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

[Mark Smith]

On 17 September 2015 at 15:25, Paul Wilkins <paulwilkins369 at gmail.com> wrote:
> 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.
>

If they assume they can't, they'll never find ways they can, and are
doomed to be eventually be taken over by TPG.



> 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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