[asterisk-biz] OT: Independent ISPs in the US

[Alex Balashov]

voip-asterisk at maximumcrm.com wrote:
>> There's no easy money.  You won't last long in pure resale.  You have to
>> add value.  At the moment, there's a compelling value proposition to
>> offer relative to other VoIP O/T & ITSP call shops in better
>> engineering, better peering, better tools, and better rates.
>>
>> But how long can you beat the folks who actually do the hauling and
>> switching, especially as they make it easier for your customers to go
>> straight to them?
> 
> At the end of the day it depends how much they want to do with these 
> customers. It might be that the way they can make money is to keep having 
> resellers and only have to support a handful of technically litterate 
> companies then gobs of peoples who can't tell how to plug an ethernet 
> cable.
> 
> Look now at the Bell of this world which are stuggling to stay solvent. 
> There are real costs in supporting a lot of customers and these can 
> quickly drag down profitability on a low margin product.
> 
> Point in case, Bell Canada had to cancel a privatization deal with 
> Teachers because the new entity would have been insolvent.

Well, yes.  This is the core of the traditional justification for the 
existence of VARs, distributors, resellers, channel partners, etc. in 
the value chain.

I didn't say the VoIP reseller opportunity will spontaneously cease to 
exist.  It's just going to get a whole lot harder, I think, as the 
product's character approaches that of a commodity.  Plus, this is 
technology service we're talking about;  it's just too easy to come up 
with optimisation and automation solutions to make some middleman 
substantially irrelevant.  Not as easy to do in many other business 
endeavours where distributors provide economies of scale in logistics.

It may be, as you say, that the carriers will be perfectly happy to 
stick resellers with all the high-overhead and low-margin customers. 
But that doesn't mean they won't cherry-pick the high-volume and/or 
high-margin customers you rely on to offset the losses from your less 
profitable base.  They might not want to take over the needy, demanding 
and vociferous n00bs, but they'll gladly undercut you with the guy who 
passes you a million frictionless minutes a month and never calls or has 
any issues and pays early every time.  That changes your economics quite 
a bit.

Some small ISPs continue to survive this way, too.  Yes, you can add 
value to the pipe.  But the important thing is that then the pipe itself 
is something of a loss leader, and not the thing off which you are 
making the money.  Small ISPs that provide patient and extensive 
technical support to 80 year old grandmothers running spyware-ridden 
Windows 95 PCs in the countryside have enormous customer loyalty among 
the customers they do have.  :-)

-- Alex


-- 
Alex Balashov
Evariste Systems
Web    : http://www.evaristesys.com/
Tel    : (+1) (678) 954-0670
Direct : (+1) (678) 954-0671
Mobile : (+1) (678) 237-1775