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Internet service has no maverick

If you’re like me, you have exactly two places from which to buy high-speed internet service: your phone company (mine is Verizon) or your cable TV provider (mine is Time Warner Cable).

That sounds like competition, doesn’t it? If you don’t like one, you can go to the other.

Why would I switch?

After nine years (and about $10,000) with Verizon high-speed internet (for a commercial account), I closed up my internet servers and asked to switch to a retail consumer account.

There was no hardware change required, purely accounting and configuration.

At first my Verizon commercial account rep was very helpful and understood my desire for limited downtime. She looked at the back log for a consumer account creation, and postponed my account closure date three days to allow for that.

Once my account was in the hands of the consumer internet division, the company once again became the bureaucratic behemoth that it is. My commercial account rep handed off my call to a consumer/residential rep, and assumed that all would be well. At that point I was told that they could not initiate any action for a residential account until the commercial one was closed. In other words, there was no reason to delay closing the commercial account.

Still, my residential rep promised a call on October 14, my close date, and stated he would “do his best” to expedite service for me. He provided the phone number of his “secretary” to reach him on connect day.

October 14 arrived, and early that morning my internet service was turned off — right on schedule. The day came and went with no call from the consumer rep.

On Tuesday morning, I started calling the “secretary” number. After three messages, I finally got a return call at about 10:30.

Everything seemed to be going well until my rep said that the account would be established “no later than” October 18, three days hence. At that point I said “cancel the order” and ended the call.

I visited Time Warner’s site and ordered cable installation. True, there’s no way TWC could respond any faster, and I have an installer appointment for Friday morning, October 18.

Still, Verizon has lost me as a customer, and besides internet service I’ll move my landline telephone service off of Verizon as well.

Do they care? Should they? The answer to both is “probably not.”

Internet service has no maverick

I only recently learned of the importance of a “maverick” when it comes to competition and markets. I learned about this from a splendid NPR Planet Money podcast, Episode 438: Mavericks, Monopolies And Beer. It tells the story of why the Federal Trade Commission halted a planned merger between Anheuser-Busch InBev and Grupo Modelo. It would convert the beer market into a duopoly of two companies: InBev and Miller Brewing.

In this case Grupo Modelo acts as a “maverick” company, forcing the two giant corporations to genuinely compete and innovate, despite being a tiny player in the beer market.

The podcast is twenty minutes very well spent.

The thing about internet service is that there’s a huge barrier to entry for any would-be competitor. Who could be the maverick?

Two words: Google Fiber.

The effect of Google Fiber entering the internet service market in Kansas City and Austin has been exactly the beneficial effect of a maverick in a marketplace dominated by two giants. The big companies find themselves forced to actually make the investments they’ve promised.

Remember Verizon FiOS? Were you waiting for it to arrive at your house? Keep waiting — they’ve long since halted the roll-out. They only built out enough FiOS to get regulators off their backs for a while.

The phone company and the cable company have this in common: They hold a monopoly on service to your home granted by your local government. The opportunities for corruption here are enormous.

We are dealing with a duopoly with no maverick, the two companies have no incentive to compete at all. No one is there to disrupt the market.

Where do I turn when Time Warner Cable can’t perform? Do I go back to Verizon? Sadly Google is taking its own sweet time to add markets, and the hope of having a viable competitor here in Los Angeles county is negligible in my lifetime.

Here are some of the symptoms of the internet/TV service monopoly:

  • No upgrades to service speed or quality in many years
  • Lack of support for high-quality consumer end equipment. (You’ve seen how bad cable boxes are, right?)
  • Forced bundling of TV channels, instead of a la carte
  • Random introduction of “fees” with no regulatory basis

TV distribution has a market disruptor in the form of Netflix (and maybe Vudu and Hulu). But even those disruptive forces have to travel the same broadband pipes that are controlled by the massive duopoly. I don’t have good feelings about recently announced efforts by Netflix to cooperate with cable companies.

(And a topic for another day: sports franchises locking out non-cable customers from televised games.)

3 comments to Internet service has no maverick

  • I couldn’t agree more!

    — Art Z.

  • Joey Riso

    Mojo, you’re spot on. I do think there is one more option – admittedly one which most anti-regulation types will abhor:
    Right now telephone and electric services are regulated as utilities. In California that means you have the strength and clout of the CPUC’s Division of Ratepayer Advocates behind you. And they can help you with internet service issues if you’re using Verizon. But internet services in the generic sense are not considered utilities. I propose that they SHOULD be, for a variety of reasons. First, modern life and commerce is dependent upon connectivity. Second, many people are beginning to use VOIP for voice communications.
    If internet service is treated legally like electric service, or water, or gas, then we have a structure in place to assure availability of service and reasonableness of price and performance. The ratemaking mechanisms are in place and well-established, and reward good behavior and punish bad.
    That’s the approach I’d advocate. Then, if a maverick wants to enter the market, there is also a mechanism for them to enter without punitive price competition or other difficulties.

    • No disagreement from me. We saw what happened when Verizon was threatened with more regulation — FiOS is a great product. I’m just afraid that it’s either regulate or make the market accessible to competitors. I don’t know how to accomplish either one.

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