Seth,
The people we met with yesterday had negotiated with ATT and the proposed pricing they received to layoff calls would have netted them .02 per minute. What you have to understand is that ATT only gets involved when calls are outside the established network. In the beginning it was projected that 95% of the calls would in fact be outside the network, thus producing a net gross of .02 per minute. As more DVG's were deployed, thus expanding the network, the less percentage of calls would need to be laid off, thus resulting in a higher percentage of ON-Net traffic which has a no cost basis, thus resulting in an almost 100% retention of the per minute customer charge. For example if I were charging .07 per minute (as an example) and a call was placed to an area code outside of where I had a DVG deployed, then I would have to pay ATT .05 per minute (as an example), but if the call went to an area code where I did have a DVG deployed, I'd keep all the billing .07, except the very small fee that may be charged by the POP where I was colocating my DVG.
Unlike FNET's plan to colocate with the carrier (such as WCOM), this fellows plans didn't call for on-site colocation agreements with ATT, which would lead me to believe that FNET may be getting much better rates, or possibly in some type of revenue sharing arrangement.
At any rate, the bottom line is that the more DVG's an IT company has deployed the higher the rate of return on invested equipment dollars.
So the .02 was a worse case scenario, yet in the projections I was looking at it still net netted over $10 million in profits within a 24 month period.
I am just now really studying the projections, but the .02 seems to be cast in concrete and even that may be conservative when considering the percentage of On-net/off-net ratios changing almost monthly as it expands.
I am seriously contemplating a possible Venture Capitalist involvement based on what I'm seeing. But it is very preliminary at this stage and there are a lot issues that still need to researched.
RB |
