Building a Telco For 15 Cents Per Hour

Fixed costs are the enemy of any business. Money that must be invested up front to pay for land, buildings, furniture, machine tools, and computers all constitute fixed costs. Regardless of the amount of income that’s coming in, interest must be paid on the capital expended on fixed costs.

In a post titled “Amazon S3… Building a Telco for only $0.15 per hour“, Nuclei Networks CEO Thomas Anglero describes how variable cost, on-demand infrastructure is a game changer for telco (fixed and mobile phone) operators.

Thomas certainly sees that something is afoot at Amazon:

“While focusing on my IP communications start-up, (Nuclei Networks) I have learned a great deal and one company that keeps appearing on my radar again and again when contemplated opportunities for new business models and improvements in infrastructure performance, Amazon.com!”

Thomas describes how Amazon S3 and Amazon EC2 can be used as the heart of a next-generation telephone company in a post peppered with real-world illustrations of how this can be done. For example, computing and issuing bills is a monthly exercise. Why keep a bunch of expensive hardware up and running all month if you only do this once per month for a couple of days? Use some EC2 time when you need it, and eliminate those fixed costs.

This might be my favorite part of his post:

“Amazon’s S3 and EC2 web services are the foundation building blocks that can potentially shift the IT prowess of nations. We all joked about start-ups that came from people’s garages. Well in some countries they are too poor to even have a garage (or know what it is), but for $0.15 per GB-month they now can provide services to the entire world without any infrastructure, only some code.”

Hard to argue with that.

— Jeff;