How do ISPs make a profit?

Hi, I'm with Claranet at the moment, and they claim that charging £30
for a 512Mb connection is necessary for them to maintain a reasonable
profit margin.
So how on earth can Plusnet offer £21 for an uncapped 2000Mb connection?
Indeed nearly all ISPs are significantly cheaper than Clara. Are they
storing up financial problems for the future?

--
Simon

> Hi, I'm with Claranet at the moment, and they claim that charging £30 for
> a 512Mb connection is necessary for them to maintain a reasonable profit
> margin.
> So how on earth can Plusnet offer £21 for an uncapped 2000Mb connection?
> Indeed nearly all ISPs are significantly cheaper than Clara. Are they
> storing up financial problems for the future?

Becuase they run reliable servers, and actually employ decent support staff?
(Though having support staff in central london probably costs a lot)

I don't think Clara have moved to BT's CBC or UBC (Capacity-based, or
Use-based Charging) models yet. Plusnet isn't truely uncapped - look up
"bad boy pipe".

Clara, like Demon, are appealing to a different class of users. Infact,
Clara are more of a business-oriented ISP anyway - how many other ISPs in
the domestic market will sell you leased lines?

On Mon, 20 Jun 2005 12:15:29 +0100, simon <(E-Mail Removed)>
wrote:

>
>Hi, I'm with Claranet at the moment, and they claim that charging £30
>for a 512Mb connection is necessary for them to maintain a reasonable
>profit margin.
>So how on earth can Plusnet offer £21 for an uncapped 2000Mb connection?

by selling other, more expensive, services to other classes of users.
Read up on "loss leader" as a concept.

>Indeed nearly all ISPs are significantly cheaper than Clara. Are they
>storing up financial problems for the future?

Some of them certainly are.

On 20 Jun 2005 12:15, simon <(E-Mail Removed)> wrote:

>Hi, I'm with Claranet at the moment, and they claim that charging £30
>for a 512Mb connection is necessary for them to maintain a reasonable
>profit margin.

Back in 2000 (or before) it was mentioned by staff that they introduced
ADSL to meet customer demand. There were some complaints about them not
reducing the price in 2002 when customers could request 'wires only' for
their ADSL service instead of engineer installation. While Claranet has
never been the most expensive, it has never been rock bottom, and while
I can see it worth comparing Clara with Plus.Net, the former spends on
advertising (or has done), and the latter doesn't (generally... though
some football team sponsorship didn't come free, of course).

Check the list of exhibitors at Internet World, which Claranet has been
attending annually and you'll see none of the other ISPs which have
residential customers (I knew a few of the hosting firms, but plenty
of other businesses I'd not know or need to know about, to be fair).

Claranet seems to have reduced its hours (Customer Services used to be
24x7, but I guess demand overnight and costs for the firm didn't make
it viable), and have pushed more for business customers, hosting, etc,
and get used by other firms that host servers with Clara and then sell
their own services, without Clara being mentioned... as Clara offers a
reliable service, 99.9x% of the time ! Peter M.

On Mon, 20 Jun 2005 14:14:43 +0100, Peter M <us-(E-Mail Removed)>
wrote:

>On 20 Jun 2005 12:15, simon <(E-Mail Removed)> wrote:
>
>>Hi, I'm with Claranet at the moment, and they claim that charging £30
>>for a 512Mb connection is necessary for them to maintain a reasonable
>>profit margin.
>
>Back in 2000 (or before) it was mentioned by staff that they introduced
>ADSL to meet customer demand. There were some complaints about them not
>reducing the price in 2002 when customers could request 'wires only' for
>their ADSL service instead of engineer installation. While Claranet has
>never been the most expensive, it has never been rock bottom, and while
>I can see it worth comparing Clara with Plus.Net, the former spends on
>advertising (or has done), and the latter doesn't (generally... though
>some football team sponsorship didn't come free, of course).
>
>Check the list of exhibitors at Internet World, which Claranet has been
>attending annually and you'll see none of the other ISPs which have
>residential customers (I knew a few of the hosting firms, but plenty
>of other businesses I'd not know or need to know about, to be fair).
>
>Claranet seems to have reduced its hours (Customer Services used to be
>24x7, but I guess demand overnight and costs for the firm didn't make
>it viable), and have pushed more for business customers, hosting, etc,
>and get used by other firms that host servers with Clara and then sell
>their own services, without Clara being mentioned... as Clara offers a
>reliable service, 99.9x% of the time ! Peter M.

Freeuk.com is also owned/run by Claranet (or was 5 years ago anyway)
and only charges £22.99 for a 512Mb connection

On 20 Jun 2005 17:49 GMT, Dave <(E-Mail Removed)> wrote:

>Freeuk.com is also owned/run by Claranet (or was 5 years ago anyway)
>and only charges £22.99 for a 512Mb connection

.... and puts restrictions on the quantity of news you can download each
month (10 GB, last time I checked), and doesn't offer a static IP, which
is an option with Claranet, and doesn't have the same mail filtering you
can have with Claranet e-mail) so is a different product. At least they
use an 0845 support number, however, so that's similar.

Free UK could be compared to Claranet as UK Online is to Easynet, except
Clara staff indicated Clara only manage the Free UK service. Peter M.

In article <(E-Mail Removed)>, simon says...
>
> Hi, I'm with Claranet at the moment, and they claim that charging £30
> for a 512Mb connection is necessary for them to maintain a reasonable
> profit margin.
> So how on earth can Plusnet offer £21 for an uncapped 2000Mb connection?
> Indeed nearly all ISPs are significantly cheaper than Clara. Are they
> storing up financial problems for the future?
>
>
One reason is economies of scale. PlusNet have more users, and buy their
bandwidth in bulk. They can then pass those savings to the customers.

Same sort of thing comparing that can of beans bought at a corner shop
and at ASDA. ISPs buy pipes and other services to move traffic around
the internet. They buy bigger, they get discounts.

The other is that PlusNet can spread their operations charges over a
greater number of BT Wholesale connections so don't need as much markup
there either.

FR