I'm sure a few more provider failures
are in the offing - but obviously if the marginal price for bandwith
doesn't pay for the capital costs of expansion, either eventually
bandwidth will be more expensive, or the equipment will be cheaper.
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?
brandon
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