Guest Post: Thoughts on Cost Containment

Reader with Twitter handle @RehabbedO offered her thoughtsTwitter_Social_Icon_Rounded_Square_Color on Cost Containment

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“… When the same service can be offered at lower cost or when additional services can be offered at about the same cost, there is no end to the joy the company will show you.”

I cringed when I read this paragraph from the first installment of Cost Containment series.

The way service providers, especially retail ones, define their “service” gives me a headache.

Let us take a look retail ISPs here in Thailand. Competition in both wireless & wired access is fierce. When someone offers better deals, others immediately follow.

The competition is still sustainable because they have wiggle room, oversubscription. They promise an up to Mercedes connectivity in marketing material with fine print in the contract that says they may deliver a Pinto one.

An ISP here offers 50Mbps connectivity for less than a thousand baht. That 50Mbps connectivity was for domestic traffic only. International traffic, revealed after installation, was *capped* at 5Mbps.

In an attempt to keep the regulator at bay, they whitelisted several popular “speed test” sites so that their subscribers was able to get good throughput from all international test servers.

This network management policy is invisible to average subscribers, but it is disruptive to those who actually need the internet access. By average subscribers, I mean those who think their “internet” is fine when the likes of YouTube, Facebook, and LINE load fast.

A person who came up with this policy could argue that it is still the same service (e.g. YouTube loads fast, speed test “looks normal”) while providing significant international transit savings, and still having a shot at #1 in next year’s Ookla rankings.

This was my first-hand experience and it was not unique to this particular ISP. It was one of many bad experiences with ISPs local & abroad, and some transit providers.

Many ISPs opt to cut cost in dishonest ways if they can maintain the appearance of delivering the same “service” to average customers.

The problem is exacerbated in an oligopolistic market.

My initial disagreement with Russell’s Cost Containment was based on just the first installment before any specific cost-cutting action was mentioned.

Having now read up to the April 15th installment, I can say that his strategy does not include any action that I disagree with. It, in fact, should be adopted by any organization aiming to get the most out of telecom & IT budget. Some of the recommended actions are something that I practice on a regular basis.

If there is one thing that I could add to the concept of Cost Containment, it would be that the service provider be more transparent with their policy, and try not to promise a Mercedes while actually aiming for a Pinto. — Well, two things.

Because there are “millions of ways” to do Cost Containment, the right ones not only helps the bottom line but also maintains the organization’s goodwill.

I thank Russell for an opportunity to voice my opinion toward the industry’s cost-cutting practice on Bangkok Beach Telecom. I can be reached via Twitter DM @RehabbedO.

This post is WTFPL licensed.

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