A week and a half ago, ILEC Windstream Communications announced that it would be acquiring business telecommunications company PAETEC, a current UTOPIA provider. As of yet, nothing has been said as to if that arrangement on the network will continue. As you may recall, AT&T had planned to join UTOPIA as the flagship provider until SBC purchased the company in 2005. That got called off because incumbent providers, both in the telco and cableco space, have a long-standing gentleman’s agreement to stay out of each other’s territories. While Verizon and AT&T fired a few shots in some Texas suburbs a few years ago, this arrangement has continued to stand for decades. The question now is if Windstream is willing to risk competition in its own backyard to keep access to UTOPIA.
I think the answer might be yes. Business telephone companies regularly both compete with and buy wholesale services from incumbent providers. Veracity, for instance, does this all the time. This would be a rare occurrence that a company is both, and I find it highly unlikely that CenturyLink would set up shop in Windstream’s backyard (mostly because they don’t have the money, but I digress). Even with what I assume are relatively few accounts on UTOPIA, Windstream may be ready to make the calculated decision to open up an ILEC-on-ILEC war right here in Utah. It may even expand to the residential market now that the merged company is no longer focused on business accounts.
The implications are huge. If Windstream pulls it off, Verizon and AT&T, both of whom are cash-rich, may decide to start picking off bits of CenturyLink’s business. Before long, incumbent territory won’t matter anymore. UTOPIA’s open access model would be ideally positioned to capitalize on the willingness to cross the anti-competitive artificial boundaries and provide quick market access.
Happy New Year! This Broadband Bytes covers from December 20 through the end of the year. The end of 2008 saw even more retransmission battles (in particular the 11th-hour showdown between Time Warner and Viacom), Qwest trying to unplug a rival that’s suing it for racketeering, and the pending launch of FTTH services in Lafayette, LA. I predict that 2009 will offer up explosive growth in broadband speeds and availability fueled by federal dollars, an increased flight of users from cable to online video streaming and continued greater-than-inflation rises in programming costs.
Qwest’s official company policy appears to compete on everything but having a superior product at a superior price. After small New Mexico ISP SkyWi sued them for anti-competitive practices, Qwest decides to shut down the ISP claiming that they are in arrears by $1.7M. Regulators in New Mexico responded by demanding that Qwest restore service pronto to “critical” customers. Given Qwest’s attitude with Centerville over RDA funds for UTOPIA and their continued efforts to block pole attachments, I think we can see a pattern from America’s least competent ILEC. At least they’re smart enough to slash prices on DSL service across the board.
After years of litigation and construction, Lafayette is finally to launch fiber services in the city next month. Packages are priced very competitively with AT&T and Cox with an $85/mo triple-play package that includes 10Mbps symmetrical Internet service. Lafayette is both wholesaler and service provider, so it makes their financial goals a good deal lower than open networks like UTOPIA that have to share revenue with third-party providers. The Lafayette Pro Fiber blog has a breakdown of pricing options.
It wouldn’t be 2008 without some more bad economic news. The Washington Post reports that the housing slump is hitting homebuilders pretty hard which means you can’t depend on greenfield development to power your growth. New providers will have to look at expensive brownfield development in order to gain new customers. One bright spot is that a think tank has recently called for lowering pole attachment rates as a way to spur broadband deployment. That could spell good news for overbuilds.
As if it wasn’t bad enough that video rates keep on climbing (thank the Governor of New York for some of those increases), text messaging rates are seeing a precipitous climb in overage charges even though it costs fractions of a cent to send each of them. Providers have uniformly increased the cost per message from 10 to 20 cents. Given that a text message is no more than 140 characters, you’re essentially paying over $1400 per MB for texting.
Could big broadband kill Blu-Ray? ZDNet seems to think so citing the growth on online HD video options and the high cost of both players and movies. (h/t: Woods Cross Citizen) A few high-profile flops aside, online HD video has been exploding with manufacturers like Roku and LG integrating Netflix, YouTube and a bevy of other video providers into set-top boxes and DVD players. Even the Wii is getting in on the streaming action. To really compete with Blu-Ray, however, requires a solid 16-24Mbps of bandwidth, something most households only dream of having access to. Will the explosion of on-line video kill cable and broadcast TV? Probably not. Despite some strong warnings to get ahead of the online viewing trend, a recent study showed that online viewers are just as likely to watch live TV as everyone else.
Remember how much TV sucked after the writer’s strike and how some shows (I’m looking at you, Heroes) managed to never quite recover? The Screen Actor’s Guild is getting dangerously close to authorizing a strike after it’s January 12 meeting. If, like me, you’ve been eagerly anticipating new seasons of hit shows like Lost, we might end up waiting a lot longer. Maybe it’s time to get around to watching Jack of All Trades on Hulu.