Understanding 'Why have ISP's not build their own network comments'

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exportgoldman

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#10272 13-Nov-2006 23:28

I have read many comments in various threads from users saying that ISP's are simply 'freeloading' on Telecom's network, and they shouldn't be complaining if they arn't building their own networks. (or similar lines of arguments)

I was amused, and confused by their comments. Do people really think this, or are they baiting people?

I've talked to Telecom people (as you do in the industry) and understand they have to tow the company line, it is the place to work, if you want to work on the biggest network in NZ.

From my vast reading on the topic, I have found several things to be true

1. Building a network from scratch is VERY expensive - only in the grasp of one or two ISP's if we are talking wired, wireless is far cheaper, but even then theres a real risk of never getting a return (e.g. Woosh has just gone through another round of capital injection by it's original founders.) World wide, it has been found time and again the local monopoly stays that way, without government intervention - bar cable television companies which we don't really have.

2. How on earth can you think ISP's are freeloading on Telecom, when they are making $886 Million a year in profit? When Telecom's offerings to ISP puts them on razer thin margins of 5%, sometimes selling retail plans for LESS than the wholesale plan (without helpdesk, international backhaul, other services) are added on?

Does anyone have examples, or references of places around the world where the local monopoly was left in place, and ISP's successfully build out high speed broadband networks and competed and won sigificiant market share? (I'm not mocking, I'd be interested in their strategy, technologies etc.)

Sometimes I shake my head when reading peoples comments, wondering if this is all they have experienced in broadband connectivity?

Tyler - Parnell Geek - iPhone 3G - Lenovo X301 - Kaseya - Great Western Steak House, these are some of my favourite things.

grant_k

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#52238 13-Nov-2006 23:58

exportgoldman: I have read many comments in various threads from users saying that ISP's are simply 'freeloading' on Telecom's network, and they shouldn't be complaining if they arn't building their own networks. (or similar lines of arguments)

Even though Telecom's copper wires in the ground are last century's technology, they still have a lot of useful life left, at least until such time as a competing provider builds a last mile alternative, if/when that ever happens...

Instead of viewing the actions of other ISPs as "freeloading" or "leeching" on Telecom's network, would it not be a more accurate and less biased portrayal to say that those other ISPs are unlocking the true potential of those copper wires, especially in Orcon's case where they plan to offer VDSL services. It remains to be seen how successful this will be, both in a commercial and in a technical sense (due to reliability issues etc).

But I fail to see why other competitors, Telecom included, shouldn't put aside their sour grapes and say to Orcon:

Good on you guys for pushing the envelope, let's hope you succeed, and if you do, we may well just take the same approach to improve our offering to our own customers.

Why do Telecom staffers (with few exceptions) look with such a jaundiced view at the possibilities which will exist from April 1 next year under the ULL regime?

Surely it's in everybody's interest to grow the market for REAL broadband, and get away from this crippled lame animal that is GO LARGE...

riahon

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#52242 14-Nov-2006 05:05

Why ask a question you have answered?

Q. "Why have ISPS not built their own network"

A. "1. Building a network from scratch is VERY expensive -"

didnt really take in anything else you said except this:

"2. How on earth can you think ISP's are freeloading on Telecom, when they are making $886 Million a year in profit?"

Then I thought - What sort of arguement is that? IF they made a profit of $886BILLION still does not detract from the fact other ISP's still want a piece of it for little investment. The only difference is they use the guise of for the betterment of nz public, economy blah blah blah, but when it comes down to it - they want money, no brainer really.

Simple answer quote from "Field of Dreams"

"If you build it....they will come" eg Vodafone.

antoniosk

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#52244 14-Nov-2006 06:45

Simple answer quote from "Field of Dreams"

"If you build it....they will come" eg Vodafone.

They must have got lost along the way... it took Bellsouth 7 years to get to 36k subs, when they were sold to Vodafone in 1998 for $750m (a rounding error in vodafones annual accounts even then). It's only when they got some nicer handsets out that they really started coming.

As telecom discovered when they started getting nicer handsets for cdma......

________

Antoniosk

exportgoldman

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#52490 15-Nov-2006 20:49

riahon: Why ask a question you have answered?

Q. "Why have ISPS not built their own network"

A. "1. Building a network from scratch is VERY expensive -"

didnt really take in anything else you said except this:

"2. How on earth can you think ISP's are freeloading on Telecom, when they are making $886 Million a year in profit?"

Then I thought - What sort of arguement is that? IF they made a profit of $886BILLION still does not detract from the fact other ISP's still want a piece of it for little investment. The only difference is they use the guise of for the betterment of nz public, economy blah blah blah, but when it comes down to it - they want money, no brainer really.

Simple answer quote from "Field of Dreams"

"If you build it....they will come" eg Vodafone.

I may have written what I thought the answer was, but the people which actually believe and debate this do not believe that was the answer - and thats what I was trying to find out - with you I am probably preaching to the quire - to use another turn of phrase.

The thing about your arguement "fact other ISP's still want a piece of it for little investment." that I don't understand is that Telecom built the network (capital) to rent for profit. When ISP's do exactly that, people like you complain that ISP's arn't "investing" in Telecom's network.

How do you see this ISP's "investing" in Telecoms network working?

Tyler - Parnell Geek - iPhone 3G - Lenovo X301 - Kaseya - Great Western Steak House, these are some of my favourite things.

exportgoldman

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#52491 15-Nov-2006 20:52

Grant17:
exportgoldman: I have read many comments in various threads from users saying that ISP's are simply 'freeloading' on Telecom's network, and they shouldn't be complaining if they arn't building their own networks. (or similar lines of arguments)

Even though Telecom's copper wires in the ground are last century's technology, they still have a lot of useful life left, at least until such time asa competing provider builds a last mile alternative, if/when that ever happens...

Instead of viewing the actions of other ISPs as "freeloading" or "leeching" on Telecom's network, would it not be a more accurate and less biased portrayal to say that those other ISPs are unlocking the true potential of those copper wires, especially in Orcon's case where they plan to offer VDSL services. It remains to be seen how successful this will be, both in a commercial and in a technical sense (due to reliability issues etc).

But I fail to see why other competitors, Telecom included, shouldn't put aside their sour grapes and say to Orcon:

Good on you guys for pushing the envelope, let's hope you succeed, and if you do, we may well just take the same approach to improve our offering to our own customers.

Why do Telecom staffers (with few exceptions) look with such a jaundiced view at the possibilities which will exist from April 1 next year under the ULL regime?

Surely it's in everybody's interest to grow the market for REAL broadband, and get away from this crippled lame animal that is GO LARGE...

"freeloading" isn't my term, it seems to be a term used by Telecom supporters to define ISP's in NZ. I was wondering why they used this term.

Tyler - Parnell Geek - iPhone 3G - Lenovo X301 - Kaseya - Great Western Steak House, these are some of my favourite things.