Telecom providers need to update their business models

Telecom providers need to update their business models

The telecommunication industry hasn’t changed for the longest time while the data center industry has been moving forward. It’s time for telcos to catch-up!

What’s wrong with the telecommunications industry

Telecommunication providers play a huge role in the data center market. Even if a company has the best Tier 4 data center, poor connectivity can make the whole facility useless.

To be clear, we’ll be focusing on the service of renting internet access within a colocation facility.

Terrible contracts

Large corporations can easily commit to long contracts and over-commit their bandwidth to prepare for the furture. However, having worked with many SMB’s and small ISPs, these companies can’t do so.

ISPs want clients to commit to 1Gb/s connectivity for 36 months and more. This makes no sense what so ever. First of all, this makes it so the company is stuck with a 1G port no matter what. Need more? Order a new 10G port! Also, within 24-36 months, the price of a 1G fiber will have dropped, but the client is stuck with the same pricing.

Contracts should be on a shorter-term and have an easy upgrade path.

Crazy pricing

Delivering fiber to a private address is expensive. Depending on the region, it can cost C$12,000 to C$20,000 per kilometer. However, colocation facilities are very dense. With the same fiber cable, network providers can get much more revenue, yet, charge the same price as a private fiber at an office.

Transit at a colocation facility should be cheaper, especially in a carrier hotel in downtown. Paying C$700-1000 for a 1G port is too expensive for what it is.

On another hand, the colocation and hosting industry has adapted to monthly our hourly commits. Where is the equivalent in the telco business? We know a ton of businesses that would love to upgrade their network capacity on the fly and scale down when they are done.

To be clear, this is the job of Tier 2 providers, not Tier 1 providers as they are already committing millions of dollars on long-haul fiber routes and don’t have the capacity to “micro-manage” these bandwidth changes.

Bad tech support

Bad tech support is probably the worst of all. Every IT employee hates is being bounced back in forth between tech support agents and network specialists at 2 AM when the fiber is down. All tech support agents must understand all network basics, IPv6, fiber technicalities (wavelength, types of fibers, etc), and basic BGP configuration.

Marketing BS

So many ISPs are shady in their marketing. Some say they operate their own fiber when they are actually renting dark fiber, others say they have a large network but don’t publish their network map, and we even see providers blatantly white-labeling other providers.

Just. Stop. It.

Who’s doing it right

zayo logo

If there is one company that mostly nails it all the way, it’s Zayo.

Zayo is by no means perfect, but the company has been doing quite a few things right.

First of all, their network map is public. Anyone can go online and see their network map. This makes it especially easy to figure out the location of their POPs and where it is possible to rent their services. Networking aside, its just a good business rule. If clients are able to understand and find your service, you are off to the races.

Some old-school network providers hide their network for many reasons, but it just makes it harder for clients to do business with them. Anyhow, if someone really wants to find your fiber, they can just run out in the streets and find your tags on your fiber cables. So stop hiding your networks.

Secondly, Zayo has built an amazing pricing platform. Tranzact allows anyone to get budget pricing for their needs. This allows clients to quickly get a feel for their project costs and not have to bother sales reps until they are actually ready.

An honorable mention

cogent logo

As an honorable mention, we would like to give Cogent a shout out. We are very aware of their past reputation, but we consider that they have overcome most of it. At least in Montreal, network performance is quite good, with no network bottlenecks. Of course, sometimes the transit takes some long paths, but that’s typical for a Tier 1 provider.

Anyhow, what makes them really stand out is built upon 2 things. Great tech support and great pricing.

On the phone, clients are always directly connected to a network engineer that understands even the most complex routing technologies like BGP. That’s really nice when you are used to getting transferred to a “network specialist” on 90% of your support requests with other ISPs.

In terms of pricing, Cogent is simply unbeatable. Some will say its due to overcommitting network capacity, but our clients never had any issues with that.

We can’t wait to see change

What are you doing in the telco business if your network is not already IPv6 ready and fault-tolerant? If you are going to charge your clients top dollar, at least be honest in your marketing and provide top quality service.

As you may understand, as we work with many businesses, we must relay our client’s frustration. We sincerely think that as of right now, the status of the connectivity services in Montreal is the main reason that is stopping the city from becoming the next data center hub.

We’ll give an award to the first telco company in Montreal to bring considerable changes to their business model.

Looking for connectivity in Montreal? Contact-us.

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