Cable And Telephone Companies Distort Reality

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.

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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.

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