Being in the DFW Metroplex, we've had an opportunity to observe how Verizon is handling their FIOS installations first hand. And I'm the first person to admit that I get a little giddy thinking about what they will some day be offering.
But that's not the focus of my thoughts today. I want to look at something else... how businesses are being affected by the rollout.
Talking to all the people online and in person who have FIOS going into their areas, I came to an interesting observation. It seems that Verizon has specifically engineered the new fiber roll-out to avoid as many business customers as possible. Now when you consider that the average business is paying 2x as much per copper wire in the Verizon network as residential customers you can see a profit motive there.
So I have an interesting hypothesis... Verizon plans to move as many of the residential customers in their network over to fiber to get them on higher ARPU products (i.e. cable TV) to boost their revenues and to get rid of many of their high maintenance copper loops (i.e. long runs of copper into subdivisions). At the same time, Verizon intends to force as many business customers into "legacy" (and more expensive, more profitable) solutions - T1, DS3, etc. - as possible to extract every possible cent from their copper network before they start to dismantle it.
With the residential focus of FIOS and similar solutions from other ILECs, it seems we're going through another round of "ignore the business customer b/c if they really want something they'll pay for it anyway". This is the same thing most businesses who called Comcast or Time Warner for cable modem or TV service 3 years ago ran into. Businesses screw up the financial calculations when they "upgrade" themselves to less costly technologies.
I don't want to scream conspiracy here... but if you consider what would happen to Verizon's financials if all their business internet customers (T1 and higher) moved to FIOS you can see they certainly have strong incentive to maintain the status quo as long as possible. (Why else do you think they moan so loudly about the CLECs sucking away all their profitable customers?)
What does this mean for today's business? Well, the ones still on dialup will either move to DSL or do nothing. Those businesses who are growing and have a real need for bandwidth (especially for hosting applications, high volume email, or anything requiring much upload speed) will be forced into T1s. And those customers who outgrow T1s - which many are already doing rather quickly - will find themselves looking at DS3s and co-location. All the while they'll be asking the carriers and sales folks "why can't we get this cheap fiber stuff". The carriers won't answer directly... but you'll hear a faint voice in the background whisper "because we're a monopoly, we've paid off most of the politicians, and we don't have to give you anything unless we want to".
Are we headed for a trainwreck? Where American homes have faster internet connections than the average business? I hate to think about it, but if the current state of affairs continues, the answer will be yes.
So what's a business internet user to do about keeping their connection pricing reasonable? A good start would be taking a look at the current offerings in your area using our real-time T1 and DS3 price engine http://www.anyionservices.com/ .
}- Davoice
