North American Network Operators Group

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Re: Current street prices for US Internet Transit

  • From: John Curran
  • Date: Mon Aug 16 16:59:18 2004

At 3:05 PM -0400 8/16/04, Patrick W Gilmore wrote:
>
>Perhaps some of your assumptions are wrong.  Perhaps people are making due with OC48s.  Perhaps there is less redundancy or more loading.  Perhaps your discount level is too low.
>
>Who knows?  Did you build an OC192 network with 6 routers and 3 links and etc.?  I didn't, so maybe I'm wrong.  But given the choices of A) Every single network on at least two continents is selling for less than half their cost or B) An one page e-mail to NANOG may not reflect the complex business realities of the telecommunications world - well, I'll pick B.

Amazingly,  the term "cost" actually has different contexts, and these
greatly impact the final numbers.   For example, the cost model used to
justify a given price to a customer can be "fully-loaded/fully-allocated"
or simply "incremental"...   The fully-loaded one will result in the same
unit cost every time, whereas the incremental one often doesn't recover
the cost of past investment in the network.   Of course, if that investment
is several years old, has been through a bankruptcy or two, then it might
not really matter (until a customer sale results in having to do some new
spending for additional capacity...) 

Do you take on customers at rock-bottom prices which barely cover your
out-of-pocket expenses, your payroll, and interest payments, or do you let
them go to your competition because no revenue is better than revenue
which doesn't let you cover the network growth in 3 or 4 years?   This is
a question which is being discussed at quite a few ISP's today...
 
/John