cost of doing business (was:Re: OpenTransit (france telecom) depeers cogent)

jmalcolm at uraeus.com jmalcolm at uraeus.com
Sun Apr 17 17:33:09 UTC 2005


Brandon Butterworth writes:
>Perhaps they aim to keep driving the competition out of business
>to ensure there's a cheap supply of equipment so they can grow
>whilst charging so little?

There are several problems with such a plan, even were someone to
attempt it. One, overall traffic is still growing, so cannibalizing
the already-constructed equipment owned by others after you drive them
out of business only goes so far. (Note that low prices stimulate
demand.) Two, requirements change - for example, filtering capabilites
more or less acceptable years ago when certain linecards were released
are no longer. And then there's the fact that the world is moving in
the ethernet direction. Providers need to keep up, because their
competitors will do so. Three, vendors won't support the current
equipment forever, and once they don't, that will quickly end the
usefulness of the equipment in question.

Joe




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