more on FCC rules that telcos can cut off DSL resellers

[David Farber <dave () farber net>]

Begin forwarded message:

From: Joe McGuckin <joe () via net>
Date: August 7, 2005 9:12:52 PM EDT
To: dave () farber net, Ip Ip <ip () v2 listbox com>
Subject: Re: [IP] FCC rules that telcos can cut off DSL resellers


(For IP )


Brett,

Is this another 'the sky is falling' warning?

I've been hearing for years about how the telcos are going to crush
independent ISP's, yet small ISP's seem to be thriving. Yes, if you  
try to
complete directly against an ILEC such as SBC, you're going to get  
squashed.
You cannot beat the ILEC on price, service availability or install lead
times. Did I mention price?

I know the president of a large DSL reseller here in California. Even  
though
they are probably one of the SBC's top 10 dsl resellers, he mentioned  
to me
that after adding in the various costs imposed on them by the SBC for  
access
to the DSL network and fees for accessing DSLAMS and CO's, their cost  
per
subscriber was higher then the SBC's retail street price. They have to
compete on selling a 'better' product, but the sad fact is that  
consumers
generally buy the cheapest product - and the ILEC will always be able to
sell it cheaper than any of their resellers.

Every bill received by a SBC telephone customer is a pitch for their  
data
services. Every time a subscriber talks to the SBC customer service,  
there's
a pitch to combine or consolidate services to save money. Three months
before a resale customer's contract is up, they're being cold-called by
SBC's telemarketers to switch over direct to SBC.

DSL is a lost cause - as T1's will be. Any service that remotely  
resembles a
commodity and where the underlying access is controlled by an ILEC will
eventually be price-pointed below profitability for the non- 
facilities based
ISP.

As far as backhauls go: Except for very rare circumstances, ILECS are
already the most expensive option for circuits. Any ISP with any  
sense will
have moved their gear into network neutral colo with a wide selection of
carriers in order to guarantee themselves reasonable pricing.

I don't think the independent ISP's are endangered, you just have to  
sell
against the ILEC's weaknesses, not their strengths.

Joe


On 8/6/05 4:25 PM, "David Farber" <dave () farber net> wrote:



> Begin forwarded message:
>
> From: Brett Glass <brett () lariat org>
> Date: August 6, 2005 4:35:03 PM EDT
> To: dave () farber net, Ip Ip <ip () v2 listbox com>
> Subject: Re: [IP] FCC rules that telcos can cut off DSL resellers
>
>
> Dave:
>
> The most serious problem with this ruling is that it may not only cut
> off local providers' access to the DSL infrastructure but also their
> "backhauls" -- their connections to the Internet. The ruling will
> allow the Baby Bells to price wholesale access (the "big pipes" that
> ISPs buy) above the retail value that can be derived from them, thus
> making it infeasible for others to compete and ensuring vertical
> integration. The days of the independent ISP may well be numbered.
>
> --Brett Glass
>
>
>
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--

Joe McGuckin

ViaNet Communications
994 San Antonio Road
Palo Alto, CA  94303

Phone: 650-213-1302
Cell:  650-207-0372
Fax:   650-969-2124





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