ADSL Economics

By Dan Jones in Reader

Posted in Uncategorized on September 1, 2007 at 4:41 pm

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Why are ISP’s going under so reguarly right now? As in E7even.com and similar recently - I know the answer:

The main reason is a lot seem to be under the opinion that they can sell to end-users at below their actual cost price on the basis that they can grow market share at a rate fast enough to offset this in the hope of either later rising prices, or the wholesale cost decreasing through volume from BT (who still own the underlying ADSL technology used in the majority of ISPs environments). An ISP charging a tenner a month cannot survive due to their costs being greater than this.

There is an Excellent page on the Economics of broadband at Adsleconomics.org.uk - although it does miss some key up-front charges an ISP has to pay - which are ~40 + vat/user as a one-off charge, which you avoid if the user already has BT wholesale DSL on a line.

So, basically if you are buying a service for

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