How Most Broadband Providers Have Focused On Decreasing Competition; Not Innovation

Articles like these are increasingly being written pointing out that lack of true broadband competition is stifling innovation.  Cities that have built open-access municipal networks have enjoyed lower pricing and innovative new services.  The cost of building that last-mile of fiber is unjustifiable for a public company if they are the only user.  Amortize the cost over several service providers and the payback becomes around 5 years which is well within the planning horizon of a city.  The incumbents should embrace the use of “other peoples’ money” to offer new and innovative services to increase ARPU.

from the indeed dept

Ryan Single has an excellent piece at Wired that details how incredibly misleading telcos are being in claiming that the FCC’s attempt to reclassify broadband access will lead to less “innovation.” He highlights how far behind other countries the US has fallen, and how hard the telcos seem to work at not competing and not investing in innovation. Basically, Singel points out what many of us have pointed out all along. All of this posturing by telcos is about lowering their own costs (i.e., not investing) and squeezing more money out of customers, in an attempt to please Wall Street:

The dirty secret of ISPs is that even as broadband usage on their networks continues to increase 30 to 40 percent a year, their annual costs for shipping data onto and off the net’s main pipes continues to fall.

The problem isn’t the cost of shipping data.

The problem is that the large ISPs answer to Wall Street and instead of planning and investing for abundance, they prefer to spend their time thinking of ways to extract more money from customers without having to invest significantly in future-proof infrastructure.

He does note that Verizon may be the exception, but as we recently pointed out, with CEO Ivan Seidenberg on his way out, the company has shifted gears and is pulling back heavily on investing in new infrastructure. Seidenberg has long fought Wall Street, pointing out that putting down fiber was the best long-term bet, but the short-term thinkers on Wall Street didn’t want to hear about high capital expenditure that would cost a lot initially, but not pay off until later. And, now, without Seidenberg leading the charge, Verizon is going back to not wiring up fiber.

Article Continued on Techdirt…

About Mark Milliman

Mark Milliman is a Principal Consultant at Inphotonics Research driving the adoption and assisting local governments to plan, build, operate, and lease access open-access municipal broadband networks. Additionally, he works with entrepreneurs and venture capitalists to increase the value of their intellectual capital through the creation of strategic product plans and execution of innovative marketing strategies. With more than 22 years of experience in the telecommunications industry that began at AT&T Bell Laboratories, Mark has built fiber, cable, and wireless networks around the world to deliver voice, video, and data services. His thorough knowledge of all aspects of service delivery from content creation to the design, operation, and management of the network is utilized by carriers and equipment manufacturers. Mark conceived and developed one of the industry’s first multi-service provisioning platform and is multiple patent holder. He is active in the IEEE as a senior member. Mark received his B.S. in Electrical Engineering from Iowa State University and M.S. in Electrical Engineering from Carnegie Mellon University.

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