The Internet’s Vendor-Oriented Aspects of Differentiation

What has the biggest impact on someone’s use of the internet? Is it the connections in a building, how often someone transfers files or uses video? Probably not. For most people, the most significant impact on their internet usage comes from their ISP’s behavior.

Vendors have a major impact on day-to-day users, but they’re not as much of a commoditized experience as one might expect. Here’s what people should know about how the internet’s vendor-oriented traits affect the modern internet commodity expectations.

What is a Commodity?

A commodity is an interchangeable good, typically one in which users will notice no particular difference if they substitute something of the same type. Common types of commodities include metal, energy, and meat.

The opposite type of product is known as a differentiated product. These are things where there’s a discernible difference between the products, and customers are likely to notice. Cars are differentiated products. While cars of a particular make are similar, different models from the same manufacturer are obviously different products.

The Internet's Vendor-Oriented Aspects of Differentiation: Commodities trading

The Internet Issue

The internet’s issue is that it has aspects of both commodities and differentiation depending on who someone is using as an Internet Service Provider (ISP). This means it’s hard to say it falls into either category, although many people consider it closer to a commodity. Let’s look at how internet access is similar across vendors, then how it can be different.

Similarities Across Vendors

Here are the points of similarity in internet access.

Bandwidth

Bandwidth is essentially how much traffic someone can send to and from the internet. Thus, bandwidth is related to speed, but not quite the same thing. For example, it’s possible to have high bandwidth (supporting many devices) but low speed (slower connections).

Bandwidth of any particular level is essentially identical no matter what carrier someone is using. This is the primary metric most people focus on when using the internet, so in many ways, it’s decisive.

Service Level Agreements

Service Level Agreements are legal documents that come up as part of a customer’s contract with an ISP. Essentially, they say that service providers do not guarantee 100% uptime, so customers have no basis to complain if something goes down briefly.

However, they do usually guarantee uptimes of 99.9% or better. On the annual scale, this means an ISP is allowed approximately 8.77 hours of downtime per year, which they mostly spend on upgrading and switching systems.

Most people won’t notice a difference in performance based on SLAs. Actual downtimes tend to be short, sometimes on the order of a few seconds as backup systems kick in. Companies may advertise even better SLAs, but realistically, this doesn’t matter.

Differences Across Vendors

These are the main differences people might see when they look at internet commodity expectations.

Infrastructure Access

Infrastructure determines the highest speeds attainable on a particular network. The internet might be on a fast network overall, but if it has to cross a slower copper cable to reach someone’s house, they can’t take advantage of the network’s potential.

Infrastructure is one of the primary advantages one vendor may have over another in a particular area. Vendors may also have upgrade options available. This can mean that changing to a better network is essentially like flipping a switch. If the infrastructure isn’t in place, improving a connection can require significantly more work.

Network Distribution

This matters mainly for businesses. Network distribution covers how much area a particular ISP services. Most companies would rather have one ISP for their entire corporation, which simplifies billing and price negotiations.

Redundancy

Redundancy covers how well a network can avoid problems and reroute work. If all of the network’s traffic goes over a single cable, any damage to the area could shut off large sections of the network.

The best networks have resiliency and multiple routes that data can take to reach a destination. This means that if one cable gets cut physically, the rest of the network will keep working.

Support Infrastructure

A vendor’s support infrastructure determines how fast it can respond to problems. Ideally, the vendor has 24/7/365 support and can respond immediately to issues whenever they occur. Otherwise, a user could be stuck waiting days or even weeks for repairs, and that can cause tons of trouble.

Conclusion

While the internet itself is functionally a commodity, vendors have enough differentiation that choosing between them feels more like picking the right software than grabbing whatever is cheapest. Internet commodity expectations push people to demand similar service levels, but how quickly those roll out depends on the area.

Regular homeowners may not notice much of a difference, but the more someone relies on the internet, the more important these differences become. Users should research and look at each ISP carefully before selecting a vendor to use.

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