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North American Network Operators Group Date Prev | Date Next | Date Index | Thread Index | Author Index | Historical RE: The DSL business model
> From: Steve Sobol [mailto:[email protected]] > Sent: Monday, May 14, 2001 2:18 PM > > [I don't know that I agree that this is off-topic...] I'm with you here. > Steve Schaefer wrote: > > > 1) ISP's who deploy DSL are on a very slim margin. They > can't afford to > > be "full service." That doesn't mean that the best DSL ISP's don't > > provide better service than the mediocre or poor DS-1 > ISP's, but don't > > expect $500/month support for your $150/month line. I disagree with this characterization. Quite a few of those businesses would gladly pay a few shekels more, for a decent SLA and some service. The problem is in how you stratify the market. There are also market aggregation issues (crossed with excessive greed). > > 2) Data CLEC's who provide most of the lines for > independent ISP's have a > > challenging business model. Northpoint went down hard. > That doesn't mean > > that the others will go down hard, too, but they have the > same kind of > > risks. They needed lots of capital and got most of it through debt > > financing. Debt financing is okay, as long as you don't overstate your sales projections. Homes/business' passed isn't [the same as] homes/business' online. Getting them online is the actual gross revenue (minus delinquencies) and you have to have your payment terms fall under some reasonable percentage of that. What many of them did was ass-u-me a larger percentage of plant utilization (ie x plant generates y sales, over z months). The sales didn't ramp up, or the delinquency rate went out of sight, and predictable results followed. It's no different with public offerings. Not making your dividend payments is about the equivalent of not making your loan payments. It's all credit. > Well, wasn't the big problem that the DLECs were having > trouble turning > around orders, and as a result ended up not getting paid by the ISPs? Maybe. Looking at the Covad v. DSLnetworks case, Covad let DSLnetworks get about 18 months in arrears. It certainly smells like bad management of receiveables. How many of you guys would let arrearages age more than 90 days, regardless of the reason. At worst, you convert it to a prommisory note, or some other debt instrument, with re-payment terms spelled out in their BoD's blood. > > 3) ILEC's don't have a clue. Some of them are well-intentioned > to say about both Verizon and Ameritech. Ameritech was > fair-to-middling > until being bought by SBC, and they rolled downhill rapidly Having witnessed SBC takover of PacBell, from the inside (PacBell ACN/CBS), it was most amusing to watch San Ramone meeting San Antone. I absolutely knew that the HFC system was going to get cut, at the minimum. SBC track-record isn't real good and they're not all that nice to work for. > Here in Cleveland, Ameritech offers only ADSL. I am not sure they even > know what SDSL is. :) They will, however, be happy to sell > you 1.5x256 ADSL for $175 a month! PacBell does NOT offer SDSL, which is pretty much a requirement for most business usage. ADSL is only good as a [barely] competitive offering against residential cable. BTW, other than DSLnetworks failure, my DSL line has been rock solid for over 2 years. Every problem I've had was an upstream failure. You can't fault xDSL technology, only the business' behind it. The technology that can be faulted, and I sincerely apologize for not being clear enough on this, is that which prevents adequate redundancy at the end-nodes. The fact that 100,000 businesses can get lopped off by a single provider business failure is pretty sad. I've tried, for over a year, to get redundant uplinks to an alternate provider (ISDN backup to xDSL). CIDR, prefix filtering, and cluelessness nail that effort every time. It doesn't seem to matter that I am more than willing to pay for it. It simply isn't available. But, it should be (I don't mean tinker-toy methods either). Before CIDR, it was. The past few quarters has shown how necessary it is. Guys, this is a huge market gap, why isn't anyone filling it? -- ROELAND M.J. MEYER Managing Director Morgan Hill Software Company, Inc. TEL: +001 925 373 3954 FAX: +001 925 373 9781 http://www.mhsc.com mailto: [email protected]
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