FRIACO not the be all and end all?

LegacyUser

I don't know if this has been covered yet,(couldn't find it in any other topic)
but pushing for FRIACO mightn't be the big boon we'd imagine and should only be looked at as a small step in the long range scheme of things...

It takes a large, successful ISP to make money from FRIACO...in reality money generated from FRIACO is from advertising not from the users subscription.
Now our problem is that there is no 'large' ISPs, except those related to Eircom, and Esat does not have the significant content orientated/advertising based revenue stream necessary to offset losses from susidising users on a FRIACO type scheme.

Thus, FRIACO while being a start, is not 'the' holy grail. As many small-to-medium ISP's discovered in the UK, FRIACO is *not* good business, and again who were to suffer -the consumers. I would imagine competitors to Eircom will have a long hard look at whether FRIACO is worth it -after all it is up to them to take it up.

The 'usefulness' of a FRIACO implementation probably lies more with reigning in Eircom and forcing it to release it's material and conceptual grip on the telecom's infrastructure rather that for the benefits of FRIACO which users may or may not be able to access from an ISP.

<waffle ends>
Cheers,
lph

LegacyUser

i dont follow you, FRIACO is what all small isp and big ones want,

all its means is instead of paying per every minute their client is on they pay a flat rate,
they dont have to sub anything,
it coasts something like £15 to bt per client per month from a FRIACO system,

they charge £20 a month they make a profit,
sure the margins are smaller,

LegacyUser

Some maths..

Conservatively, say an ISP gets 80,000 sign ups - they pay 15 of 20 to Eircom, leaves 5 profit.

5*80000 is not a viable income given the overheads involved in supporting 80,000 users both in network and practical terms -never mind the rest of the overheads..

Implementing FRIACO means and ISP misses out on the potential revenue to be gained from charging per minute or whatever..

Just doesn't work without huge cash reserves or some other source of income from your FRIACO users..

lph

[This message has been edited by lphchild (edited 11-07-2001).]

LegacyUser

well he simple fact is an isp wont get 80,000 clients on per minute base, and the majority of them wont earn them much,

the only time you see those numbers is with flat rate as england that proven, and thats the only way you will see it here, 20000 people signed up to esats offer.

LegacyUser

and can you give an estimate on the number of potential FRIACO users in Ireland??
100-200,000??

I'd imagine nowhere near enough to make a profit comparable to that to be earned on timescale+subscription basis..

lph

LegacyUser

I think there's a real need to look at FRIACO pragmatically (be warned, this may be controversial):

From the ILECs perspective:
Simply put, its not economic for the ILECs(ie Eircom) to provide a service of this sort. Unmetered dialup requires that, for the price of line rental + £10 or whatever extra, Eircom must, as long as the person in connected, provide and maintain a *dedicated* 50k or so path through their network to some ISP/competing ISPs interconnection point.

Compare that to data services like DSL where backhaul must be paid for separately by the competitor, and massively overbooked connections from the local exchange are possible, all at a far higher price.

From the ISPs perspective:
Provide an unmetered, day and night 50k connection, for about a fiver a month, when 5 years ago tehy could hardly scrape by on 10-15/month subscriptions

I don't want to rain on anybody's parade here (particularly people who won't be able to get broadband anytime soon), but on an economic level, unmetered dialup on PSTN is utterly mental. I accept that it is socially desirable(I'm a nolimitser mytself), and that Eircom got themselves into this mess themselves by not upgrading their network for data sooner, but to expect them to provide a service of this sort may be going a little far...

Finally, please don't think I'm being a troll or trying to start a flame war, I just think some serious debate about this could be very useful for the irelandoffline cause.

LegacyUser

Yup hit it on the nail....

Not a nay-sayer, just trying to see the big picture -we don't have anywhere near enuff of a population to make a FRIACO-copy scenario practical for any ISP to implement..

lph

dahamsta

I don't know if this has been covered yet,(couldn't find it in any other topic) but pushing for FRIACO mightn't be the big boon we'd imagine and should only be looked at as a small step in the long range scheme of things...

FRIACO's been mentioned in a few topics, but no-one's really gone into depth on it. Possibly because nobody's really mad about the idea. I reckon that most of us are aware that FRIACO isn't the be-all and end-all of telecomms deregulation - it's obvious the UK FRIACO implementation is fundamentally flawed - but at least it would be a start? That's half the problem with Irish telecommunications - no-one is willing to pick up the ball and run with it. They need a nudge to get them started, and maybe FRIACO is the nudge they need. We have to start somewhere?

It takes a large, successful ISP to make money from FRIACO...in reality money generated from FRIACO is from advertising not from the users subscription. Now our problem is that there is no 'large' ISPs, except those related to Eircom, and Esat does not have the significant content orientated/advertising based revenue stream necessary to offset losses from susidising users on a FRIACO type scheme.

I apologise in advance for being argumentative, but I think you're somewhat wrong on both points here. First of all, I don't think you *necessarily* have to be a big, successful ISP to make money from FRIACO. In the UK, possibly, but that's because the pricing was badly structured. It's relative too - Ireland is a smaller market, so big in Ireland is very different to big in the UK. I see your point, but there is an important factor in that we don't have to subscribe to UK pricing levels with an Irish version of FRIACO.

Yes, we all want to keep the cost down as far as possible, but there's no doubt there's a lot of people out there who will pay a fair fee for a fair service. Yes, there'll be whiners out there who will compare our pricing to the UK, but there will also be sensible people who will point out the economies of scale to them. I think transparency can do a lot to assuage these types of concerns. Just like if Esat had been a little more honest with us when they cut us off, we wouldn't be half as ****ed off as we are now.

When it comes to revenue streams, again I agree with you, but with reservations. As an example, yes, Esat seems to have dropped the ball on alternative streams, but even with that the IOL site is still one of the most popular in the country. Granted, advertising revenues are pretty shoddy at the moment, but that didn't hit Ireland as bad as it did on the worldwide scale, and it's recovering anyway.

Thus, FRIACO while being a start, is not 'the' holy grail. As many small-to-medium ISP's discovered in the UK, FRIACO is *not* good business, and again who were to suffer -the consumers. I would imagine competitors to Eircom will have a long hard look at whether FRIACO is worth it -after all it is up to them to take it up.

I don't think anyone really believes that FRIACO is the killer app that's going to promote competition in Ireland lph, but more the aforementioned nudge to set the ball rolling. And again, I think that a lot of the ISP's failed in the UK because FRIACO was badly thought-out and badly-implemented. It's up to the regulator and the ISP's to look at the failures in the UK and learn from their mistakes. Unfortunately, that kind of sense doesn't seem to be very prevalent with them, which is pretty sad when you consider the number of clever people these companies have working for them.

Personally, I'd prefer to skip a FRIACO-style service altogether, and fire straight into LLU, because I can't see it working in Ireland. But if it has to be done, it has to be done. Oh, and it's not really ultimately up to Eircom whether we have a FRIACO-style service when you get right down to it, it's up to the ISP's to push for it, and the regulator to step in if someone complains. There's no doubt Eircom would battle against FRIACO to the bitter end. Unless of course, as I've said before, you get someone with real intelligence and foresight in the driving seat.

The 'usefulness' of a FRIACO implementation probably lies more with reigning in Eircom and forcing it to release it's material and conceptual grip on the telecom's infrastructure rather that for the benefits of FRIACO which users may or may not be able to access from an ISP.

Well, this is the ultimate aim, isn't it? I mean, Ireland Offline is fighting for affordable access to the Internet, and I think the people in charge are only too well aware that you could resolve this tommorrow by unbundling the local loop, and be home in time for tea,

Full local loop unbundling is the only real factor that will create a truly competitive market. But even then you need a regulator taking an *active* role in controlling pricing, access and suchlike. I don't know whether the Irish regulator is taking a passive "we'll do something if we're asked" role out of necessity or for some other reason, but it's really quite obvious it's not working with the current methodology.

In a market with only two serious contenders, both of whom seem perfectly happy sitting on their haunches and maintaining the status quo, somebody needs to stand up and shout at them. That's just not happening right now, and it's the consumers and businesses are suffering. That's immoral, and more importantly, it's illegal.

adam

LegacyUser

i still cant understand why not,
if a company like ntl which takes addvantage of a FRIACO uk why no just treat us as a part of the uk(spit blah blah) if the difference is just they pay eircom £15 a month instead of bt, whats the problem,

o and of course eircoms not goign to like it, its less money for them

LegacyUser

<font face="Verdana, Arial" size="2">Originally posted by Gladiator:
i still cant understand why not,
if a company like ntl which takes addvantage of a FRIACO uk why no just treat us as a part of the uk(spit blah blah) if the difference is just they pay eircom £15 a month instead of bt, whats the problem,
</font>

NTL is different to other ISPs in that they're trying to hook people into buying an overall package. So for example, they can subsidise their Internet package, but make it up on phone charges or PPV events on SKY etc. Are they making money on FRIACO flat rate lines? Probably not.

<font face="Verdana, Arial" size="2">
o and of course eircoms not goign to like it, its less money for them</font>

Its not a matter of less money, FRIACO would force Eircom to sell service at a price substantially lower than the cost of providin g it. And we would be the losers - we would have to fight them for everything, instead of have them tripping over to help us (witness Esat's nolimits customers, beacuse the service was being sold below cost, being told to go **** themselves when they complained.) Thats not the kind of internet service we want here, is it?

I admit I want to pay little as possible for Internet access, but as Tony Blair said during the UK election when asked about tax cuts, "Well, obviously, we would all prefer to pay no tax at all, but that's not haw it works"


[This message has been edited by hudson806 (edited 11-07-2001).]

LegacyUser

Thanks for the reply Adam

I have to say i agree with what you've said(not going to go for the whole question answer thing reckon we're on the same page).. I suppose I started from the presumption that we'd be copying FRIACO(the UK flavour), as it's constantly refered to in discussions around internet access.

The danger in this is that those in 'power' will pick up on the buzz word and think it's what is needed to quel the unrest among internet users, leaving us to look like plonkers when they give us FRIACO(as they see it in the UK) and we start on a rant about how it doesn't suit use etc..

May it's better to stick to Flat-Rate as a term so we won't get stung??

In agreement,
lph

[This message has been edited by lphchild (edited 11-07-2001).]

LegacyUser

well the eu say flat rate internet is needed for growth, and i can see them bringing a mandate in that all eu countries need to have it,

goverment subs and tax relief maybe in order

LegacyUser

Few points from posts above.

1) FRIACO is very important to people like myself who are outside main population areas and not likely to get broadband in foreseeable future. I would love to get broadband eventually but would live with FRIACO in the meantime.

2) There are economies of scale, unmetered is likely to cost more here than in UK but most people don't seem to have problem with that - many users asked for Esat to retain SNL at a higher charge.

3) The revenue stream from FRIACO won't be massive but bear in mind that many of the overheads are there already so it should at least cover its costs and probably make a small profit.

4) Telco's will (or at least should) look at the future devlopment of users. Like many people, I invested in second line when SNL came on stream. If SNL was available 24/7 I would be seriously looking at ISDN in the short term. IMO, lot of FRIACO users would eventually upgrade to broadband. Bit like banks going after unprofitable student accounts to get them for later on.

5) ESAT have told us they will be going after FRIACO as soon as it is available; the proof of this is in the fact that they brought in SNL before FRIACO and whilst we are all p***ed off with 2,000 users being disconnected, they have kept it for 18,000 users in order to hold onto them as subscribers.

Martin


[This message has been edited by o_donnel_abu (edited 11-07-2001).]

LegacyUser

<font face="Verdana, Arial" size="2">Originally posted by Gladiator:
well the eu say flat rate internet is needed for growth, and i can see them bringing a mandate in that all eu countries need to have it</font>

When they say flat rate, as far as I can remember, they are referring more to deployment of new data access technologies such as IDSL, ADSL, FWA or Cable. I seriously doubt that there would ever be an EU mandate that ILECs should use their PSTN networks in such a recklessly stupid and inefficient manner.

Follow this through a second, Gladiator: technologies such as DSL don't offer any guaranteed Quality of Service - part of the reason they're so cheap(relatively speaking) is that you will be sharing a 2mbit ATM connection or whatever with God knows how many other people on your DSL service. The quality can be reduced on increased at the local exchange as necessary in order to keeps costs low.

Compare that to PSTN Flat-Rate - the system is designed to reserve 64k right through the carrier's inefficient PSTN network to some point in Dublin where the ISP picks it up. Thats essentially the same service as a leased line (from Eircom's perspective), but they charge 300IEP/month for that (I know that's ****expensive, but where can you get a leased line for 10-15IEP that FRIACO would have to be?)

I'm not trying to argue with you here, but I think people should stop seeing flat rate as some sort of holy grail - at best its a technical kludge (until data services become more widespread) that will have to be provided waaaaay below cost if people are to buy into it.


[This message has been edited by hudson806 (edited 12-07-2001).]

LegacyUser

fair enough,
one question, why is bandwidth expensive here,
what about all thgis international contecntion were getting, about the only thing the goverment invested wisely in,

and all these fibre rings they are building.

as for sharing bandwidth, i thought that adsl was more constant like 56k, were you get what you pay for, not like cable were your sharing it like a network

LegacyUser

I reckon FRIACO is a massive step forward, especially if you live in the county and the reality of the situation is that flat rate 56k maybe ISDN is the best your going to see for a long time.

Thank god the chairman is from the countryside or we'd be forgotten about by now!

Farls

LegacyUser

<font face="Verdana, Arial" size="2">Originally posted by Gladiator:

as for sharing bandwidth, i thought that adsl was more constant like 56k, were you get what you pay for, not like cable were your sharing it like a network</font>

Not usually. The difference between DSL and cable is that DSL can be used to offer a guaranteed access rate, using ATM Service Classes. So, for example, a business user could be guaranteed 256k at all times(Constant Bit Rate), but another person on the DSLAM could only be allowed to use whatever bandwidth is left over.

Typically, Telcos don't bother with anything that complicated though - they usually just put about 1/25 -1/50 as much bandwidth into the DSLAM as they have sold to customers, so if there are 100 customers on a DSLAM, who have been sold 1mbit each, there will be about 2mbit-4mbit going in.

BT Openworld, as far as I know uses a 50:1 overbooking ratio, so at peak times, net access is only about as fast as dialup.


[This message has been edited by hudson806 (edited 11-07-2001).]

LegacyUser

I see FRIACO working here but only if:

1. ISPs are free to charge what ever they feel appropriate above this amount for their profit.
2. The same deal is given to both large and small ISPs i.e. a fixed rate per month per line from Eircom.

If the wholesale price is fixed, then there must be some retail price that is profitable. Economies of scale will mean that this price is higher than in Britain (no ?10/month deals etc.) but will still be affordable).

Now some ISPs might not like this, they might be very comfortable with getting revenue from their 'free' internet access. But as users migrate over to the flat-rate providers, they will be forced to follow suit. Thats their problem anyway.

I believe, after a few false starts with BT favouring the large operators only, this is how things worked out in the UK in the end.

My reason for (A) above is to encourage at least one ISP into the arena. They will not be interested if there is a set retail price.

My point here is that it's not fundamentally unprofitable it simply introduces a different business model into the ISP business here.

Another argument in favour of FRIACO is that this is the way things work in the US (simply because local calls are free in much of the States). This does not put ISPs out of business. Some ISPs will go out of business but it is because they don't meet the needs of the consumer or are too expensive. Again, that should not be our problem.

My reason for (B) above is to allow for a dynamic rather than static market. If one ISP tends to dominate the business it will get bloated and expensive. You need to allow small ISPs to come in and undercut them. There will be consolidation but you get that anyway. It is not always a bad thing.

Unfortunately, the ODTR, unlike OFTEL(UK) cannot implement the above. I don't know whether they are interested either. Never mind.

LegacyUser

<font face="Verdana, Arial" size="2">Originally posted by Skeptic1:

My point here is that it's not fundamentally unprofitable it simply introduces a different business model into the ISP business here.
</font>

It probably is fundamentally unprofitable to the Local Exchange Carrier. Eircom's economics are based on people paying per-minute charges to use their PSTN network. Now a very small minority of their customers will have their lines almost permanently turned up, but will pay only a very small amount of extra money.

<font face="Verdana, Arial" size="2">this is the way things work in the US (simply because local calls are free in much of the States). This does not put ISPs out of business.</font>

This is not the way it works in the US. Over there, everybody pays a few bucks extra for unmetered local calls (including internet calls), so you don't have the problems that we will have here, namely that only the 'heavy-hitters' will sign up for the unmetered service. And in the US, absolutely no businesses get unmetered local or internet calls - the FCCs argument being that Verizon should not have to susidise businesses.

The only reason I'm bothered about Eircom being forced to sell below cost is because if they have no incentive (ie profit) to provide a decent service, they won't.

In the states, for example, if you buy your dsl from one of the competitors on an unbundled line, and the line goes down, you have to call your ILEC(=Eircom) and report the fault. It could be a business-critical DSL line, but as far they're concerned, they only make 7-8$/month off it by renting it to the competitor, so they're attitude is like, "Yeah, we'll look at the problem on Thursday, maybe, if we get around to it"

But again, I do believe that Flat-rate is important, not least because the losses Eircom endures on Flat-rate lines, will push it to roll out data lines to as many people as possible.

But how about a carrot and stick approach? Say, on lines on which Eircom can deliver unmetered data services(ie DSL), they are not obliged to allow flat-rate access, thus forcing them to roll out broadband more aggressively. This would at least force minds away from all this flat-rate BS and onto the important issue; unmetered broadband.

[This message has been edited by hudson806 (edited 11-07-2001).]

[This message has been edited by hudson806 (edited 11-07-2001).]

LegacyUser

<font face="Verdana, Arial" size="2">Originally posted by hudson806:
This is not the way it works in the US. Over there, everybody pays a few bucks extra for unmetered local calls (including internet calls), so you don't have the problems that we will have here, namely that only the 'heavy-hitters' will sign up for the unmetered service. And in the US, absolutely no businesses get unmetered local or internet calls - the FCCs argument being that Verizon should not have to susidise businesses.
</font>

I concede the above point.

<font face="Verdana, Arial" size="2">The only reason I'm bothered about Eircom being forced to sell below cost is because if they have no incentive (ie profit) to provide a decent service, they won't.</font>

If FRIACO is to work then it must be (like LLU) on the basis of cost. There are various methods of calculating cost, I know. But the principle behind FRIACO must be that Eircom, being a monopoloy, has responsibilities, one being to release some of it's assets to competitors. When I say cost I don't mean oportunity cost (i.e. the amount Eircom will lose due to not charging by the minute for certain types of call).

This cost to Eircom might not be totally flat rate. There might be ware and tear on the line due to it being 'on' all the time. I don't know. But it could be worked out. I'm not arguing that Eircom should be forced to sell at below cost.

I have no moral problem with the above. Eircom, given its monopoly needs to be incentivised into innovating. No company should be allowed to hold back an entire country.

<font face="Verdana, Arial" size="2">In the states, for example, if you buy your dsl from one of the competitors on an unbundled line, and the line goes down, you have to call your ILEC(=Eircom) and report the fault. It could be a business-critical DSL line, but as far they're concerned, they only make 7-8$/month off it by renting it to the competitor, so they're attitude is like, "Yeah, we'll look at the problem on Thursday, maybe, if we get around to it"</font>

Unfortunately, we will have to live with that here. I think this would happen even with quite a high price for LLU. Close monitoring and sufficient penalties are required.

<font face="Verdana, Arial" size="2">
But again, I do believe that Flat-rate is important, not least because the losses Eircom endures on Flat-rate lines, will push it to roll out data lines to as many people as possible.

But how about a carrot and stick approach? Say, on lines on which Eircom can deliver unmetered data services(ie DSL), they are not obliged to allow flat-rate access, thus forcing them to roll out broadband more aggressively. This would at least force minds away from all this flat-rate BS and onto the important issue; unmetered broadband.
</font>

Yes. I agree. And maybe Eircom should be paid a variable rate depending on their performance in implementing LLU. This could be provided by the Government. If they don't unbundle the lines in a given exchange they don't get the special bonus. Something along those lines. I'm not entirely sure how it would work in practice but it may be worth considering. My impression about the Government is that they don't mind spending money if it is put to good use.

LegacyUser

From what I've heard, FRIACO costs an ISP about £5/month per user. £15 is not correct.

All that said, I think we can do it better than the brits. We can go all the way and make all local calls flat-rate. Why only be as good as the brits when you can be better?

LegacyUser

<font face="Verdana, Arial" size="2">Originally posted by Urban Weigl:
From what I've heard, FRIACO costs an ISP about £5/month per user. £15 is not correct.

All that said, I think we can do it better than the brits. We can go all the way and make all local calls flat-rate. Why only be as good as the brits when you can be better?</font>

because were a tiny banana republic, i dont think we can do it better then them because were no in the same boat,

As for charge, good only knows how much it is, logic might working for aol and all