[AusNOG] NBNco: "Let's start competing with our customers!"

[Paul Wilkins]

have a think about how local pizza
shops manage to survive in competition to national pizza
chains/franchises, who will have lower costs. They're all
fundamentally selling pizza, so how do local pizza shops get away with
not only selling the same thing, but probably make a much bigger
profit when doing it?

Depends if you want something that someone has repackaged from an
industrial toxic spill, or a pizza.

ISP's otoh largely can't differentiate their product.

Paul Wilkins

On 17 September 2015 at 13:07, Mark Smith <markzzzsmith at gmail.com> wrote:

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