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Are new 1/2mb upgrades a kind off margin squeeze?

  • 03-04-2005 10:21pm
    #1
    Calibos
    Registered Users, Registered Users 2 Posts: 7,816 ✭✭✭


    I'm sure we've all been following the threads on the broadband forum concerning the 1mb/2mb upgrades where the initial fast download speeds have slowed to a crawl as the day wore on. This could be merely teething troubles but it could also indicate a lack of bandwidth from the exchanges. Have the various providers not purchased enough new bandwidth?

    That got me thinking though that maybe this whole speed upgrade thing was Eircom killing several birds with the same stone.

    ie
    1. It shuts comreg and the governent up for a while and gets them off eircons back.

    2. Its a slightly more competitive product(though thats not saying much) with the Smart offerings.

    3. Is it a form of forced Margin squeeze (or what ever the business terminolgy is) on the other resellers. If the resellers don't upgrade their backhaul bandwidth and their customers see that they are not getting the new speeds they thought they were getting there will be war and they will leave the resellers in droves. On the other hand if the resellers do upgrade their bachaul bandwidth they are having to absorb the extra expense without being able to pass the extra costs onto the customers meaning smaller margins and as we know they are already working on smaller margins than Eircom as it is. The resellers are in a lose lose situation.

    Or am I way off the mark??


Comments

  • #2
    SkepticOne
    Closed Accounts Posts: 6,718 ✭✭✭SkepticOne


    Calibos wrote:
    Or am I way off the mark??
    I would broadly agree with that although I think you may be overestimating the pressure from ComReg in point 1.

    I think the main factor in the upgrades is competitive pressure from Smart. Any pressure from outside like this will put pressure not just on Eircom but resellers too since they form part of the same system. I think the reason that Eircom haven't fully matched Smart in terms of speed and price is that Smart are still only in a small number of areas plus, Eircom can still respond in other ways to deal with the Smart problem.


  • #3
    Sponge Bob
    Banned (with Prison Access) Posts: 25,234 ✭✭✭✭Sponge Bob


    Calibos wrote:
    3. Is it a form of forced Margin squeeze (or what ever the business terminolgy is) on the other resellers. If the resellers don't upgrade their backhaul bandwidth and their customers see that they are not getting the new speeds they thought they were getting there will be war and they will leave the resellers in droves.

    Or am I way off the mark??

    No , you are Spot On Calibos . I was very surprised the bitstream resellers were so quiescent when eircom gave them 3 weeks (in effect ) to order more handover bandwidth that takes 6 weeks to install . Lose Lose it is.

    Eircom also installed some cack handed anti P2P stuff that is misconfigured as I understand it .

    Comreg did not have a formal complaint from a reseller to act on (as of Tuesday last) and did not spot the margin squeeze themselves until it was too late .


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