North American Network Operators Group

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Re: sprint passes uu?

  • From: alex
  • Date: Fri Oct 18 13:05:21 2002

> note that $170/Mbit is actually below cost for any network smaller than
> sprint's or uunet's, once you figure in the people, the routes, the
> rent, and the depreciation, and then fuzz it based on economies of
> scale.  however, the market hasn't bottomed yet, and most people still
> don't know what their costs are.  once we bottom out and start
> regenerating, $200/Mbit to $300/Mbit for wholesale high-commit transit
> is going to be just about right, given the single-digit NPM that you get
> from high capital long term commodity plays.

This is total and udder rubbish, the same kind that took one of the best
networks out there and destroyed it. CGS has a very strict definition. CGS
of a company A that gets goods from B does not care about B having negative
margins.

There is a number of good providers that provide very limited service at a
rate of under $100 Mbit/sec. An Enterprising Co takes transit from two of
those companies paying $100 Mbit/sec to each. Adding a few services, one of
which is called inhouse customer service that does not rely on former
security guards paid $5.25 per hour and happily resell it at $300 per
Mbit/sec. Factoring real salary costs, real equipment costs and real
depreciation schedules, the Enterprising Co manages to make money hands over
fist because it does not spend $80MM USD to built 15,000 sq. feet of space.



Alex