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Bells can’t be satisfied

The Baby Bells are acting like spoiled children, despite the FCC’s ruling.

On Wednesday, Associate Editor Elizabeth Millard and I sat down for lunch with Bil MacLeslie, the head of the largest local ISP, Visi.com. His company is growing despite losing a lot of customers who went out of business in the last couple of years. Why? Because he pays attention to his customers’ needs and he doesn’t promise more than he can deliver. The behavior of his company is in stark contrast to the local Baby Bell–Qwest–which tried to sell DSL and other services to customers knowing it wasn’t feasible for them.

We talked about my disastrous experience with Qwest, which stemmed from the fact that I was just too far from the nearest central office (CO) to get anything like a reliable DSL signal that didn’t interfere with my voice service. (Other factors in the voice network may have had an effect, but I never found out because Qwest wouldn’t send a technician out.) Qwest had to know that I wasn’t eligible. For whatever reason–overaggressive sales reps, management decisions, etc.–it sold me the service anyway. MacLeslie said he rarely gets connectivity issues with his customers because he refuses to offer DSL to customers greater than 15,000 feet from a Qwest central office. This is just one way the small local company better serves the needs of its clients than the huge regional monopoly. So he retains the customers that survive and grows primarily trough word of mouth.

We didn’t ask him about the impending FCC ruling, which was supposed to free Baby Bells on certain competitive laws. The details at the time were too sketchy and the ruling too much in doubt to get a solid conversation going. But rumors ahead of time made it seem like it would not go well for the likes of Visi.com. Rather than speculate, I waited until the ruling to call him back and get a reaction. Because the ruling came out shortly before I wrote this (Friday), I called to get his reaction. Still the ruling was too vague for him to get a solid read on how it will affect his business. He is worried that it would now be legal for Qwest to phase out his company from its present arrangement–offering the applications and service agreements to customers while Qwest offers the lines. But he’s not so sure it would phase out Visi given the profitable nature of the relationship. He’s more concerned about smaller ISPs falling away from Baby Bells if the Bells are interested in their customers or find the relationship too cumbersome.

He did say one thing that perked my ears up: “The FCC is clearly in the Baby Bells’ corner.”

If that’s the case, the Bells are acting like the spoiled children that didn’t get ice cream with their birthday cake. Apparently, they expected to be able to raise prices for Competitive Local Exchange Carriers (CLECs) and local ISPs (which are one and the same entity in many cases) tomorrow if they wanted to. Instead, competitively priced line sharing will be phased out over three years, giving CLECs and local ISPs opportunities to either invest in their own solutions or develop alternative business relationships. Most important, it will keep the millions of users who rely on the services of the little guys connected and engaged.

As for Visi, it will develop its own solutions and seek alternative partnerships regardless of the effects of the ruling. For example, it’s looking into erecting fixed wireless towers at the edges of the range of DSL. If you draw a map of any large metropolitan area, you’ll find that most COs are more than 30,000 feet apart. That leaves whole swaths of populated areas without reliable DSL service. Visi is looking to fill those gaps by erecting towers to serve customers with 802.11 wireless service. MacLeslie will make these investments because he’s had to turn away hundreds of prospective customers who fall through the DSL cracks.

One company sure to be affected is Covad, which leases lines at a fraction of the cost to individuals and charges ISPs, such as Earthlink, an upcharge on those lines. If a Bell offers Covad a line for $10 per month, it charges Earthlink $30 per month, which in turn charges the customer $50. If Covad must pay $30 for that line, Earthlink will not be able to resell the service at anything approaching a profit (after customer service and other costs). The end result will be less DSL for customers, especially in those areas where the Baby Bell is either incapable or unwilling to invest. As many more customers will most likely be without affordable DSL service as a result of this ruling, MacLeslie’s investments in 802.11 will inevitably grow. And companies like his that make the best of this ruling while keeping the customer in the center of their focus will thrive regardless of the FCC’s Baby Bell favoritism.

James Mathewson is editor of ComputerUser magazine and ComputerUser.com

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