Muni nets can work to incumbents’ advantage, Yankee advises

The well-regarded Yankee group advises the incumbents to see a low-risk opportunity in municipal nets. It makes sense from a rational, competitive point of view: let the munis take the risk of high-cost fiber or untried wireless technology. So it makes sense to tell the telco’s:
“If I were a telco, I’d be encouraging fiber build-outs,’ Davis said today in a phone interview. ‘I’d want to kill wireless or WiMAX, but I’d encourage fiber.’

And it makes sense to tell the cablecos:

For their part, the cable companies should be eyeing municipally built wireless broadband networks, using mesh technology or WiMAX when it is available, as an opportunity to address the small to mid-sized business market that they don’t currently serve in a cost-effective way.

Trouble is, as I said, it makes rational, competitive sense.

What the Yankee Group and some municipal builders themselves appear not to realize is that the phone and cable companies aren’t thinking in terms of competition–and that is not a failing of these corporations: it is a base fact of their existence. Their business model is fundamentally that of a monopoly. They are thinking in terms of sustaining that, very profitable, business model. They are thinking of squelching competition; not of taking advantage of opportunities to be competitive, not even on someone else’s dime.

I have to imagine that they both know quite well that their respective monopolies in cable TV and landline telephony are dangerously unstable. Being the sole provider of last mile access to homes in each of their monopoly markets is the key to their current profitability. They fear real competition and the coming commoditization of big bandwidth which will destroy the profitability of their current product by allowing people to bypass their phone and video offerings.

Fiber and wireless municipal builds only hasten that day. They won’t cooperate, don’t know how to cooperate, can’t really see that cooperation could do them any good. And they are right. Helping sustain any municipal network only insures that they will NOT be the monopoly provider of last mile services…and that is what is unthinkable.

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