<div dir="ltr"><div><div><div><div style="margin-left:40px">have a think about how local pizza<br>
shops manage to survive in competition to national pizza<br>
chains/franchises, who will have lower costs. They're all<br>
fundamentally selling pizza, so how do local pizza shops get away with<br>
not only selling the same thing, but probably make a much bigger<br>
profit when doing it?<br></div><br></div>Depends if you want something that someone has repackaged from an industrial toxic spill, or a pizza.<br><br></div>ISP's otoh largely can't differentiate their product.<br><br></div>Paul Wilkins<br></div><div class="gmail_extra"><br><div class="gmail_quote">On 17 September 2015 at 13:07, Mark Smith <span dir="ltr"><<a href="mailto:markzzzsmith@gmail.com" target="_blank">markzzzsmith@gmail.com</a>></span> wrote:<br><blockquote class="gmail_quote" style="margin:0 0 0 .8ex;border-left:1px #ccc solid;padding-left:1ex"><div class="HOEnZb"><div class="h5">On 17 September 2015 at 09:57, Noel Butler <<a href="mailto:noel.butler@ausics.net">noel.butler@ausics.net</a>> wrote:<br>
> On 17/09/2015 09:37, Paul Brooks wrote:<br>
><br>
> On 17/09/2015 7:56 AM, Skeeve Stevens wrote:<br>
><br>
> I am saying that while the CVC should be like $2.... if they aggregated<br>
> their PoI's, you'd need a lot less because it would scale much much more and<br>
> it would actually costs less.<br>
><br>
><br>
> Methinks you're confusing topology with charging model. If you negotiated<br>
> your wholesale backhaul provider to just add up all the traffic on all the<br>
> POI ports and charge you for the aggregate, rather than per physical port,<br>
> it wouldn't matter how many actual POIs there were.<br>
><br>
> This whole mess also seems to hang on two assumptions:<br>
> 1) every ISP needs to service the whole national footprint<br>
> 2) every ISP needs to charge the same uniform retail price all over the<br>
> footprint.<br>
><br>
> Are either of these true?<br>
><br>
><br>
><br>
> Of course they are - unless you want to be blasted into extinction<br>
><br>
> 1 - a necessity to compete/survive<br>
><br>
> 2 - a necessity to compete/survive<br>
><br>
> I'm truly amazed someone on THIS list assuming they have any RSP experience<br>
> even asks such a question<br>
><br>
><br>
<br>
</div></div>If small players think they can out capitalise and out scale of<br>
economise much larger players, then they're never going to win.<br>
<br>
As a smaller RSP, If your only competitive advantage is your lower<br>
price, then you're vulnerable to your competitors lowering their<br>
prices. That is an easy and low effort decision by your competitors,<br>
and if they have larger margins to do it, because their scales of<br>
economy are larger and as they get larger volume discounts from their<br>
suppliers, they have much more room to lower their costs.<br>
<br>
It is a race to the bottom, and since you're starting much closer to<br>
the bottom than your competitors are, you'll lose (they will probably<br>
get in trouble for using their market power to crush you, however you<br>
may suffer a fatal blow before they get taken to court, the court case<br>
occurs etc., etc.)<br>
<br>
You're far better off trying to find something that your competitors<br>
can't or won't do, creating a barrier to entry. Then you have a unique<br>
advantage (i.e., a natural monopoly), which means customers must come<br>
to you to get it because they can't or can't easily get it from<br>
anybody else, and you can charge what your customers are willing to<br>
pay for your unique value, rather the same or a few percentage points<br>
lower than your competitors' prices.<br>
<br>
If you don't think this works, have a think about how local pizza<br>
shops manage to survive in competition to national pizza<br>
chains/franchises, who will have lower costs. They're all<br>
fundamentally selling pizza, so how do local pizza shops get away with<br>
not only selling the same thing, but probably make a much bigger<br>
profit when doing it?<br>
<div class="HOEnZb"><div class="h5"><br>
<br>
<br>
<br>
><br>
><br>
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