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Internet Services Profitability



the discussion digressed from DFNN to Data Centers.

Philippine Data Centers cannot compete with US ones in terms of bandwidth. Instead, a Data Center that has peering links to the major local players can deliver local content to local sites, quickly. It can also act as a mirror for foreign sites or as a hub for a Content Distribution Network such as Akamai ( http://www.akamai.com ).

Another benefit of local Internet data centers is manageability and accessibility. Hosting is no big deal since the data center provides you with a server, but what if you want to colocate one of your own with a custom setup?

I can't comment on their profitability since I'm in the biz, so you go speculate :)


  • GilbeyGilbey PEx Rookie ⭐
    In terms of profitability... I have financial statements of some ISPs based on what they have submitted to the SEC.

    Most noteworthy is Pacific Internet or Primeworld which is the only ISP that have miraculously reported net losses to a net gain. SkyInet is still continously losing. The auditors of both companies are credible. For the other ISPs, they report either meager profits or losses based on what they have submitted, I do not know however if this is true.

    A problem I see is the focus of the managers or directors. It is a question of focus or belief. I know an ISP who believes their worth is based on their number of subscribers and not on their profitability, thus they did not mind having gross loss (cost of goods/ services are higher than their revenues).
  • I often wonder why so many "mom and pop" ISPs have hung around as long as they have. One reason people have suggested is that these ISPs are fronts for ISR operations (ISR - independent simple reseller, aka BYPASS). Several years ago, VoIP was used to route voice traffic from the US into the domestic phone system. Once upon a time this was an illegal, but lucrative activity. The typical revenue was in the range of $0.30 - $0.20 per minute of voice traffic.

    ISPs provided a perfect front for ISR operations, because: 1) they could get multiple dialup phone lines from PLDT or Globe, with credible justification; and 2) they had international IP bandwidth which could be used for VoIP. So it didn't matter to them that the internet services they provided were expensive, crappy, or both. The real money was being made elsewhere.

    Today, I think, VoIP revenue is coming in at $0.02 per minute or thereabouts, so it isn't as attractive as before. The NTC, also, intends to legalize this activity, bringing margins down even further.
  • zimdudezimdude PEx Veteran ⭐⭐
    Let's see... some people's thinking is that Internet services are now the domain of the Telcos. This is especially true with telco-exclusive services such as DSL.

    It's true that some ISP's are ISR operations, some have been caught by the NBI, etc. and some by their telco suppliers. But the vast majority of mom and pop's stil exist due to services that they can focus on - a niche - as compared to the larger Philippine ISP's.

  • GilbeyGilbey PEx Rookie ⭐
    well... nice thing is to be able to sell your isp to a bigger one.. and gain profit from there...one thing a lot of net entrepreneurs earn later on is on the sell out of the Company....

    Besides... having small isps is just an extension of the internet cafes that are blossoming out....
  • zimdudezimdude PEx Veteran ⭐⭐

    Of the P5.024-billion IT approvals the biggest investment amounting to P2.268 B was pumped in by Philweb.com Inc.

    Philweb, an Internet service provider is 94.5-percent Filipino-owned (led by former Trade and Industry Secretary Roberto Ongpin) and will engage primarily in IT-enable services including web development and hosting, hotel online program, e-Padala and Philcampus online Padala.

    Philweb Intends to provide employment for 223 people and projects a revenue of P10.9 million during the first five years of its operation.

    The second largest investment came from Ayala-port Makati Inc. amounting to P1.069 billion.

    Ayalaport is 62-percent Filipino-owned (primarily by the Ayala group) and 38-percent Japanese owned. Its primary business is being an Internet data center. Ayala-port is expected to provide employment for only 50 people but projects revenues of P3.442 billion for its first five years of operation.

    Aside from Philweb and Ayalaport, 13 other projects were approved during the review period including Meridian Telekoms Inc. and Yapster e-Learning Inc.

    I suppose PEx, Inc. will benefit from the Ayalaport? These are big stuff...

    the INQUIRER article (print only) gave figures for these - P167.4M for Meridian's wireless Internet service, P220M for Yapster (e-services and learning), P447M for SourcePilipinas e-marketplace, Aneco Communications' P316M international call center, Vinta Systems' P177M software development project ... and more (see INQUIRER page B2 March 6, 2001).

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