LinuxSA Mailing list archives

  From: Jason Tan <jason@rebel.rebel.net.au>
  To  : Simon Hackett <simon@internode.com.au>
  Date: Tue, 23 Jan 2001 19:23:04 +1030 (CST)

Re: AOL? or best ISP

On Fri, 19 Jan 2001, Simon Hackett wrote:

> At 9:26 PM +1030 18/1/01, Stephen Donaldson wrote:
> >[...] Internode's business strategy and others who still limit
> >hours or apply D/L charges are the ones who should be reviewing their business
> >models.  The Internet is and will be permanent part of our work and play
> >habits.  Limits of any kind are a model for disaster.
> >
> >Simon H. once said to me, the business models for ISP's must be value adding
> >and include complementary services. I hope he hasn't changed his mind on this
> >as he was quite correct.  The ISP business model of just dial-up 
> >services is no
> >longer valid.
> >
> 
> I'll bite :)
> 
> Lets take those paragraphs in order. Apologies for the length, but 
> you've hit one of my hot buttons :) In doing so, I'll put the case 
> for why I think we (Internode) are a great choice as an ISP, as well. 
> Apologies for those who think I'm just trumpet-blowing - you can hit 
> 'd' now if you wish.
> 
> On the first comment (limiting downloads or hours): Your statement 
> that limits of any kind are a model for disaster is false IMHO.

I have to agree, but the limits should be reaosnable, and should take
into acount that the supplier does not pay for all he(generic) supplies.

In fact with some users the supplier doesnt supply much at all(eg gamers
who because of latency issues pretty much have to play on local- ie in sa
saix - servers) but who at the usual metering point chew through tons of
data.

> Think of a petrol station - how long lived is a petrol station going 
> to be if it charges you $25 per month for unlimited downloads of 
> petrol into your car?
> 
> What about if he throws in unlimited downloads into all the cars you own?
> 
> What about if he lets your bring in a ute full of jerry cans and fill 
> them up to hand on to his mates?

But petrol and data are very differnet and have diferent charateristics as
saleable items.

In particular you cant cache petrol, you can data and you dont get local
petrol for free, or near free depending onthe scale of your petrol
station.

> 
> This sort of mental attitude about ISP's seems to abound on the 
> presumption that bandwidth is free. Well it's getting cheaper, which 
> is great. But free is a long way from the truth, and per-head 
> consumption is rising at least as fast as per-MB costs are dropping.
> > If bandwidth was free, it wouldn't be one of my two largest monthly 
> expenses (the other one being staff salaries).
> If I'm supposed to let you connect and download that non-free 
> bandwidth up to 24x7, for (say) $25, how was I supposed to pay for 
> the bandwidth *and* the $27 per month Telstra charges me for an ISDN 
> channel, and stay in business? The answer's pretty obvious - I don't 
> do it, because it doesn't work.
> And - lets see what's happening - we seem to be surrounded by ISP's 
> who fold, or get bought out to avoid folding, lately. Indeed we've 
> been doing some of the buying of late. Gee, I sure don't think we're 
> doing it wrong :)


Bandwidth is not free, but cached bytes are or very close to it after you 
pay for the equipment, configuration and maintenance.

Local/peered traffic is very cheap too.

Ok so you have to pay to get it from your peer point to your customers,

I suspect it would be fair to say that the that cached and local traffic
is very very very low cost.

So by all means charge for the bytes that cost you(in fact of coure you
should charge exactly how you want, it is your business), but uless
you differentiate between bytes that actually cost you and bytes that
dont, then you are not simply charging the customer for the bytes that you
are charged on. 
You are likely charging on way more than that  form the last time I
checked your price list(the installfest).

Some ISPs recognise this and charge these bytes at different rates or do
not count them against the bytes yioyu are charged against.
This seems reasonable and equitable to the ISP and the user.

These ISPs are also buying up other ISPs left right center, as well as
, I belive, reporting profit.

It seems they have some idea about what they are doing, as well. :-)
 

> It's the old adage, 'good, fast, cheap, pick any two' in action. We 
> made a day one choice to shoot for 'good' and 'fast' ahead of 
> 'cheap'. And we're thriving.

Sure but some people choose good and  cheap as their crtieria.
You appear to choose not to serviuce that part of the market, but that
does not mean those businesses that provide that service cant coninue to
provide it, or those consumers arent perfectly happy with the level of
service and the compromise they _chose_.

There seems to be a recurring theme of intrnode employees on this list
suggesting that the only way to go is good and fast. 
This combinaiton does not suit everyone.

 > > Since we do charge, fairly, for hours and/or megabytes, we allow 
>multilink ppp. We allow ISDN indial for the same price as modem 

As an aside I was under the impression it was typcially cheaper equipment
wise for you to accept isdn calls than modem calls.
Ie a your typcial terminal server chassis required additonal hardware to
terminate modem calls but could typcially terminate as many isdn B
channels as it coudl modem calls, without that additonal hardware.

> And now, the 'heartstrings' argument :)
> 
> Is Dingo Blue building the first non-Telstra rural broadband network 
> in the history of South Australia, to blow away the inequities of 
> living in the country in SA for voice calls and Internet access? No, 
> but we are - and we're proud of it.

So it is not in fact user pays.
Urban internode users are presumably psubsidising your country users?
Oh joy! Users get to subsidise more people they dont know for services
they may nt be able to get themselves, particularary for a reasonable
price. 

> Is Dingo Blue providing broadband enabled buildings all over the 
> Adelaide city area, and in Tech Park, and elsewhere, helping a whole 
> raft of incubator centers to provide cost effective space for new 
> companies to grow and prosper here in Adelaide? No, but we are - and 
> we're proud of it.
> 
> Tell me I'm not spending your money wisely. I think we are :)

Well you arent directly spending my money at all, at the moment.
But you could be.

If you were, I dont think I would want to be subisidising big businesses
connections either.

I dont want fibre in the cdb, there is enough there as faar as I am
concerned.
I want it in my street, 10 metres from my front door.

It sounds like you are actually just emulating bigger telcos by takiong
your profit from your consumer business and investing it to
provide better and even more lucrative services to busness.

This is unbdoubedtly wise, however it is not an argument that is going to
tugs my heartstrings very hard.

And is certainly not doing "joe blow" user a whole lot of direct good.

Having said that I would much rather that some local company does
that,than some national or international company.

jason


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