North American Network Operators Group

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Re: OpenTransit (france telecom) depeers cogent

  • From: Stephen J. Wilcox
  • Date: Sat Apr 16 12:08:06 2005

On Fri, 15 Apr 2005, Patrick W. Gilmore wrote:

> On Apr 15, 2005, at 2:10 PM, Fredy Kuenzler wrote:
> > Paul Vixie wrote:
> > > in other words, sometimes it's better to take pain in a "lump sum" than on
> > > the "time payment plan."  if that's what cogent's trying to do, they've
> > > got my support.  if on the other hand cogent is, as accused here today,
> > > dumping transit at below cost, then may they rot in hell.  (could i say
> > > that simpler?)
> >
> > I'm not sure about the US price war, I just can say that I've seen an offer
> > of AS174 in Switzerland which is 38% of the price of AS1239 we currently pay
> > (same CDR). I'm not sure if ths already justifies hell, but at least
> > purgatory ;-)
> Strange, I am REALLY HAPPY when someone offers me a comparable product for
> less money.  If you prefer to pay more, well, I'm happy for you.
> (And no flames about Cogent not being comparable.  I've already posted here
> that their network runs just fine.  Of course, now that they are no longer
> offering "full transit", we are re-considering how "good" their pricing is.)
> Back on topic, I am unclear on why "you sell X for less than I do" is
> justification for rotting in hell.  Whether X is below your cost is COMPLETELY
> immaterial.  Whether it is below their cost is irrelevant to me, but it might
> be important to some countries / laws / whatever.  If they are breaking a law,
> have someone investigate & charge them.  If there is no law against it, deal
> with it.  They should be going out of business RSN anyway.

The carrier transit market is in a real mess, many of the large players having 
already gone bankrupt once, when that happened with the so called dot-com crash 
it affected the global economy. 

What we see now are todays carriers facing the risk of bankruptcy again, some 
for the second time round. One possible interpretation of Cogent's price erosion 
is that networks have been built that will not make a profit until 2 or 3 years 
and being forced to cut prices heavily in order to compete is pushing that 
profitability curve such that the companies will run out of funding before they 
hit profit.

The short term benefit as a buyer is reduced costs, but long term this could 
affect the very market that you're operating in and your own viability and 
profit margins.

For many folks too the falling price they buy transit for just means they are 
being forced to take that off their product sell prices so they dont actually 
make any more profit.. in which case there is no advantage to buying below cost 

In general I'd prefer to operate in a healthy marketplace, where all parties are
making money, theres little risk of the supplier filing bankrupcty and I am
getting reasonable customers service. That can only lead to growth of the
industry, healthy businesses and healthy economies. Unforunately none of these
things appear to be happening at the moment...