ISP sacks customers

Written by on June 19, 2015 in Guest Blog with 0 Comments

Angry busines sman screaming at employeeWhile the Net Neutrality rules came into effect late last week for folks in the US, Aussie ISP Exetel cut off services to a number of its own customers.  This is not the first time Exetel has dumped data hogs.  Exetel sent notice to around 500 customers informing them that they had 30 days to churn to another ISP before being forcibly disconnected from their service.

While much noise has been made about Exetel’s move to terminate these unprofitable accounts, Exetel claims it isn’t fair for all its other users to effectively be subsidizing these people.  Every business has a perfect customer.  The customer that is going to generate the most profit possible. As real customer behavior diverges from that of the ‘perfect customer’, marginal revenues become eroded and your ‘heavy users’ can make you a loss instead of a profit.

Every now and again I have this absurd notion that I should join a gym and get into shape.  I assume I not the only one who make these new years’ resolutions.  Anyway, I figure I am the perfect customer for a gym.  I’ve always thought that the Internet Service Model is similar to the sport fitness center.  There is a fixed amount of capital equipment (treadmills, bikes, weights, etc) that need to be shared.  There are always suckers (myself included) who sign up to the gym as a new year’s resolution and then end up going three times in a year.  We pay the money and we don’t use the capital.  We effectively cost the gym nothing, so the money we pay up front is pure profit.

My grandmother was the perfect ISP customer.  For many years she sent a handful of emails and looked at the same three websites each day.   She was on an ‘average’ plan that had been recommended to her.  In short she was all profit – the model customer any ISP would be happy to have.  That was until she discovered the joys of Bittorrent.  Now she may well make Exetel’s hog list.

Putting Granny aside, I have no problem with ISPs who do this kind of thing as long as the whole process is transparent.  Customers should know what they are buying and should have clear expectations about the service.  That means, the details shouldn’t be hidden in fine print on the bottom of page 53.  This is just good business.  The customers you don’t kick off will be much more loyal for it.

More Here… [C|net]

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About the Author

About the Author: Jonathon has been lurking around the Telecoms and Internet space for the last 20 years. He is now a man on a mission – that being the reformation of the Industry Analyst business. He is working with his co-conspirators on transforming the Industry Analyst world forever as an Expert with EMI. .

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