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Flexible Products, Lower Prices
Tuesday April 28, 2009,
01:33 am ET
WANNASKA, Minnesota, Apr. 28 /Don Romburgh/ --
For many small to medium size businesses, higher productivity with relation to their broadband
and voice services is just around the corner. Thanks in part to the recent price reduction trend
in the industry, carriers have deemed it necessary to consolidate in order to offer more services
at a lower cost than their rivals. Overlapping networks have been consolidated into leaner, more
feature-rich versions of their previous selves, dramatically lowering the price small businesses
pay for the popular dynamic integrated T-carrier (T-1) lines that combine local voice and
high-speed Internet service into one connection.
Min Lieu owns a small insurance agency in Minnesota. Five years ago he signed up with
XO Communications for a TDM-based integrated T1 line for $870/month, which did not
include local or long distance calling. Recently, he was offered XO's version of
a dynamic circuit called "XO Flex" for half of the price he was already paying.
"I would have been a fool not to take the deal" stated Mr. Lieu. "I'm able to
add headcount with additional voice lines, without any increase in expense or
degradation in high-speed Internet performance."
According to a recent study conducted by PK Communications Telecom Brokers Inc., the average
cost of a POTS (plain old telephone service) line serviced by the Bells (AT&T, Verizon,
and Qwest) have changed very little over the 10 year span from 1996, the year the
Clinton Administration signed into law the Telecommunications Act, to 2006. The real
change in the industry came in the T-carrier class of products, where customers can
get up to 1.5 Mbps of bandwidth and 24 digital phone lines all in one package. Some
CLECs like XO, TelePacific, Nuvox, One Communications, and even Covad are now offering
rates well below the $550/month level, making the change seem like a no-brainer to
thousands of customers.
"Even though we have been witnessing the re-consolidation of AT&T, we will never go
back to the dark ages of telecom where customers were stuck with bad customer service
and high prices" commented Troy Karlson, telecom analyst for e-STAR. "The competitive
local exchange carriers (CLECs), all whom own their own networks and compete directly
with the Bells, have created products such as dynamic T1 service that enables its
customers to connect to the Internet at 1.5 MBPS and have up to 24 regular voice lines,
packed with a feature-rich suite of add-ons, all for under what it costs to have
6 regular phone lines from Qwest/AT&T/Verizon.
Change does not happen quickly in an industry as so heavily regulated as Telecommunications.
Recent industry consolidation has provided huge alternatives to the incumbents, who
are now under pressure to keep up with new technologies while charging better prices
to retain and attract new customer bases.
Hopefully the CLECs can continue to push the boundaries of innovation and economics.
The only thing that can keep them from the promise land is the gatekeeper of competition:
the Federal Communications Commission, and the huge Bells (AT&T and Verizon - that's you)
who make it a point to spend more money lobbying in Washington DC than Exxon Mobile.
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