---------- Forwarded message ----------
Date: Mon, 16 Feb 1998 20:08:33 -0600
From: Jack Rickard <jack.rickard@boardwatch.com>
Reply-To: isp-ceo-owner@isp-ceo.com
To: isp-ceo@isp-ceo.com
Subject: Re: Nationwide Access - Please no Dweebs
We just finished a kind of interesting test series of 90 "national" dialup
ISPs who had POP in 25 area codes or more. We picked 5 POPs somewhat at
random from each ISP for 450 POPs. But we of course wound up with 328
individual phone numbers. THe reason of course is that manyof these ISP's
gain a national footprint by purchasing POP services from national
companies who wholesale such services. I can tell you that MCI, UUNET,
PSINET, and GTE/BBN all do this. From what I can gather, the price ranges
from $7 to $13 per subscriber per month. Lower prices are for longer term
contracts and higher customer body count minimums. Also there is the basic
POP service or you can get POP service with tech support, etc.
I don't want to spill the beans too hard as it is rather the center of our
March Boardwatch Issue and the Winter Directory which will be released at
the ISPCON show. But two things did jump out. I fear I'm going to take a
terrible beating from some very unhappy ISPs over part of it. The
K56flex/x2 battle is over. We have bought into the concept that these were
two peer technologies struggling for dominance for over a year. It is,
unfortunately, not so, and V.90 probably won't change it. Average connect
speed for x2 modems to x2 ports - long distance - was over 45kbps. K56flex
was just over 30 kbps. These two types of modems are not even in the same
class or comparable.
The other aspect is of course call completion rate. We made 145,000 calls
to 450 POPs during the month of January. Average call completion rate of
89% but it varied from a low of 63% to a high of 97%.
IBM's dialup network is the best in the land gents. I met with them last
week to try to get them to get more into the wholesale business and it
looks good. Sprint has an excellent call completion rate right up at the
top in the 97% range. But they have older equipment and average connect
speeds were in the 27 kbps range.
Right now MCI looks like the best source of national footprint. All x2, 45
kbps average connect speed anywhere, and high nineties on the scale. And a
number of the ISP's were caught in the act of using them, so clearly they
offer the service.
On the K56flex side, GTE/BBN look fully deployed. Good call completion,
but poor average connect speed due to the K56flex move. They do a lot of
POP wholesaling.
I haven't seen many viable alternatives to wholesaling from a larger
service actually. The roaming thing never did quite happen. There is
somebody out there with kind of an interesting idea to aggregate CLEC pops
and package them for ISPs and I think they'll be at ISPCON.
But the biggest trend is large nationals who haven't really been able to
compete with local ISPs on price because of the customer service thing. So
they are groking to the concept of just wholesaling it to smaller ISPs and
letting them do the hard work. And there are more of them getting into
it. AGIS is going to setup national dialup footprint and wholesale to
ISPs. And several other smaller backbones are making the same noise. I
think it is a coming thing and wiithin a year we think we'll see hundreds
of national dialup ISPs operating from a dozen or so providers.
The interesting part is the $7. We're kind of finally shaking out what the
true basic cost of providing dialup infrastructure is. It's something less
than $7 per customer. If we assume that the $19.95 price was correctly
arrived at by market forces, then that leaves about $13 to cover marketing,
support, and overhead. It's a bit shy of being all the riches of Crocius
I'm afraid, but it's a "good" business potentially.
And I think end users will have the following criteria in the following
order:
1. Price
2. Call Completion Rate
3. National Footprint
4. Connect Speed/modem match
5 Customer Service.
I rate national footprint higher than you've heard. But I think it
accounts for a good bit of the AOL huge membership. People do want to be
able to get on their service wherever they go, even if they rarely go
anywhere. Items 1 and 2 are soft in order. Too many busies will convert a
customer to reverse these two priorities. But I think the price sensitive
nature of the end user is consistently under rated. There are dozens of
hgher bandwidth schemes that all assume a $40 or $50 per month rate. There
is a band of power users that would be all over that instantly. But after
they are quickly absorbed, I think the entire industry will be surprised to
see the numbers of Internauts that stick with dialup at $15-$20 over xDSL
and Cable at $40. It will make headlines and come as a huge shock. But I
think it is true.
So I see a lot of pressure to go national, and do it with someone who can
complete calls.
Jack Rickard
Boardwatch
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