Friday, June 06, 2008

Are You Still Reselling DSL?

There's an ISP association meeting coming up where they will discuss all matters pertaining to Southeast wholesale DSL. What a misnomer! Wholesale DSL. Wholesale means that you buy in bulk and get a discount off the retail rate. It means that you buy the parts and put them together yourself to offer a product. The parts are usually cheaper than the whole due to the labor, support, etc. This is not the case with DSL in most of the US. since the 1985 2005 FCC forbearance proclamation, Qwest, VZ, Embarq and all divisions of Ma Bell, have sold DSL for Resale to ISP's under a commercial contract. In all most all cases, the wholesale rate is at or within $10 of the going Retail rate. This does not include the ATM aggregation circuit, the Internet bandwidth, or the modem , all of which the ISP must supply.

Figuring out what the "retail pricing" is at the telcos is difficult, because since deregulation has been a chalkboard exercise. The prices change faster than the DOW!

In all likelihood, these carriers have little idea if they are making money off DSL or not. Any way that a normal person does math, based on their wholesale rates, they are losing their shirts. Add in DPI and spam controls, tech support, and the way they will do anything for extra money (like Bare fruit, Front Porch, NebuAd, etc.) and you have to wonder why they don't help the ISP's sell their circuits.

Regardless, if your business relies on reselling ILEC DSL for a majority of its business, you will forever be at the mercy of the ILEC. Has it been a pleasant road so far? Based on all the complaints, I would say it has not. Well, stock up on Tums and sleep aids, because 2009 means it will get worse.

Predictions are that more Resi users will drop their landline in hard economic times. (Read that to mean: right now). You can't sell Naked DSL. Your vendor does - and even bundles it with cell phones, which you also can't sell. So the 2 areas of growth for the ILEC - broadband and cellular - and you don't control either. Interesting.

Technology continues to outpace the average user. Current laptops are 100x more powerful than the IBM 3033 that I worked on at RPI in 1983. iPods, twitter, blogs, and everything that you StumbleUpon. They need help. Give them the help and move to a manage services model. That is where the future lies.

A final suggestion I have is to market the fact that you offer: Pure Unadulterated Internet for a premium.

  • Buy mine now!
  • We don't look at your traffic patterns.
  • We don't inject ads.
  • We don't snoop.
  • We just sell you a dumb pipe to the whole Internet!

If you are attending the ISP meeting in Hotlanta, let me know. I might be up there doing 45 minutes on How to market Against the Big Guys. Leave me a message at (786) 228-7039.

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