Tuesday, June 15, 2010

What if you are reselling DSL?

In response to ISP's that are reselling ILEC DSL and experiencing troubles, I gave the idea to sell T1's and larger circuits. You need less customers and make more money. BUT you have to sell. That's the speed bump. But an indie ISP owner in Tennessee wrote this today:

ISPs on this list and everywhere are busy certifying and deploying as CLECs. AT&T is creating lower margins and increased competition for themselves by pursuing a strategy of trying to choke off rather than enhance the ISP sales channel.

There are alternatives to AT&T. If AT&T doesn't want the ISPs as part of their delivery channel it looks to me like other providers are willing to step up and use that resource. My suggestion to AT&T is that they very quickly establish a FISPA U-verse distribution agreement before they allow that existing alliance with ISPs to disintegrate.

AT&T, you are snatching defeat from the jaws of victory with this strategy of trying to kill off the independent ISP.

I'm a cynic some say, but I can see the cablecos doing the same thing as the ILEC's in a couple of years. I'll reiterate: own Layer 1 or Layer 7.

My original response to this problem is here:

Not for nothing but this situation has been the game since 2005, when DSL was unregulated.

It is not a long term business strategy to resell broadband from the Duopoly. The long term strategy is own Layer 1 or own Layer 7.

Resistance is futile as you are spending huge amounts of time and energy on low-margin broadband that gets increasingly more time consuming for you each year. (Which means it is less profitable). You could be spending that time building a long-term business that is more profitable.

If you want to just resell broadband, be an agent and make more money for about the same amount of work. Or sell data cards and make way more.

You make about $10 on a DSL account. You have about 350 of them on average. That's $3500 per month.

If you only had 70 T1 customers making just $50, you would make the same profit with less hassle. T1 and bigger circuits get installed and repaired faster than DSL. They don't port block or traffic shape on these circuits either - so less headache.

And you could sell VoIP, backup, desktop apps, SAAS, etc. to add even more profit.

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