Telco Consolidation Shutting Down Competitors

In a rash of related stories, it appears that a mixture of telco consolidation and lawsuits against VoIP providers is going to lead to fewer choices for broadband and phone service. Earthlink has been bleeding money for some time since dial-up subscribers have been fleeing in droves and it doesn't look to get much better as they lose access to DSL customers and the related copper infrastructure. In the process, they're betting the farmhouse on some high-profile WiFi deployments, most notably in Philadelphia. This is the same scenario at Covad, a provider of bandwidth to competing DSL carriers. The company recently announced that they would be laying off about 8 percent of their workforce as business lags.

Meanwhile, VoIP provider Vonage is still embroiled in Verizon's "we own the Internet" lawsuit, putting a damper on the company's future prospects. This is no doubt playing into SunRocket's decision to lay off about a quarter of their staff including several executives. It's also disheartening for these companies as more and more of the fees and regulations associated with normal phone lines are being mandated by the FCC, this time expanded to 711 for TTY and relay services. Combine that with aggressive expansion by both Verizon and AT&T, and it looks like we're heading for an even worse competitive environment than prior to the 1984 "Baby Bell" breakup.

With incumbents getting more and more entrenched and entering new markets a la Standard Oil, the need to keep infrastructure and retail services separate seems more necessary than ever.

(See additional articles here, here and here.)

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