Monopoly Thinking

The phone companies really don’t get it. Even when they are bragging on how competitive they are they still think like the monopolists they are at heart. Take Verizon. Verizon is the one telephone company that has the sense to build a fiber to the home network–they want to compete for video service with the cable companies and are doing what is obviously necessary. That shows they have some sense–about video capacity. But no less than Verizon’s director of internet and technology policy says:

“The speed we offer is based on competition from the cable sector,” says McKeehan. “If they offer 6Mbps, we go a bit better. We don’t see the need to ramp up the speeds just yet.”

There’s an internet and technology policy for you! Good grief, if you’ve got capacity that the other guy doesn’t have and could offer product people want you just go after it. Offer real speed–you know, like they get in Korea or Amsterdam. Build a little customer enthusiasm. What you don’t do is let the other guy stay within striking distance.

Here’s what Verizon would do if it had a lick of sense: offer really big bandwidth for just a cut above the carriage costs. Make everyone think you actually are on their side. Offer them real value where it costs you little. Get a reputation for advanced technology and earn customer loyalty. Encourage you customers to think that you wear a halo. Then sell your video product against the cablecos for just a tad less than they do while that nice healthy halo is hovering overhead. Eat their video lunch and make yourself absolutely dominant on the IP side–and IP-based services are the future.

But Verizon doesn’t get it. And you can bet that if fibered-up Verizon doesn’t know how to use its advantage then AT&T/BellSouth, which hasn’t even bothered to develop any advantage, certainly isn’t capable of beginning to get it.

Nationally stuff like this makes it obvious that the incumbent providers — and especially the phone companies — should be written off. That sad fact leaves most of the country looking at a pretty bleak picture in regards to getting real broadband.

In Lafayette we have reason to hope that LUS won’t use its fiber network so ineptly. Incrementalism prolongs the battle in dangerous ways. Offering real, fast broadband service at rock bottom prices is the way to develop customer loyalty and a reputation that will spill over into more conventional (and more profitable) video services.