KrK
Heavy Artillery For The Little Guy
Premium
join:2000-01-17
Tulsa, OK
 ·AT&T Yahoo
·AT&T DSL Service
 ·Cox HSI
·AT&T Southwest
| reply to openbox9
Re: First place
"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
| 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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KrK
Heavy Artillery For The Little Guy
Premium
join:2000-01-17
Tulsa, OK
·AT&T Yahoo
·AT&T DSL Service
·Cox HSI
·AT&T Southwest
| 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...
--
"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
| 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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CylonRed
Premium,MVM
join:2000-07-06
Bloom County
1 edit | 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
| 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 | 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
| 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
| 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
| 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
| 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 | I'm willing to bet that O&M is rising considering the cost of copper, fuel, labor, insurance, etc. |
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