Hehehe Gary, I have this feeling that you have a technical background with very little real understanding of the business aspect of network infrastructure business!
To say that people won't pay for bandwidth indicateds the most naive and superficial understanding of what happens in the Carrier business.
I think where you get this quaint notion that bandwidth is free is because of the following phonemenon;
1) free ISP access model (i.e. Freeserve in UK started this) where the ISP provides free internet access in return for your "eyeballs"
2) free Internet Telephony (which really isn't free and which really is not accessible for 99.99% of the world population.
What the ISP does in their business model INCLUDING offering free internet access does NOT translate to free bandwidth because guess what? Those ISP's pay dearly to the PTT's and Telcos for bandwidth.
If you can find me a Carrier who won't charge an ISP or CLEC or ILEC or a switch based reseller for bandwidth, please let me know.............I am in the international telecom and internet business and I DON'T KNOW ANY CARRIER WHO WOULD PROVIDE ME WITH A FREE PIPE!!!
"People will not pay for bandwidth" Hmmmmmmm, that has to be the statement of the year.
To be frank, I am surprised to hear such a nonsense from you Gary as you appear relatively knowlegeable --- at least amongst the posters in this thread.
People WILL pay for bandwidth and pay dearly for it --- yes the price is going down at the wholesale level and it will continue to go down as more parallel networks and fibres are laid down but TRUST ME --- bandwidth is not free today and it won't be free tomorrow.
By the way, I made a nice 600% return on Psinet and got out last year. Why? Despite Schrader's rhetoric, their business model is made of house of cards. If you look at their gross profit margin, you will see that they are living off a 25% margin (if you add back the amorization and depreciation of "owned" circuit -- which is really not owned actually but is an indefeasible right to the transoceanic circuits for 25 years). They cleverly converted the top line gross margin costs of leased circuits by "buying" access (and it wasn't free Gary!) from the likes of C&W, BT, AT&T, etc. --- yes the very same 'old' PTT dinosaurs that guys like you and Schrader claim are obsolete!
The only problem with their clever tactics is that they are still losing incredible amount of money (which makes perfect sense since their Internet Telephony, VPN, and Internet Fax service all generte squat in terms of real revenue. But it's all hidden behind their junk bond capitalization so the Wall St. boys keep feeding billions of dollars worth of capital -- all because Schrader goes around saying we are the new-fangled Carrier here to dethrone the PTT dinosaurs.........which is the only reason why they continue to stay afloat even though operationally they are bleeding like a hemophiliac.
With absolute certainty, Psinet and companies like that will run out of capital when
1) wall st. boys finally realize the promised mega returns just aren't going to happen or
2) there is a correction in the stock market and risk capital dries up
And of course, when that happens, guess who is going to be there to pick up the customer base, employees, and whatever assets are worth keeping? The same backbone Carriers and PTT's who are making money off Psinet (actually Psinet investors).
In fact, the data network operators are now looking at PACKET based pricing model with the QoS (Quality of Service) thrown in to boot. Why is that? Because lo & behold, ISP's are learning that flat pricing for all customers is a rather dumb way of running their business (no wonder very few ISP's make any money). |
