I see this post come around every once in a while, and while the idea seems alluring, the fact is if you’re not in the right location and market, this kind of business will be unsustainable.
Maybe you can start your own ISP, but do not assume it will be in the same place you live. Analyze the country and find the pockets where you can thrive and grow a successful business, otherwise don’t even bother. Also bring a decent amount of cash and a good credit line.
* People found an ISP $NEWCOMER in an area where $ESTABLISHED has bad service and high fees.
* The newcomer invests loads of money into cabling the neighbourhood with fiber (or wireless internet) and offers deals with lower fees and better connectivity than $ESTABLISHED
* In a static world everyone would switch to $NEWCOMER and they'd make a lot of money, being able to expand to other places. But executives at $ESTABLISHED aren't stupid. They invest as well and lower their prices, too, just enough to be lower than $NEWCOMER.
* $ESTABLISHED waits until $NEWCOMER runs out of money. They rise prices again. It doesn't even matter if its price reductions mean $ESTABLISHED loses money in that region. The regions where there is no newcomer bring in enough cash to pay for the few regions with (temporary) losses.
Of course even if $NEWCOMER runs out of money, someone will buy their infrastructure and offer similar services, but there are more components in the competitive moats of established ISPs like (local) government granted monopolies in exchange for providing public buildings like school with free internet, or the bundling of streaming services with internet deals. Those moats usually are wide enough that there is no avail for small ISPs to break through. That being said, if you break through the moat, it's an insanely profitable business. DTAG had to invest tons of money until they got there and now they are in the place where the big ISPs can't harm them any more and the american daughter company is now the favourite of the DTAG shareholders.
A WISP, at scale (50 users or more), should have a cost per user of about $10/m. You can oversell bandwidth considerably, more than most people realize. I've specifically seen an 80 customer wisp reporting their peak time is only 230mbps. This largely makes sense as you people streaming video is going to be your biggest usage, and that really only average 15mbps at the worse. A $1/mbit for ISP bandwidth should be doable in most areas, and since it's wireless your costs per user are actually rather low, given a good tower.
But WISPs do make the most sense in areas where there is no good alternative (only DSL or Dish).
Yeah, the big problem is labor. if you are only making a few bucks a user, making enough money to make up for your opportunity cost (vs. working as a tech for a large company) requires a lot of users.
I've got a lot of experience serving the low-margin market, both for ISPs, WISPs, but mostly on the hosting side, (and hosting is actually easier; the less you have the customer on the equipment, the less time you spend fixing stuff they broke.) and let me tell you, low margin does not at all line up with low support expectations.
Even if you can charge your customer twice what it's costing you and making ten bucks a month per user, one tech support issue can end up eating all the margin that customer would have given you for years.
I'm certainly not saying to price it so you only make $10/m per user. I'm simply stating what your base cost is. $50/m should be expected with a WISP, as I tend to see rates of 50mbps+ from well run WISPs. I was just pointing out that it's hard to price someone out of market without dropping prices to ridiculous rates.
I'd love to know where you can get a fiber circuit for $500/m. (And even if you can, then you probably can't compete with whoever's selling you that circuit anyway.) When we started we haggled considerably.. (had to sign a 20 year deal) and managed to get a 2G/10G circuit for $1,500/m. (A 1G circuit would have been $1200/m)
I guarantee it's not dedicated. it may go over a dedicated line at some point, but I'm in the layer2 business running GMPLS and shared switched traffic and you're either on GPON or some Metro Ethernet gear. you are sharing the neighborhood bandwidth on a metro switch, or you're sharing both light spectrum (GPON) AND the neighborhood bandwidth. you could have 100g but it's still shared.
Do you think there's a company advertising 5gbps at $600/m for residential services? Those are dedicated fiber prices, all be it very good ones (I'd question the peering outside of Europe).
2G/10G? Normally I see it considerably cheaper for download bandwidth vs upload bandwidth, as your provider will just sell/reserve the upload bandwidth for servers, since servers use vastly more upload.
Of course, the rate you gave holds with the $1/mb I was assuming. You oversell bandwidth obviously.
Not as much as Comcast/$ESTABLISHED company can. The people most likely to switch to a WISP or alternative ISP are the people most likely to crush your bandwidth.
> A WISP, at scale (50 users or more), should have a cost per user of about $10/m. You can oversell bandwidth considerably, more than most people realize.
I run a small non-profit WISP (with price per user about $15/m), and the cost of bandwidth is not a significant part of the budget (about 15 %). Biggest part of the budget (about 60 %) is hardware and work for development and repairs of the network.
> since it's wireless your costs per user are actually rather low, given a good tower.
I would say that wireless has pretty high cost per user. To have good coverage and not overloaded APs, you target ~5 users per AP and 1-3 APs per node.
I think there will be more demand once people realize there are other options. I saw a post on HN a few days about someone starting a small ISP in NYC. I suppose NYC market is saturated as it can get.
One interesting I ran across is how mountainous villages in Nepal has their Internet connections. I was in Annapurna trail last month, and in Manang village (which has about 20 guest houses), there is one big satellite connection and everyone shares from it. The owner charges the consumers a flat fee. From what I hear, and it could be exaggerated, they pay about $500 per year. I think a remote location, one uplink satellite, and a few wired subscribers can be a viable business!
Also since these would be WISPs (Wireless ISPs), it depends on topology as well (signals can't go through mountains, backhauls need to have line of sight to multiple customers, etc). It's a tricky balance of multiple variables.
Maybe you can start your own ISP, but do not assume it will be in the same place you live. Analyze the country and find the pockets where you can thrive and grow a successful business, otherwise don’t even bother. Also bring a decent amount of cash and a good credit line.