SEACOM Uncapped Pricings for new ISP

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Sandman30s

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Hi All

I've just had a discussion with Neotel about the possibility of setting up an ISP and providing *cough* cheap uncapped international bandwidth, given the landing of the SEACOM line.

The first half-an-hour was pretty useless; the key account manager showed me their current WiMax and other offerings - for example the 1.5 Mbit connection with 1-Gig CAP and thereafter 8c per meg. I told him that I was not interested in that, and that the 'per meg' rate was not as cheap as he touted; in fact we are paying the same with IS accounts.

Then he showed me that they currently offer uncapped international for R999 per month - bandwidth taken from SAT3 and SEACOM. I told him that this was also comparable and I didn't regard that as cheap international bandwidth by any means.

He showed me the SEACOM pricing - which costs approximately R1.5 million per month for a 155 mbit pipe and fixed line. This is where I have trouble equating this hideous cost with 'cheap' international bandwidth passed on to you, the screaming consumer. If the ISP has a 155 mbit pipe, and 155 consumers connect at 1 mbit - this will cost the ISP R10,000 per customer. Obviously, this is not viable. Then if the ISP has to compete with Neotel's offering, it has to have 1550 customers - costing the ISP R1000 per customer. This takes away the guarantee of full bandwidth but still offers 'uncapped'. Obviously, if the number of customers goes up, then the available bandwidth on that fixed 155 mbit line becomes lower.

This is where I need opinions from you guys:
- Would you pay R500 per month for a 1 mbit connection uncapped but NO guarantee of speed?
- What would the minimum acceptable speed be for uncapped? Please be reasonable here - for obvious reasons pointed out above, that's not financially feasible.
- What would the trade-off be between the number of consumers and buying more SEACOM capacity?
- What would be a typical ratio be (for uncapped users) for users browsing casually, and power downloaders maxing out their capacity?
- Would it be acceptable to introduce a cap - let's say 100G - instead of uncapped? What would an acceptable cap be?
- Would anybody be interested in investing in a startup ISP with the potential to list on the JSE? (minimum share price - R10,000 - I already have an interested large invester providing I can provide a feasible profitable business model to them)

Interesting in hearing opinions,
best regards
Sandman
 
384*3=1152, so just more than a mbit. @R500 ea, you're looking OK and sitting at R500 more than you paid. Or something like that.

512*2 can pay proportionately more, likewise the 1&4mbit okes.
 
Except, if you were to have 10 users per 1Mbps of bandwidth, and all downloaded at the same time, full speed, 24 hours a day, 7 days a week, they would only be able to pull 33.480GB per month each, and that's without TCP/IP overheads and whatnot.
In short, you don't have excess bandwidth not being used by some clients, with which to supplement the 100GB cap clients.

That being said, one could go a fair way to improve the above by implementing a proper proxy setup which caches your content, thus alleviating load on your international connection.


The thing is, how long until you see a ROI?
 
I think the minimum speed should be youtube based. You must be able to watch youtube without it buffering.
 
Definately some potential, but you will have to put a more solid business plan together.

I agree with Messugga on the fact that you wont have excess bandwidth to supplement the power users with, as most likely at the start it will be power users subscribing first, due to the lure of uncapped / High cap.

That said if you can guarantee 384kbps during the day and about 512kbps speeds at night with a 45gig cap then it shouldnt be a problem finding clients.

Id say provide an uncapped service, but higher than your R500pm, and rather focus on providing cheaper accounts with higher caps than is currently available in the market. Make your minimum cap something like 15gig, and then increments, eg, 30, 45, 60.

That would equate to 5 offerings (15, 30, 45, 60, uncapped). Then the only considerations left are speed and price. With speed, I think you should try to set a minimum guaranteed speed, and be transparant about how high it can go etc.

Just my 2c

btw, the NPO ISP sounds like a good idea, but if you can get an interested party to provide funding I think you'll be up and running faster.
 
Can i just ask something Sandman - is it possible to do it like this:

if you have 155 users it will cost 10k per account. ok. so you put 10 customers on 1mbit and charge R1000, right?

fair enough - but here's the ultimate question:
if for instance it is 11:00 at night and 50% are sleeping, is it possible that users will get more speed?

and say there are only 10% awake at 3:00 AM - will it be 155mbit/155 customers? (10% of 1550)

because this story of "you can only use 382kb" even when nobody is using it, and the fibre optic cable is under utilized, is just wasting it.

google for "Tronguy" or "net neutrality" - he makes VERY valid points. if you send a file it is supposed to get to the other side as quickly and efficiently as possible.
 
Thanks for all the comments people.

Fantastic1/lightscribe I will pm you guys tomorrow to discuss your ideas further.

PCsToGo: yes 1 mbit = approx. 128 KBytes/s download speed (more like 100).

Keeper: Neotel will lease me a full, uncapped 155 mbit STM-1 portion of the SEACOM cable. How I divide that capacity is up to me. What you ask about users sleeping is possible, but remember they could be downloading while they're sleeping; there are many factors that affect the speed of the line. I just don't want to reach the infamous scenario of our IS News Server where there are many thousands of people on a limited pipe getting a measly few K per second speeds. I will have to work on the business model carefully. Obviously I can buy more capacity from SEACOM when needed (and not necessarily in 155 mbit chunks), but the ISP wants to make full use of the capacity of the line as well. Keeper, there won't be a story of 'you can only use 384 kbit' - this new ISP will not reduce connection speeds to lower than 1 mbit. So if there's spare capacity at any point in the day, you will get as much as you can pull.

At this stage it's a feasibility study, or 'fishing expedition' as the account manager put it :) He knows my targets, so let's see if they can offer that pipe for less than 1.5 million per month...
 
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Keeper has a point.

Guaranteeing clients 0.1Mbps (1Mbps/10) with no maximum speed, bar for the limitations imposed by the client's line, would truly prove the be very attractive.
If it truly is a NPO, then you would not care about whether the line is being utilized fully or not - in fact, you would want to get as much out of the connection as possible, since you(the ISP) pay for it.
This is a similar concept as to how WISPs operate, not so?
 
ironstone said:
I find the "NO guarantee of speed" clause concerning. You'd have to guarantee some sort of minimum before I'd even consider further...
Click to expand...

What do you think that minimum should be?

Before you answer, think about the cost of the line... 1.5 MILLION for 155 mbit - 10 grand per megabit/s or 100K/s. Would you pay that? No. Make it 1 grand for 10K/s guaranteed? Even then the price is too high and the guaranteed speed is too low. See the dilemma? I think the promise of uncapped or HIGH cap with variable speeds might sound more appealing. Lets hope there's a workable ratio between download freaks, download-on-demand, youtube people and general web browsing people.
 
I'd gladly pay +/- R500 all inclusive for:

1Mbit uncapped,
a semi guaranteed minimum speed of 384k [1]
A contract that is fair and can be canceled with a minimum/fair penalty
No stupid thresholds & restrictions
Shaping is fine during office hours, but don't shape services like Youtube

[1] By that I mean, if it's running at 128k 40% of the time I'm going to be seriously miff.
 
nihilist said:
Shaping is fine during office hours, but don't shape services like Youtube
Click to expand...

For a home user perhaps, but certainly not for a business. I suppose an ISP should ideally have a ratio of 1:1 of business users to home users to maximise the upstream bandwidth.

I'd be happy if you restricted me to 64kb after 20:00.
 
Sandman, charge R500 for 10-15GB and you would be good to go.

is it feasible? math guru's ?

edit: don't do shaping - if the person wants to download 2GB now, let him do it if the network has enough bandwidth - as fast as possible.

Topup's should be possible too.
 
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hilton said:
For a home user perhaps, but certainly not for a business. I suppose an ISP should ideally have a ratio of 1:1 of business users to home users to maximise the upstream bandwidth.

I'd be happy if you restricted me to 64kb after 20:00.
Click to expand...

Agreed, but a 1:1 ratio and guaranteed line speed will obviously carry a premium price.

I think ISPs should have more flexible accounts, perhaps an order page where you tick/choose features you want for your account and pay accordingly.
 
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