IP Services Are Too Expensive, Say Users

Most corporations think international IP services represent poor value for money, according to a survey conducted by Telemark Consulting Ltd., a U.K. market research company (see Carriers Benchmarked in Report).

Telemark interviewed 202 corporate IP users around the world for its survey. Among other things, it asked them to rank the relative importance of 32 aspects of carrier performance and then rate the following international providers against those yardsticks:

Network reliability came out as the most important issue, followed by fault reporting and installing services without disrupting users. On fault reporting, Equant got a "good" rating, and WorldCom got "excellent," while the other operators all got the lowest rating of "poor."

On value for money, the ninth most important issue, none of the carriers fared very well. Cable & Wireless, Equant, and WorldCom managed to get "acceptable" ratings while the three other operators -- AT&T, BT Ignite, and Infonet -- all got "poor" ratings (see below).

Table 1: International Carrier Survey: Top 10 Issues
AT&T GNS BT Ignite Cable & Wireless Equant Infonet WorldCom
Network Reliability Good Good Good Outstanding Good Excellent
Fault Reporting Process Poor Poor Poor Good Poor Excellent
Installation Not Disruptive Excellent Acceptable Good Excellent Acceptable Excellent
Secure Data Transfer Good Acceptable Good Outstanding Excellent Outstanding
Network Availability Good Acceptable Good Excellent Good Good
Notification of Network Problems Poor Poor Acceptable Acceptable Poor Outstanding
Accurate Bills Acceptable Poor Acceptable Excellent Acceptable Excellent
Adequate Data Throughput Acceptable Acceptable Good Excellent Good Acceptable
Value for Money Poor Poor Acceptable Acceptable Poor Acceptable
No Hidden Extras in Bills Good Good Acceptable Excellent Excellent Outstanding

Equant and WorldCom got the best overall results. Out of the 32 service attributes rated by users, both operators got six "outstanding" ratings. Equant's were for network reliability, secure data transfer, reaching difficult locations, international performance, bills in currency of choice and support in local language. Worldcom's were for secure data transfer, notification of network problems, no hidden extras in bills, understanding customers' requirements, single point of contact and third party equipment integration.

Conversely, BT Ignite did the worst, getting four "poor" ratings - for its fault reporting process, notification of network problems, billing accuracy and value for money. AT&T and Infonet got three "poor" ratings apiece. In both cases they were for their fault reporting processes, notification of network problems and value for money.

For more details, check out Telemark's Executive Summary.

— Peter Heywood, Founding Editor, Light Reading
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BTDT 12/4/2012 | 10:37:06 PM
re: IP Services Are Too Expensive, Say Users As headlines go, this couldn't have been a better example of what ails the telecom sector. IP services are only recently marginally profitable for longhaul, and for most of their existance have been subsidized by voice and private line. I can't wait to hear the bellyaching when the prices are raised to actually support the cost (and mayby a little profit margin) of providing the service.
greybeard 12/4/2012 | 10:37:02 PM
re: IP Services Are Too Expensive, Say Users I agree with BTDT. If IP services were overpriced, then service providers would be making money. There are more than 10 backbone IP carriers in business in the US. This sort of competition is incompatible with excessive prices.

IP services have become critical. These services aren't going to go away. Sooner or later either the service providers are going to find a way to offer solid reliable IP services with lower operations costs, or (more likely) prices will have to rise to balance the cost of providing the services.
obkenobi 12/4/2012 | 10:37:01 PM
re: IP Services Are Too Expensive, Say Users Delivering IP services is not cheap. Far more profit lies in L2 transport (be that Ethernet mpls, atm, or frame), leaving the IP world to the end user. Our RBOC customers have said this repeatedly to my company.

Remember, you are competing with nearly free functionality (shareware and Windows XP) in the enterprise and security issues. How do you transfer liability to a carrier if your network is penetrated?

You also no longer have a dearth of IT talent. I imagine with all the blood oozing out of every tech doorway that IT people are cheaper and plentiful these days. Even some good ones.

As a mangled services customer in a previous life, I can tell you that the effort wasn't worth the expense.

Missing from the article was any mention of how many calls and orders are placed for these nobs to get a change order done as expected.
bitdropper 12/4/2012 | 10:36:59 PM
re: IP Services Are Too Expensive, Say Users There's a difference between something being profitable and being expensive. The customers are indicating, if you believe that the headline correctly interprets the report content, that they "perceive" they're paying for more than they're getting. This *may* mean, they would rather spend their money on a higher QoS service such as ATM (and please don't start yet another debate on the ATM vs. MPLS virtues). It doesn't necessarily mean that the customers believe the margins are too high and the carriers aren't putting enough money into the network.
Peter Heywood 12/4/2012 | 10:36:58 PM
re: IP Services Are Too Expensive, Say Users I'd be interested to hear from anybody on whether their experience of Worldcom's billing matches the results of this survey - ie that its billing accuracy is "excellent" and its performance on "no hidden extras in bills" is outstanding.

Please contact me on [email protected] and mark the subject header "Worldcom billing"


Peter Heywood 12/4/2012 | 10:36:57 PM
re: IP Services Are Too Expensive, Say Users Look at the issue from a user perspective - me:

I'm faced with the following choices for getting access to the Internet (which of course is vital for my job):

1. Leased line connection. This is actually what I use, just because I can't afford to have it go wrong. But my piddly little 64 kbit/s connection from Worldcom (supplied over a conventional phone line to my house) costs me a whopping $600 a month.

2. If I lived in a town (which I don't), I could probably get a DSL connection that gave me, what, 8 times the downstream bandwidth for maybe 20 times less money a month. I've heard that it takes operators a long time, like up to a week, to restore DSL lines that go down. But I could buy 2 DSL lines and still pay one tenth of my current rate for eight times the bandwidth.

3. Some satellite services are coming on line that deliver DSL like bandwidths for less than half the cost of my leased line. Big question is whether they'll be reliable enough.

4. Dialup - analog or ISDN. I originally shifted to a leased line because my dialup charges were enormous (I was on line for more than 12 hours a day and local calls cost a LOT in the UK). However, a lot of ISPs now offer deals that eliminate dialup charges. Then again, these services are really targeted at folk that don't rely on the Internet for their job.

Bottom line: right now I'm sticking with the leased line connection (from Worldcom) but do I think it's good value for money? Of course not. I think it's a total rip of - although the real culprit isn't Worldcom but BT, which charges an obscene amount of money for providing a local loop.

JustWantToSaySomething 12/4/2012 | 10:36:57 PM
re: IP Services Are Too Expensive, Say Users Hi,

paying 600 bucks a month just to have an Internet connection is quite a bit ...

DSL is the answer to your problem. It is not that bad, I have it more than one year now, and it was down only once for a couple of hours. By the way, if you want to have your IP connection available even if your DSL should be down, you could use dial-up as backup...

This advice costs you $50 ;-)

Br, Thomas.
Peter Heywood 12/4/2012 | 10:36:54 PM
re: IP Services Are Too Expensive, Say Users The point I was making is that there's a HUGE difference in price between IP services targeting corporates (via leased lines) and IP services targeting consumers (via DSL) and it's tough not to conclude that the former is poor value for money.

BTW, I can't DSL where I live.
chande 12/4/2012 | 10:36:50 PM
re: IP Services Are Too Expensive, Say Users This may be a little (but only a little) off-topic, but I'm just curious: have there ever been any proposals, dicussions (in the media or other circles) or for that matter, offerings (I take not) of flat-rate billing for local telephone calls in the UK? And do other European telcos also charge customers on a pay-per-use basis? I guess I'm wondering if deregulation/privatization "over there" has put any pressure on the pay-for-connect-time model.

I live in Canada, and about 11 yrs ago I was host to several visitors from the UK who, when they asked me if they could use my telephone to make a local call were shocked to discover that it wouldn't add to my phone bill!

Of course, since then my regional (provincial) phone company has been privatized and my monthly flat rate has increased now that they have to pay taxes and dividends, but still I have unlimited use. The company has also over time found other ways to make extra money, such as charging everyone a small monthly fee for 911 "network services" (whether you use them or not), but still the monthly flat rate for basic service remains. I thought back when I first learned of this from my UK guests, that connect time charges would soon be washing up on North America's shores, but so far it hasn't.

Even my analog (dial-up) ISP only charges me $10 (Cdn) per month for unlimited use. All in all, I'm paying on average around $45/mo. for telephone and Internet access. Long distance has become much cheaper as well (about 10 cents/minute), but I hardly use it anymore thanks to email and text and voice chat.

Am I living in paradise?
bitdropper 12/4/2012 | 10:36:48 PM
re: IP Services Are Too Expensive, Say Users "Am I living in paradise?"


Depends on what part of Canada you live in. :)
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