Yes-sir-ee. Nothing like some evenly matched competition.
----------------
PacBell Gives ISPs A Taste Of 'Co-Opetition'
September 25, 1998
PAC Bell is finding out just how tricky the "co-opetition"
game can be. As the California carrier learns the lessons
of allying with rival Internet service providers, its
competitors are paying some of the price.
The conflict stems from PacBell's dual role as provider
of newly commercial Asymmetric Digital Subscriber Line
(ADSL) data access and as an Internet service provider
(ISP). On the ADSL access side, PacBell needs to sign
up as many independent ISPs as possible to serve as
sales agents to get maximum distribution for its
high-speed access service. But the carrier also has an
interest in seeing its ISP arm, Pacific Bell Internet, snag
the biggest possible share of the business.
PacBell (www.pacbell.com) has reached at least
preliminary agreements with dozens of ISPs, mostly
regional operators but also a few national providers, to
sell ADSL service to their customers. The telco's parent,
SBC Communications Inc. (www.sbc.com), is counting
on the California rollout to serve as a model for Digital
Subscriber Line (xDSL) launches in other SBC markets.
But first comes ironing out the conflicts. "There's bad
blood between ISPs and the Bells," says Jim Balderston,
an analyst at Zona Research Inc.
(www.zonaresearch.com). "These guys are all
competing like crazy."
Those responsible for PacBell's xDSL access business
say they treat all ISPs equally. "We give no preference
to Pacific Bell Internet," Donald Roe, SBC's director of
xDSL business, told Inter@ctive Week. "They're
another of the ISP partners that we hope will sell a lot of
[x]DSL for us. "
But the same day Roe spoke, an anonymous phone
inquiry from Inter@ctive Week to PacBell's customer
service department yielded a different story.
"We'll take care of everything right here at Pacific Bell;
then we will coordinate it with Pacific Bell Internet," said
a call-center representative. Asked about using a
different ISP, the rep replied: "We're only dealing now
with Pacific Bell Internet. If you're going to deal with
any other Internet service provider, you're going to
have to deal with them directly, and they will deal with
us."
Above Board
PacBell is within its rights to push its own Internet
service, to the exclusion of others, on potential ADSL
customers. "Internet access is a fully competitive
business, and we are under no obligation to tell a caller
about the other 6,999 ISPs," says John Britton, a PacBell
spokesman. Told of the company's stance,
representatives of the California Public Utilities
Commission and the U.S. Federal Communications
Commission say such conduct appeared permissible.
But the carrier still must worry about the sensitivities of
ISPs to keep from upsetting the balance ofhe
partnership program.
"PacBell not only gets a sales force, they also get a help
desk force through the ISPs," says analyst Balderston.
The carrier also is getting help pushing Internet traffic
off its strained phone network, says Michael Harris,
president of Kinetic Strategies Inc. (www.kinetic.com), a
consultancy.
The incentive for ISPs, beyond small commissions, is to
try to separate from the pack by adding fast service for a
bandwidth-famished market. "The ISPs get an offering
that hopefully will be able to generate reasonable
[profit] margins," Balderston says. "Dial-up and general
access -- that stuff is not generating big margins."
Direct Network Access Ltd., one of the first ISPs to sell
PacBell ADSL service, now has more than 140 ADSL
subscribers. It also has questions about its PacBell
partnership.
"It's in our interest to have a smooth, comfortable
working relationship, " says Charlie Tripp, operations
director at Direct Network Access (www.dnai.com). "On
the other hand, PacBell is taking advantage of its
position in terms of owning the infrastructure. Pacific
Bell Internet and PacBell are supposed to be separate
companies. It seems like PBI is getting preferential
treatment."
Dave Walz, xDSL manager at Direct Network Access,
says communication within PacBell can be poor.
Trouble tickets seem to get lost, and changes in new
service orders don't always get carried out, he says.
PacBell spokesman Britton defends his company's
service quality. "We want to do the best job we can
meeting ISPs' needs, and we're going to do that, " he
says.
On the favoritism question, the company has changed
its Web site to include links to partner ISPs in
alphabetical order. "We're moving toward ISP parity,"
Britton says. "We heard from some ISPs that wished we
were more neutral, more on a parity basis, and we
listened."
As ADSL grows, though, conflicts could flare again.
Says Harris of Kinetic Strategies: "It's going to be an
interesting relationship."
<<Inter@ctive Week -- 09-21-98>>
[Copyright 1998, Ziff Wire]
|
