What’s the average Telco employee earn in India as opposed
to the US?
You’re also not comparing apples to apples when you’re
talking about capped prices. A severely capped circuit is far different
from the sorts of generously capped circuits in US broadband service
plans. You need to compare similarly capped plans. Now
hypothetically speaking let’s say that similarly capped 1.5 Mbps DSL
connection costs $10 per month compared to the $20 US plan. What is the
relative cost of $10 to a typical Indian citizen relative to income? Wouldn’t
that be the equivalent of $80 to $100 per month to an American?
If you’re going to quote Dave Burstein’s vague
statements from anonymous sources, I can’t take you too seriously.
Try citing a specific name and the exact statement and then we can start
discussing the facts. Besides, you’re talking about a very small
component of the marginal costs to begin with.
As to your last question, the US market has rejected cheaper
capped plans and we now have groups like Free Press lobbying to make cheaper
capped plans illegal.
George Ou.
From: nnsquad-bounces+george_ou=lanarchitect.net@nnsquad.org
[mailto:nnsquad-bounces+george_ou=lanarchitect.net@nnsquad.org] On Behalf Of
Rahul Tongia
Sent: Sunday, October 04, 2009 9:52 PM
To: David Farber; nnsquad@nnsquad.org
Subject: [ NNSquad ] 2 thoughts (new ideas) on Entry level pricing
People talk of entry level pricing. A few thoughts.
1) Entry level pricing is cheapest (or amongst the cheapest) in a place like
India. The list price for DSL (now 1 Mbps) is some 256 Rupees/month, just
over $5. BUT, this is usage capped. Unlimited plans are more expensive.
So, if that is the trade-off, that is something worth explicit
discussion. However, folks I've talked to and my own analysis indicate
this is not cross-subsidized, esp. at the marginal level. They don't
really make much money on the cheapo DSL, but this also gives them a landline
subscriber. [note, I've seen the incumbent offer $2/month DSL as part of
a package, under a special offer]
My old TPRC paper (http://web.si.umich.edu/tprc/papers/2006/592/TPRC06-Tongia-submission%20v2.pdf)
goes into some analysis on how you really can provide DSL for <$10/month in
the US, assuming the appropriate local loop copper is there. Dave
Burstein and others have shown how capex is now approaching $50, and we have
the famous statement from ?CTO of a major ISP saying uplinking is between
$2-3/month, average. Thus, for the "entry" subscriber, it would
be on or below the lower end of the range.
2) A major issue is whether entry level broadband is just a "lite"
version of other ("regular") broadband or is it something different?
DSL is especially interesting since other than the well-known
distance-bandwidth tradeoff, there is little to physically differential entry
and regular DSL. "Regular" DSL can typically go faster than what they
offer (my own modem allows me to line test, and I find it capable of 31 Mbps,
here in India!). Thus, entry DSL is cheap in part because of marketing reasons,
not because of any cross-subsidy. So, by this analysis even even "regular"
(megabit class) DSL is "lite".
This, to me, speaks volumes of why carriers in the US don't offer really cheap
(but still slightly profitable) DSL - they don't want people to understand how
much higher the gross margins are for "regular" DSL than entry-level
DSL.
Rahul