[52840] in North American Network Operators' Group
Re: sprint passes uu?
daemon@ATHENA.MIT.EDU (alex@yuriev.com)
Fri Oct 18 13:03:37 2002
Date: Fri, 18 Oct 2002 13:08:54 -0400 (EDT)
From: alex@yuriev.com
To: nanog@merit.edu
In-Reply-To: <20021018163340.533B037A2A1@as.vix.com>
Errors-To: owner-nanog-outgoing@merit.edu
> note that $170/Mbit is actually below cost for any network smaller than
> sprint's or uunet's, once you figure in the people, the routes, the
> rent, and the depreciation, and then fuzz it based on economies of
> scale. however, the market hasn't bottomed yet, and most people still
> don't know what their costs are. once we bottom out and start
> regenerating, $200/Mbit to $300/Mbit for wholesale high-commit transit
> is going to be just about right, given the single-digit NPM that you get
> from high capital long term commodity plays.
This is total and udder rubbish, the same kind that took one of the best
networks out there and destroyed it. CGS has a very strict definition. CGS
of a company A that gets goods from B does not care about B having negative
margins.
There is a number of good providers that provide very limited service at a
rate of under $100 Mbit/sec. An Enterprising Co takes transit from two of
those companies paying $100 Mbit/sec to each. Adding a few services, one of
which is called inhouse customer service that does not rely on former
security guards paid $5.25 per hour and happily resell it at $300 per
Mbit/sec. Factoring real salary costs, real equipment costs and real
depreciation schedules, the Enterprising Co manages to make money hands over
fist because it does not spend $80MM USD to built 15,000 sq. feet of space.
Alex
