At 3:05 PM -0400 8/16/04, Patrick W Gilmore wrote:
Perhaps some of your assumptions are wrong. Perhaps people are making due with OC48s. Perhaps there is less redundancy or more loading. Perhaps your discount level is too low.
Who knows? Did you build an OC192 network with 6 routers and 3 links and etc.? I didn't, so maybe I'm wrong. But given the choices of A) Every single network on at least two continents is selling for less than half their cost or B) An one page e-mail to NANOG may not reflect the complex business realities of the telecommunications world - well, I'll pick B.
Amazingly, the term "cost" actually has different contexts, and these greatly impact the final numbers. For example, the cost model used to justify a given price to a customer can be "fully-loaded/fully-allocated" or simply "incremental"... The fully-loaded one will result in the same unit cost every time, whereas the incremental one often doesn't recover the cost of past investment in the network. Of course, if that investment is several years old, has been through a bankruptcy or two, then it might not really matter (until a customer sale results in having to do some new spending for additional capacity...) Do you take on customers at rock-bottom prices which barely cover your out-of-pocket expenses, your payroll, and interest payments, or do you let them go to your competition because no revenue is better than revenue which doesn't let you cover the network growth in 3 or 4 years? This is a question which is being discussed at quite a few ISP's today... /John