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July 18, 2006

Signs of Telecom Competition

Three good stories tipped by Om Malik today showing that there is SOME competition in the US telecom marketplace.  Verizon is offering 50 megabits down and five megabits up to consumers for $89.95/month.  Cablevision has become the second cableco to claim a million VoIP subscribers (Time Warner was first). And Verizon, Cingular, and Sprint collectively spent over $4 billion is advertising in 2005 – mostly for wireless according to Om, where we do know that there is competition.

It would be a quibble to point out that, even at this blazing speed, Verizon is offering less bandwidth for more money than Internet subscribers pay in Hong Kong or several other places.  This is fast for the US today.  Om attributes this offer to competition from Cablevision.  It is only available to customers in parts of New York, New Jersey, and Connecticut where Verizon has rolled out their fiber-based FiOS service,

As part of the same announcement, Verizon said that customers would be getting some speed increases at NO increase in price – just as Cablevision did before them.  But Verizon is taking advantage of its new network to offer speeds at the high end which Cablevision will find it hard to match..

By sad contrast, a T1 connection (1.5 megabits up and down), costs over $300/month in most parts of the country including Vermont.  Incidentally, Verizon doesn’t seem to want to give up the $300/month of revenue from its BUSINESS customers.  Although residential customers can get 50 meg down and 5 meg up for $89.95, the cheapest 50 meg plan for business customers is $349.95 with10 meg up (no 50/5 plan for them).  The various pricing plans are so intentionally complex that even the experienced Om made an unusual mistake and quoted 50/10 at $90.

More bandwidth for the same money.  Even more bandwidth for more money.  Complex pricing designed to slow revenue loss from falling tariffs – these are all welcome signs of competition. It’s unfortunate that this is limited to the richest markets but it has to start somewhere.

Here’s Cablevision’s VoIP offer in their words:

“Optimum Voice provides unlimited local and long distance calling to the U.S., Canada and Puerto Rico as well as a full array of advanced features for a flat monthly fee of $34.95. Optimum Voice features include enhanced voicemail, call waiting, caller ID, caller ID blocking (*67), call return (*69), three-way calling and call forwarding, in addition to directory assistance (411), VIP ringing, find me, caller ID on call waiting, busy redial, anonymous calling and anonymous call blocking - all at no additional cost. The service's "My Optimum Voice" web portal allows customers to easily activate account features, listen to voicemail messages through any Web browser, review and sort calling history and manage other settings.”

Here in Vermont where its doesn’t face significant voice competition (yet), Verizon made me this offer.  Give me a minute to dig it out of the garbage and retype it.

“The Verizon Regional Package Unlimited plan lets you save on just about all your calls – whether they’re across the street or across the region. Here’s all you get (sic):

  • Unlimited local and regional calling
  • Your choice of three of our most popular calling services, like Caller ID and Call Waiting

And you’ll get it all for only $40 a month plus standard taxes and surcharges.”

Took some digging on their web site to find out but turns out that my “region” is the State of Vermont.  So Cablevision would give me an unlimited calling  “region” which consists of the US, Canada, and Puerto Rico plus voicemail plus all the other features I want for $35/month; Verizon will give me Vermont and a couple of features not including voicemail and no web interface for $40/month (Verizon charges $56.99 for all US and Puerto Rico but not Canada or voicemail). Not surprising that a million people chose Cablevision.  But Cablevision ain’t here so I can’t choose it.

I do use Vonage, though.  Despite their failed IPO and customer-service that they seemed to have learned from an RBOC, they only charge $24.95/month plus taxes etc for the rough equivalent of the Cablevision package and throw the UK and a few other countries into the unlimited-calling region.  Even the fact that Verizon is offering ANY flat rate plans is a recognition of competition.

Do these signs of competition mean we don’t need Net Neutrality legislation or regulation?  Hmm…  Real competition would certainly mean that – look what happens where it exists.  It’s just that so far too much of the country has too little competition and we suffer from that.  I still think that Congress, the FCC, and the Judiciary should concentrate on preserving and enhancing competition rather than directly trying to control what types of service can be offered.

Posted here on how to use price to topple an incumbent. Verizon is NOT falling into the incumbent trap with its FiOS offering.  It is with voice.  Lot of history with voice.

More on Net Neutrality here and here..

And come potential good news from the judicial branch here.

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