said by KrK :Basically at&t gouges their "partners" for the DSL line and effectively makes it completely impossible for them to compete.... Did you miss the part of my post that discussed anti-competitive behavior? FYI, Sonic's "intro" rate is less than AT&T's offering. Somehow they're able to afford to compete on price. |
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KrK
Heavy Artillery For The Little Guy
Premium
join:2000-01-17
Tulsa, OK
·AT&T Yahoo
·AT&T DSL Service
 ·Cox HSI
| reply to openbox9
said by openbox9 :But is Sonic discussing building their own cable plant or are they still going to leverage AT&T's? They are building out their own network and facilities.Additionally, I don't see the increase in wholesale rates as killing off the CLECs. If cost increases can't be absorbed, then there's a fundamental error in the business plan IMO. OK. Example:
AT&T Wholesale DSL line to "partner" ISP = $45 a month. ISP has to cover their own services, so let's say they offer DSL broadband to end consumer for $55 a month.
AT&T then comes along and offers the same consumer DSL Broadband (their own brand) for $29.99 a month--- $16 less then the ISP's COST for the line alone! Yes, I'd call that "A problem with the business plan" as in at&t is trying to wipe them out, period! Basically at&t gouges their "partners" for the DSL line and effectively makes it completely impossible for them to compete.... at least on price.... and let's not even mention the "other" ways to hose over "partners" and CLEC's...
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"Regulatory capitalism is when companies invest in lawyers, lobbyists, and politicians, instead of plant, people, and customer service." - former FCC Chairman William Kennard (A real FCC Chairman, unlike the current Corporate Spokesperson in the job!) |
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openbox9
join:2004-01-26
Alexandria, VA | reply to John Galt
You didn't like my first answer, so I attempted to give you a more "politically correct" one  |
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John Galt
Forward, March
Premium
join:2004-09-30
Happy Camp
·CenturyLink
| reply to openbox9
said by openbox9 :Ok, let me rephrase. I'm all for a common infrastructure for any and all providers to provide service, as long as it can be paid for without additional tax dollars. Is that better? What an "Election Day" answer...!
Are you runing for political offce perchance?? 
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A is A |
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openbox9
join:2004-01-26
Alexandria, VA | reply to John Galt
Ok, let me rephrase. I'm all for a common infrastructure for any and all providers to provide service, as long as it can be paid for without additional tax dollars. Is that better? |
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John Galt
Forward, March
Premium
join:2004-09-30
Happy Camp
·CenturyLink
| reply to openbox9
said by openbox9 :Nobody (including me as a taxpayer) wants to pay for infrastructure that will be shared amongst multiple competitors. This is a ridiculous assertion. That is like saying that you want every trucking company to build their own roads for exclusively transporting their goods.
Perhaps you meant to say this:
Nobody (including me as a taxpayer) wants to pay for infrastructure that will NOT be shared amongst multiple competitors.
As other posters have pointed out, there is only so much ROW for these things...
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A is A |
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openbox9
join:2004-01-26
Alexandria, VA
·AT&T Southeast
| reply to CylonRed
Are you talking about the USF slush fund?
I'm with you on the ROI for rolling out new infrastructure. That's why I question why some people expect companies that make that investment to open their lines to competitors when the cost to deploy and support the infrastructure is so large in the first place.
You said it earlier, but there is no easy answer for this. Nobody (including me as a taxpayer) wants to pay for infrastructure that will be shared amongst multiple competitors. Other options have less popularity, so the question becomes, do we need additional providers in the market, or are we currently heading in the right direction? |
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openbox9
join:2004-01-26
Alexandria, VA
·AT&T Southeast
| reply to KrK
But is Sonic discussing building their own cable plant or are they still going to leverage AT&T's? Additionally, I don't see the increase in wholesale rates as killing off the CLECs. If cost increases can't be absorbed, then there's a fundamental error in the business plan IMO. Now, if you want to enter into an anticompetitive discussion, that's a different story. I'm sure the FTC and various AG's will be quick to respond if AT&T begins using it's market force to anti-competitively undercut the market. |
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CylonRed
Premium,MVM
join:2000-07-06
Bloom County
| reply to openbox9
Up till last year they were still collecting the tax for those build outs and I have no reason to believe that money was not used for build outs and maintenance (plus padded profits).
Problem is - there is no way for 5-6 ILEC's to build all their own infrastructure - too costly and you would have issues with rights on poles and re-digging up folks lawn for hopefully some undefined number of customers. That is the reason I don;t think there will be any more than 2 companies doing fiber to the home. The pockets of most companies are not deep enough - even Verizon was having issues with shareholders not seeing the value soon enough. It is going to take a lot of time for the cost of the service to go down to what people expect.
People/customers are promised cheap tv, phone and internet but as many have found out - they will raise the rates as soon as they can to help pay for the new builds and make some profits. They get people in with cheap prices initially then raise the rates.
If every company be it ILEC/CLEC/cable has to do their own infrastructure than across the US expect to see 2 cable companies at most and 2 ILEC's remain in business (Verizon/AT&T) and that's it. Because of the barriers to entry are so high - building all new infrastructure for everyone will cause higher prices and less competition. |
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KrK
Heavy Artillery For The Little Guy
Premium
join:2000-01-17
Tulsa, OK
·AT&T Yahoo
·AT&T DSL Service
·Cox HSI
| reply to openbox9
"You have to learn to crawl before you can walk."
This is basically an ISP that sees the writing on the wall. The only way they can currently offer broadband is by partnering with AT&T as one of their partner ISP's offering DSL over AT&T's lines. However AT&T is killing these ISP's by upping their wholesale DSL line rates while pushing their own (AT&T/Yahoo) DSL cheap to the consumer, in effect, removing the independent ISP's from existence.... So, with Sonic.net, the plan is obviously to becoming a CLEC and slowly as finances allow build out their own network... assuming AT&T isn't allowed to murder them now in the womb, they will be able to eventually, hopefully, provide their own services over their own network entirely.
Go Sonic.net...
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"Regulatory capitalism is when companies invest in lawyers, lobbyists, and politicians, instead of plant, people, and customer service." - former FCC Chairman William Kennard (A real FCC Chairman, unlike the current Corporate Spokesperson in the job!) |
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openbox9
join:2004-01-26
Alexandria, VA
·AT&T Southeast
| reply to John Galt
So what's your option? Maybe the CLECs should band together to build their own infrastructure. Or maybe they should purchase the old copper infrastructure as telcos migrate to fiber. Or maybe they should lobby for policy changes that might better facilitate their financial interests. |
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openbox9
join:2004-01-26
Alexandria, VA
·AT&T Southeast
| reply to CylonRed
I didn't mean to imply that you had a viewpoint one way or another. said by CylonRed :Not to mention that the build out the original companies built (copper) - was paid for, and still being paid for, by our taxes - not their profit. Yes, the original copper infrastructure was built via the assistance of government sanctioned/regulated monopolies and nice tax benefits. Are you implying that new infrastructure build outs and existing O&M costs are not being paid for by ILEC profits? Hopefully not. |
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