

Ask HN:  What Would It Take To Startup A Telecom Company? - physcab

The obvious answer is money.  But I'm interested in the not-so-obvious.  Thoughts?
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ismarc
I've been considering an ISP co-op recently, and if the economy finally hits
me, I will probably give it a start. There's a lot of core pieces that are
going to cost the absolute most. Telecommunications is heavily regulated and
there is lots of patents/IP to make sure not to step on. So first, you need a
crack lawyer on hand so the first part gets out the gate properly. Second, you
need infrastructure.

This comes in three forms.

1\. Wires in the ground, you can bury them yourself at really high cost (this
is where current providers have the edge, they were given subsidies in
exchange for time-limited monopolies in areas), you can lease them from
current LECs/providers (I'm not sure what sort of local fiber infrastructure
is leasable, but I know copper's easy to lease at reasonable costs for last
mile).

2\. Backbone. You have to provide a connection to the network you're providing
access to (telephony/internet). With that, you either need connection to the
LATA or peering agreements for internet based traffic. Not cheap.

3\. Infrastructure. To provide reasonable service, you'll need the initial
capacity for 3-4 times your customer base. Eventually, you'll be able to get
to a point where you're over-subscribed but usage patterns keeps quality good
for the consumers.

From my research so far, only $150 million is needed to open doors for
business, with $20 million in operating costs per year. You then have ~$4 per
customer per month cost with 5% population penetration. The cost per consumer
drops pretty rapidly as you gain traction because you make better use of the
cables.

The real problem is marketing. Costs are going to be outlandish. And why would
a business or consumer choose a new company with a low number of customers?
There's a couple of approaches, such as excellent customer service, a carpet
bomb/napalm style marketing campaign where everyone and there brother knows
you provide the service, and cheaper than the competitors. Then you have the
issue of other companies have multiple services they provide, meaning you have
to get past the bundle service issue.

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dkersten
Telecom Company is too vague a term. For example, I work for a company which
sells value added SMS services to mobile operators (eg, our anti spam/fraud
product is popular right now). This is a telecom company, as are our
customers. What you didn't specify is do you want to start a
carrier/operator/ISP or a service company or a hardware manufacturer or...

What it takes really depends on what it is you want to do. In general, though,
I think it takes skill/expertise most of all (not that you need it to begin
with, but you will need to learn and its tough to pick up because theres so
many densely packed RFCs, standards and regulations. For what I do, I'd say I
sifted through 10K pages of GSM specs and RFCs..), money is no more important
than any other startup, though obviously if you do something that requires
resources (hardware?) then you need to be able to pay for this. Selling to
operators also seems to be the same as selling expensive enterprise software:
looong lead times, development and work to be done before the deal is closed,
money after everythings installed and working etc (so you need to have enough
funds on hand to be able to get this far). Finally, its tough to break into
the telco industry because most companies dont like to take risks and a
startup with an unproven product poses risk over the old big well established
company.

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SwellJoe
A time machine. The time to start a telecom company for data was 20 years ago.
The telecom industry is the most insular, regulated, and has the highest
barriers to entry of any tech industry I can think of. The established players
are masters at playing the regulatory game in Washington, and have made it
nearly impossible to play on a level field with them.

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mindviews
A reason. What's the need that isn't being met?

I think the existing industry has a lot of the basics covered - wired and
wireless communication in many locations. Improvements in coverage and
performance seem mostly incremental and not disruptive enough to make for a
successful startup. Maybe the bulk of telecom opportunities are building on
top of that infrastructure - but isn't that exactly what the internet boom has
been?

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ismarc
There is a reason. I'd like a reasonably priced 10Mbit synchronous internet
connection at my residence. Heck, 5Mbit synchronous would work fine as well.
You can't get it for under $700 a month. I couldn't even find a deal that had
cheap monthly rate but metered access (ie, pay by the gigabyte, etc.).

~~~
dkersten
Unfortunately I doubt you'd have enough customers to make up for the costs. I
mean, I'm sure there are areas where you'll do exceptionally well, but it
won't work everywhere.

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babyshake
A Telecom startup is a contradiction. A Telecom company, is large practically
by definition.

If you wanted to somehow disrupt their business model with VoIP or something,
that's one thing, but I don't know if it's productive to think about directly
competing with huge multinationals without using a fundamentally improved or
more efficient approach.

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dstik
One way to try to enter the market could be leasing lines as an MVNO, however
history has shown that this approach is extremely difficult (read: amp'd
mobile, disney mobile usa, espn mobile).

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pclark
Skype?

