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stray
join:2000-01-16
Warren, NJ
| Oh my! What a surprise! NorthPoint (and other DSL CLECs) always had such an excellent business model.
1.) Nothing really proprietary in their product.
2.) Their main supplier is their main competitor (ILECs)
3.) They don't collect revenues from customers, but instead, allow 3rd parties of sometimes dubious financial strength to manage all aspects of the customer relationship.
4.) The only possible competitive advantage they have is price cutting.
5.) They are unable to inform customers whether they can deliver their product until months after the customers have ordered (and possibly committed to a long term contract, preventing those customers from signing with a competitor for the waiting interval)
6.) Despite being in the information technology business, they can't manage their own customer database for months on end.
I'm sure this list could be extended..... What the heck were these guys (and gals) thinking when they cooked up their business plan! | |
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sporkme
drop the crantini and move it, sister
Premium,MVM
join:2000-07-01
Morristown, NJ | Re: Oh my! What a surprise! About five of those points could be applied to such folks as Sprint and MCI back in the early days of LD competition. Stretch it a bit, and you can count 6.
C | |
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stray
join:2000-01-16
Warren, NJ
| Re: Oh my! What a surprise! Good point sporkme, but there are a number of differences. Sprint and MCI weren't battling a "difficult" technology; DSL is inherently limited in its reach and reach vs. speed. A significant portion of the potential customer base is simply unprofitable to install because of the ILECs' copper plant.
Sprint and MCI were converting a competitor's customers, not recruiting first adopters. Sprint and MCI made their move at a time where government regulators and the courts were willing to break the monopoly link between local and long distance incumbents, something that today's "soft money" politics prevents in the DSL arena.
Even so, Sprint and MCI survived those days by the skin of their teeth. I certainly hope that the DSL CLECs find a way out of the hole they're in. However, I'm not taking that bet without serious odds. | |
| | dbarc
join:2000-01-22
Fort Wayne, IN
| said by sporkme:
About five of those points could be applied to such folks as Sprint and MCI back in the early days of LD competition. Stretch it a bit, and you can count 6.
C
There were, however, some significant differences, which increased along the way as well.
(1) Sprint started out as SP Communications (Southern Pacific, as in the railroad). They had significant communications facilities at the start which were underutilized and they used long distance to receive revenue on the already existing properties.
(2) They initially didn't go 'global', the cities you could call from were limited by dialing a local number then account codes then the called party number, also in limited areas (again keeping the traffic over their facilities where possible). It was later they started buying access through other (like T) facilities. Initially, their 'calling areas' both the 'from' and 'to' were limited.
(3) After the ma bell breakup, their interconnections with local telco's were NOT forcing them into agreements with competitors. The rbocs didn't compete in ld and couldn't. Though the connection agreements were not of the same 'class' as ATT, so things like billing for non-completed calls (if you left it ring too long, etc) were often the case.
(4) Their expansion didn't come initially from 0 to total debt for infrastructure. Again, they had customers (generally just businesses) as they built out.
(5) They continued to be part of Southern Pacific for quite some time, a company that did have its own source of revenues, not relying on only the ld for it's income streams. That also went on for some time until they were eventually sold off along with the communications facilities.
(6) As someone else said, ATT was also pretty much under the gun on the competition area as well. ATT wasn't up against an FCC that did nothing, but had to take it's marching orders from Judge Greene , the judge that presided over the ATT breakup AND oversaw the situation for a number of years. It was the court not the FCC that kept an eye on insuring competition, and IIRC, he kept a VERY close eye on things. | |
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OCNBLUE
Dazed
Premium
join:2000-11-07
Dallas
| Re: Oh my! What a surprise! Sprint also used Southern Pacific's Right of Way to lay their fiber optic network so they could expand faster and gain more market share. (Seems strange that Sprint beat all other carriers to the first 100% fiber network!)
My point on this is Sprint owned the network and was able to make changes immediately. The issue with CLEC's is slow turn around time on any issue. Those of you who work in telecom know what I mean. For those of you who do not, let me give you an idea.
Your DSL is down. You call your vendor who realizes the issue is on the local side. Your vendor must issue a trouble ticket or maybe even a change order to resolve the issue. Then, the ILEC gets the order, finds two misprints on the order and rejects the change order or does not see a problem with the DSL line and closes the trouble ticket. So essentially, your vendor is back to square one. This can be a vicious cycle. | |
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linflas
join:1999-08-18
Manassas, VA
 ·Verizon FIOS
| I had a friend that had a drafting job with a small company in College Park, MD called MCI in 1974. From what I understood then they were constructing microwave towers for companies to be able to communicate with one another hence Microwave Communications Inc. Never really gave this much thought until the 80's when out of nowhere we started hearing about MCI and long distance. At that time my friend recalled in some dim part of his mind that he had been given some stock when he left there. Needless to say it had turned into a nice little chunk of change, nothing life altering but certainly a real nice surprise. It is interesting to see what has become of these various companies over the years. | |
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sporkme
drop the crantini and move it, sister
Premium,MVM
join:2000-07-01
Morristown, NJ
 ·Optimum Online
| Howdy Stray and dbarc,
I must agree with you on this, but there are some similarities that make me think that at least Covad will survive. Perhaps all this turmoil will cause Covad to think a bit "smarter" in how they do things. Perhaps they'll dump some deadwood along the way. All the better. I can tell you that since the first layoffs, our service (from the ISP side) has actually IMPROVED. Strange, but true. We've been getting better resolution times on TTs, and now have a human being that can answer questions that do not have standard answers.
C | |
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Kangaroo8
join:2000-08-11
Peoria, AZ
clubs:
| Re: Oh my! What a surprise! Hehe, I think the deadwood already dumped them. The DLECs should sue for theft of services or file criminal charges for conspiracy to commit fraud. Many of these ISPs (PSN comes to mind) had NO intent to repay the debt they incurred. They used that debt to gather more money from subs, who they intended to defraud. Kind of a Ponzi scheme. | |
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stray
join:2000-01-16
Warren, NJ | Re: Oh my! What a surprise! said by Kangaroo:
The DLECs should sue for theft of services or file criminal charges for conspiracy to commit fraud.
And the US should send the bill for the Gulf War to Saddam! Wishful thinking.... | |
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Kangaroo8
join:2000-08-11
Peoria, AZ
clubs:
| said by stray:
NorthPoint (and other DSL CLECs) always had such an excellent business model.
1.) Nothing really proprietary in their product.
They didn't understand value-add
said by stray:
2.) Their main supplier is their main competitor (ILECs)
That's like Sears buying from Sharper Image at catalog prices and trying to resell the same thing.
said by stray:
3.) They don't collect revenues from customers, but instead, allow 3rd parties of sometimes dubious financial strength to manage all aspects of the customer relationship.
Like coming up with a great product, but letting your evil idiot brother-in-law do the selling. Right after his prison sentence is done.
said by stray:
4.) The only possible competitive advantage they have is price cutting.
See number one above. You CANNOT three-step a commodity, someone always gets screwed (farm subsidies). When you think it is a commodity, you've lost (at least) half your margin.
said by stray:
5.) They are unable to inform customers whether they can deliver their product until months after the customers have ordered (and possibly committed to a long term contract, preventing those customers from signing with a competitor for the waiting interval)
Yes, well this one mainly falls on the uninformed. There was plenty of info out there to make an informed decision. I don't pity folk who get rooked by grifters either. Hard, but life ain't for the stupid.
said by stray:
6.) Despite being in the information technology business, they can't manage their own customer database for months on end.
Careful analysis reveals they were in the "set up the ball for the VC folk, sucker the foolish B'school teenagers into IPOing it for us before this house of cards is revealed for the complete fraud it is and get out with tons of cash" business, not a technology business. Anyone watch that show "Bull" or "The Street"? These 'wizkids' were still in high-school when the last bear market was extant.
said by stray:
I'm sure this list could be extended..... What the heck were these guys (and gals) thinking when they cooked up their business plan!
See number six.
--
I'm your huckleberry. . .that's just my game
[text was edited by author 2001-01-17 01:18:39] | |
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