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Question for Sam/Circlenet and Nitzan/Future9 and other Startup ITSP Directors

Started by mo832, May 16, 2014, 12:04:17 PM

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This is a little off topic, but...

Since I was noticing there are several new startups trying to get a piece of the voip market, making a small markup on per-minute rates, and since you guys and several others seem to be trying to give a good deal and be upfront with pricing without gimmicks:

Would any of you consider looking at the retail electricity provider (REP) business in Texas?

This seems like exactly what you do, except you're selling kwh's instead of minutes. Most of the REPs around here are playing the same pricing games as the cell phone companies, with high minimums, gotcha charges, and nickle-and-dime fees. If a straight-up fair company offered service, they would clean up...

I know this bc there were several small companies who did just that several years ago, and they all got bought out by the big boys, Constellation, FPL, Reliant Energy, NRG, TXU, etc.

I have heard it is not that big a deal to set up a REP.

You can go to for some more info.

I would LOVE to see a scrappy upstart offer fair pricing again, and make money while saving customers money and get the big boys to act right again.

Your thoughts?  ::) ::) ::) :)


I used to live in Texas for 5 years, but that was a long time ago. I think the logistics of it wouldn't work unless I'm there so that's probably a deal breaker.

I have a question for you: why aren't YOU starting this business? :) Seriously- if you think there is an opportunity there go for it!
Nitzan Kon, CEO
Future Nine Corporation


Nitzan, thanks for your response :)

Yeah, I figured that question would come up. The answer is it just seems like a stretch for me since I've never done anything even remotely similar. But I figure you guys are *already* offering customer metered services and it is a simple translation to offer other related things. I have definitely kicked around the idea though...

Regarding your location, I hardly think that matters. All physical services are handled by the utility at wholesale. These REP companies are just "billing" companies essentially. They get one wholesale bill from the pole utility and divide it up to the customers and generate an individual invoice. Some companies even do everything by phone/web/email only. Some are prepaid only, like a phone card or a drug store cell phone. Many of the "local" companies actually are located in another state. You know, electricity travels pretty fast :D.


I know voip and networking very well and I'm really comfortable in that technical enviroment and CircleNet actually started as a way for me and my friends oversees to talk without paying $$$.It's grown faster than I had imagined  :o and at present time mine and I think my wife's hands are both so full it wouldn't be fair to anyone for me to try to learn something new.

That said I can't up vote nitzan's comment about why aren't you starting it enough :-). If you see an opportunity learn as much as humanly possible about it and everything that connects to it, I mean read until your eyes bleed! Talk to as many people that are involved in that topic, area, business make a plan and go for it.

(Edited for grammar)


Also CircleNet does a little more than just bill and even more so in F9's case. We buy lots of pieces (Termination at a good rate in State X for network Y, A good DID provider in the midwest etc) and roll these into a neat turnkey A-Z product for you. We don't just buy and resell from one vendor :-).

We used to run an ISP many years ago and when we started doing wholesale resell of VZ dsl I lost interest because all we were doing was billing. It was profitable and don't get me wrong I like money but I also like to add value to the service and I love the technical back end.


Well, thanks to both of you.

Sam, your point is well taken. But just as a note, there is a bit more than just billing and reselling- it involves website front-end services, value-added services, forward price contracts, etc.

So I will keep it in mind on my end, but I would also encourage y'all to consider suggesting it to anyone you can think of that might be suited for something like this and is looking for new opportunities.

The same goes for anyone else who happens to read this, for yourself and/or your associates.


Reading up about it - it does look pretty straight forward. A lot of regulation you need to adhere to, but nothing too difficult. The only real questions are:
1. Where/how to get customers (marketing is going to be the main cost).
2. What are wholesale rates - is there a significant enough margin to make this profitable even after marketing costs are included?

I know you said a straight-up honest company would clean up, but in my experience (at least in the phone business) this isn't really the case - it's the companies with a big marketing budget that get the majority of customers. Sad but true.
Nitzan Kon, CEO
Future Nine Corporation