Best of the ISP-Lists

A Good Deal on Bandwidth?

Members of the ISP-Bandwidth list discuss long-term versus short-term bandwidth contracts.

On the ISP-Bandwidth list in November, WR queried,

"I met someone last week who claimed they could sell me a T1, DS3, OC3, OC12, etc. on a month-to-month contract and still give me the same discounts as a three-year contract. Has anyone else run into this?"

A couple of respondents suggested that the offer certainly seems possible:

[JM recalled] "I actually have heard of these guys. From what I've heard, they are an international provider taking steps to establish themselves domestically."

[ST observed] "Often, companies will allow month-to-month as long as a retainer is collected, maybe two months' worth."

JD countered that the setup just doesn't make good financial sense:

"I am in the middle of negotiations with a current customer that needs a DS3 for six months maximum and wants to do a month-to-month contract. But we contract the local loop with two-year pricing from the telco, so doing a month-to-month or a six-month contract diminishes the margins to the point where it is not profitable to discount off list price. The options I gave to the customer were to do a month-to-month at full list, or a six month contract with a 5% discount; he chose the month-to-month." A number of other respondents agreed that the arrangement isn't viable:

[MLF noted] "I have heard of ISPs allowing a contract to continue on a monthly basis at the end of a contract period until a new contract can be signed, but have never seen one that offers this for new customers. Might just be an overeager sales guy."

[RD agreed] "I would read the fine print on that one. Or call another rep from the same company, ask for pricing on a three-year term, and see if the numbers jive."

[KT advised] "If it seems to good to be true, it probably is. If people are either deeply discounting circuits, or offering terms like you said, something is probably missing."

—End