Mike Doyle found the pony in his reply#3089: I think when you compare ANY of the CLEC/DLECs out there today with probably ANY of the ILEC xDSL offerings, you have a business-focussed offering on one hand (DLEC), emphasizing data management capabilities desired by business customers, versus a decidedly consumer-oriented offering on the other hand (ILEC), promising basic best-efforts. That characterization certainly applies to COVAD, Northpoint, Rhythms, as well as USWEST, Bell Atlantic, and from what I have seen, probably SBC, for now at least.
Yes, business customers are paying a premium for capabilities they feel they need, when they source from the DLECs. The DLECs also seem to focus on symmetric services using HDSL, SDSL, or IDSL, with ADSL just an afterthought for most. The ILECs have been sucked into making ADSL work, from the binder-group FEXT/NEXT issues back to the OSS and legacy system interworking considerations. This has turned out to be far more daunting than the ILECs originally anticipated, and more challenging than a lot of the pundits in the trade press appreciate. My guess is the ILECs will work to finish getting consumer ADSL shot and skinned before they seriously organize another hunting party to bag business xDSL customers in-mass. They feel an imperative to address cable modem competition, and they have some other products addressing the medium business market, at least for a time. There is xDSL available to businesses today, of course, but I am talking about working up a far more robust service offering in terms of data management and ancillary business services, as well as the depth and quality of personnel required to provide credible and effective customer support.
An interesting juncture will come when the ILECs eventually turn their attention to xDSL for the lucrative medium business and remote-work sites for large business customers. That will mean working through some even more challenging data management issues, but then the market will have some real comparables and perhaps some more aggressive competition. We will finally see if the DLECs are offering a good and fair value today, based on their cost of providing service, in a way that is sustainable. Some ILECs may find that the current DLEC niche, providing a higher level of xDSL service to business customers, is actually A LOT more expensive to provide than their consumer xDSL best-effort services, taking into account all the new cost factors. It will also be interesting to see, once ILEC services are more generally available, even with their best-effort orientation, whether businesses feel it is prudent to "try" a $60/line/month service offering best-effort to see if it might meet their needs, before just jumping on the "guaranteed quality" of the DLEC $150/line/month offerings. There may be a lot of business demand out there that does not feel they really derive value from the service differentials at this price delta. I will be interesting to watch ...
The speculation about the ILEC pricing to AOL seems to consistently assume that in their deals with ILECs, AOL does not negotiate on their customary consumer price for dial-up service? The ILECs are clearly showing willingness to negotiate on the terms of the combination; why would you assume that AOL finishes with the 100% they started with, and the ILEC settles for, say, 30% of their starting point? Don't you see Case and company eager to make their move into broadband? Does anyone think that Case really believes he will win the TCI open-cable fight in a short time, so the alliances with ILECs are not important to AOL long term? |
