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8/6/2012
01:41 PM
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Cable And Telephone Companies Distort Reality

Telecom incumbents should consider innovating instead of abusing customers and playing fast with the rules.

The incumbent telecom providers are acting like a bunch of irrational adolescents who won't let go after it's clear that the game is over and the stadium has cleared out. Their convoluted, customer-hostile, and reality-distorting arguments are starting to get old. I'm tired of seeing them spend money on lobbyists and spin instead of innovative business services.

For example, AT&T, Comcast, and a state lobbying group in Georgia are requesting that the state's public service commission require rural telcos to raise their rates. Apparently, little Chickamauga Telephone Co. doesn't charge enough. Next thing you know, they'll be begging regulators to require non-incumbents to make data speeds slower.

In another example, Comcast has announced that it's raising its usage cap for all customers in its Nashville, Tenn., test market from 250 GB to 300 GB a month. And the crowd...went...mild.

[ What do we know about Google's upcoming next-gen communications device? Read Google's Mystery Communications Device: 6 Facts. ]

Some background: In 2008 Comcast started "capping" broadband connections at 250 GB, meaning it could cut off or restrict customers' service if they exceeded the cap in a given month. Then in May of this year, Comcast suspended the cap policy in most markets, but in some it offered customers the option of paying more if they exceed the cap. Customers who use both Comcast broadband services and data services such as Xfinity, its competitor to Netflix, get a pass on the extra charges.

While today this policy discourages customers from using data services from providers not owned by Comcast, tomorrow it could discourage them from using other data services, such as enterprise-ready file storage, should Comcast decide to get into that market in competition with the likes of SugarSync.

Adding 50 GB to that test market is nothing to celebrate. My staff moves 50 GB of data every day, and if we're going to adopt more cloud services, I'd better not have to worry about hitting some arbitrary cap.

Then there's Verizon, which received a special allocation of the public's radio spectrum in exchange for promising to run an "open" network that doesn't restrict devices or apps. Verizon then went ahead and prohibited the popular tethering apps that let laptops and other computers share the phone's data connection. I can just hear the boardroom discussion at Verizon: "What's the worst thing that could happen?" What happened is that the FCC slapped Verizon with a measly $1.25 million fine and told the company to quit it.

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Back in July, Verizon had the ... interesting ... idea that the FCC was violating network owners' constitutional rights by mandating that they treat all traffic the same--in other words, not prioritize their own voice services over competing VoIP services. What Verizon and other operators want is to get customers excited about choice and availability and then create a monopoly in the guise of righteous indignation that their constitutional rights are being violated. But it's not about constitutional rights; it's about wanting lock-in. After all, if Verizon is allowed to manipulate traffic to make its services performance better than competitors' services, ka-ching!

Now contrast the incumbent approach, with Google's planned fiber optic deployment in Kansas City. Check out the site. It's got actual innovation written all over it.

Instead of playing guessing games about how much fiber to build and where, and instead of doing some sickly sweet and expensive TV ad or direct mail campaign to build adoption (ultimately jacking up rates), Google assembled a quasi-crowdsourced/social system that provides transparent information about how many people have signed up in your neighborhood. So all of a sudden, Google has legions of free salespeople at their beck and call: Those who passionately want broadband tell their neighbors and know when their efforts have succeeded. Awesome.

The traditional telcos and cable operators like to style themselves as good old-fashioned businesses fighting the good fight against government meddling. Except that telecom and cable networks, like water systems and highways, use publicly owned rights of way. Yes, Mom is giving them sugar for the lemonade stand.

If you're essentially in partnership with a group (in this case, citizens) because they have a commodity you want to use, shouldn't you be partnering instead of slapping them around? Cities are ready for such partnerships. Andrew Seybold at Forbes points out that Seattle recently made its government-funded fiber optic network available for lease by private companies. "Bring on the Private/Public Partnerships," Seybold says. I agree.

Instead of continuing their adolescent attempts to bend reality, the incumbent telecoms should start joining the innovators and the folks who actually own the assets that broadband travels upon to create something new and great. Because if they don't, someone else will.

At this year's InformationWeek 500 Conference, C-level execs will gather to discuss how they're rewriting the old IT rulebook and accelerating business execution. At the St. Regis Monarch Beach, Dana Point, Calif., Sept. 9-11.

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Andrew Hornback
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Andrew Hornback,
User Rank: Apprentice
8/9/2012 | 2:07:10 AM
re: Cable And Telephone Companies Distort Reality
That brings to mind an occasion when I was living in Upstate NY (the part that exists beyond the Bronx). The little town that I lived in was innundated by Verizon service installation trucks - they dug up the mainstreet and put fiber optic cable underground. I was quite excited that we were going to be some kind of testing location for this new FiOS thing. Come to find out that not enough people would get on the bandwagon (they wouldn't wire an apartment building until 100% of the location bought in, and with so many folks using satellite providers, it was a very tough sell) so they used another locality, across the Hudson River, as one of the very first FiOS locations.

Of course, I also remember a group of us hatching a plan to start an Internet Service Provider in Eastern Tennessee about 10-12 years ago. Somehow, QWest got wind of the idea and wanted to provide us with technology that would allow us to piggyback on the local power grid - but we would need to get all of the local approvals to make that work. No need to build a high speed distribution network, just plug a good sized pipe into the head end of the electrical grid and distribute Internet connectivity to every household in the jurisdiction. Great idea, but that technology never materialized and somewhat went the way of the Dodo (at least I've never heard of it being deployed on a large scale, maybe it has...)

Andrew Hornback
InformationWeek Contributor
Christopher Mitchell
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Christopher Mitchell,
User Rank: Apprentice
8/9/2012 | 8:15:40 PM
re: Cable And Telephone Companies Distort Reality
Let's not forget that these cable and telephone companies have also pushed laws in many states to outlaw communities from building their own networks. Some 19 states now limit local authority to build their own networks - they are listed at http://www.muninetworks.org/co...

These companies are some of the most hated in America and yet have the power to convince states to restrict and outlaw their competition. It is pretty amazing actually.
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