Has Wires-only started a time bomb?This is what Ian Buckley from Zen Internet is suggesting in an article on news.bbc.co.uk. He expresses concern that some ISP's may be pricing themselves into oblivion with the small mark-ups they are allowing themselves. The level of markup is more of an issue with the wires-only service, since the shorter contracts mean if an ISP has a temporary blip in performance it's a lot easier for a user to switch ISP and at a lot lower cost to themselves - which may be bad news for an ISP if they had gambled on retaining the majority of customers for perhaps 12-24 months to recoup admin costs. Certainly the majority of the support cost to an ISP is within the first month of a user been connected, e.g. initial connection problems, setting up email accounts etc.
So are we going to see some more ADSL ISP's go under in the next year - probably some may withdraw from the market before they go under, procedures for bulk migration of users between ISP's are a lot better and cheaper than they used to be. BTwholesale had a little practice with this during 2001.
Some interesting comments were raised about the delays in Freeserve/AOL and BTopenworld announcing products, along the lines of it may because these ISP's are concerned over their ability to support customers, which may increase their costs compared to the smaller ISP's which often have a smaller but better technically informed support service. At the end of the day there appears to be two choices for an ISP price wise, sell at near cost now with hopes of higher profits if the wholesale price drops at a later date, or sell at a level that is sustainable now, and lower prices in line with wholesale price cuts as they occur.