IPUrbia

David Isenberg cited their own 2001 industry analysis forcasting (correctly, of course, or else it wouldn’t have gotten requoted!) a gradual replacement of common carrier by commercial agreements, effectively killing off the “small, innovative players”. He definitely got the killing right, but I am a little skeptical about the “innovative” portion–at least any more.

I am inherently a huge fan of small, innovative players and will argue to anyone who cares to listen that more competition would cure most of the ills of the telecom industry. But, in the direct business of last mile network access of any sort, where is the innovation these days?

In the 90’s, there was lots of innovation–players investing in dialup and DSL Internet access while the ILECS tried to kill off the whole concept of Internet. The Internet is as vibrant today largely thanks to companies who saw a huge growing demand and supplied a viable form of Internet access. Still, a large driving force was a somewhat broken model created by the Telecom Act of 1996 that allowed for dialup providers (when dealing with PRI’s) to be payed both for providing dialup Internet service as well as by the telephone company for terminating the Internet-bound call. In other words, legacy-based regulation created an environment where even idiots could (and did) profitably offer Internet access. “Innovation” in Internet access in those days was a lot like the stock market of the 90’s–it didn’t take a genius to make money while the good times rolled.

The beginning of the 21st century has demonstrated the lack of depth of truly innovative players in the last mile market. Once the obvious easy money dried up, the CLEC’s prior refusal to actually get their hands dirty in building out their own networks relegated them to the irrelevancy long before the FCC recognized the obvious fact that, except for the ILECS and the cable companies, most of the other players were simple resellers by this point. Call it what you will–financially safe, profitable (or not!)–but reselling is, by definition, the opposite of innovation.

Meanwhile, the ILECS and the cable companies provide, when all is said and done, the best service in town which, my friends, is just simply sad. What is even more disturbing is that most of the innovation in last-mile transit IS being done by the ILECs and the cable companies these days. Lots of companies could have rolled out ADSLv2–but no really has–except AT&T. Lots of companies could have rolled out fiber to the home–but, few bothered, and so Verizon, of all companies, is leading the way. A truly innovative player would have been doing these things 5 years ago; instead, the “small, innovative” companies of the 90’s nursed their dialup traffic, resold ILEC DSL service (at a loss!) and sat around on mailing lists griping about the government and reminiscing about the good old days. If even a fraction of the easy profit from the glory days had been informatively invested, it would be a much different–and better–marketplace.

There is a lot of innovation on the application front, to be sure. Video and voice services over IP are maturing rapidly, and Internet-based applications are, at last, a viable technical and economical offering. Still, absent a competitive playing field in transit, it may not even matter as AT&T, Time Warner, Comcast, and Verizon start leveraging their market dominance to promote their own services and offerings. I do regret the gradual disappearance of common carrier, but I understand it–after all, common carrier is a better suited philosophy for bridging networks, not reselling the same, tired piece of copper. Let’s just hope that the next 5 years sees a little more innovation than the last 5.