More on Brand X

Rich Tehrani : Communications and Technology Blog -
Rich Tehrani
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More on Brand X

I expected to come in today and blog about how yesterday’s Brand X decision is so terrible for consumers. I am trying to be open minded but the I don’t like the argument. Cable companies and ILECS have built companies based on monopolies that were sanctioned. Using this revenue they are now investing in newer networks. The argument goes – at least for the LECs that they won’t invest in new networks if they have to share them with others. You know what? I don’t blame them. I wouldn’t volunteer to share my customers with my competition.

The problem is that the LECs have built their business based on a monopoly position. The brands they own are all due to a monopoly positions they enjoyed for decades.

So these companies are upgrading their networks and as they tell the government, if you want us to share, we won’t invest.

They have a point.

At the same time, they owe us. They owe the government, they owe consumers, they owe the community… They owe everyone. Having no competition for so long means they were able to gain many advantages in the market. Now they are using these advantages to influence politicians, run TV ads and do other things to protect their monopolies.

Again, I don’t blame them. I might do the same in their position.

Still, the government has an obligation and of course has tried to increase telecom competition. The telecom act didn’t work as planned so they have decided that having just the cable and phone companies competing is adequate with the hope that power line and WiMAX (or some variant of broadband wireless) will add extra competition.

Effectively that leaves us with a grand total of two choices today. This is not enough for real competition. This leaves no room for new upstarts who want to gain share by lowering prices or those companies that want to differentiate based on service.

As I write this, TMCnet is receiving a staggering amount of traffic to its website. We have ordered a much faster connection but have to wait for many weeks before we get it. Perhaps the story is different in Manhattan but here in Norwalk, CT, you can wait months for phone companies to move. The point I am making is that service providers in general are a laughing stock when it comes to customer service. When Seinfeld dedicates an entire issue to the ridiculous appointment scheduling cable companies make, you know there is a major problem.

Getting back to the point. Two competitors does not a competitive market make. Allowing two industries with monopoly positions and terrible service levels to continue their monopolies makes little sense.

At one of recent Internet Telephony Conferences, someone from Lucent told me that he had heard a discussion recently at another industry show that made a great deal of sense. All lines should be the property of the consumer – for the last few feet anyway. Any service provider should be able to access the consumer from some distance from the house.

I agree that the consumer should be in control of their lines and thus be able to choose from various providers if they like.

Perhaps I am an idealist but having less competition doesn’t ever seem like a great way to build competition. Politicians are waxing poetic about how now the market is deregulated, there will be more competition. I just don’t get it. I is like an episode of Twilight Zone to me. The Supreme Courts says that cable companies don’t have to share their lines with competitors – effectively putting them out of business and politicians put out releases telling us that this is a great day for telecom competition. I am not sure what to make of it.

Is the issue cut and dry? No – it never is. In fact to make this whole debate more interesting, Cablevision Is slowly rolling out 100 Mbps service in and around the New York area. I am a Cablevision customer and shareholder so this prospect is extremely exciting to me. Furthermore, this is the Internet speed that some Asian countries provide routinely. I have been arguing for a while that we need service providers to give us the same speeds as other countries. Now, at least Cablevision is.

So I am torn by this decision. Half of me thinks it is terrible but the other half sees a potentially bright future if we start to see routine implementations of 100 Mbps connections to the home and office.

There is no more exciting time to be in this market as WiMAX and broadband over power line providers come on line. But I have to worry about VoIP. Somehow entrenched providers have found ways to stifle competition and use the political system to their advantage. How long will it take them to come up with a way to do the same to VoIP providers? What about video providers (it is a matter of time before a slew of competitive IP TV providers emerge). Stay tuned.

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