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.