Socket

Today I’m discussing another ISP I’ve found interesting. The company is Socket from Columbia, Missouri. The company has a long competitive history and began in 1994 as a dial-up ISP. They were successful in the local market and by 1999 had grown to 30,000 dial-up customers.

Like other dial-up ISPs that are still around the company became a CLEC in 2002 and began using unbundled network elements to reach customers. This allowed Socket to expand their focus to provide their customers with high-speed internet and voice services. Over time the company expanded its sales network to serve hundreds of towns in the state from Kansas City to St. Louis and can connect businesses with multiple branch locations throughout the state.

Socket was able to serve a large geographic area by the wide use of EELs (combining an unbundled loop and interoffice transport), allowing them to serve customers in almost any large ILEC exchange in the state. They used other unbundled network elements as appropriate but became perhaps one of the largest users in the country of the EELs product.

The use of unbundled network elements allowed Socket to be a direct competitor to Southwestern Bell (which became AT&T), CenturyTel and Embarq (which became CenturyLink) and in many towns they were the first competitor. Socket had a huge impact on the cost of business telecom services in Missouri. For example, when they entered a new market the price for PRIs (T1s with multiple channels used mostly to feed business phone systems) plunged from $1,180 per month from the telco down to $400.

In many places Socket is still the only competitive alternative. The FCC is considering ending the requirement for the big telcos to unbundle their copper – and if that happens prices in many of these markets will climb back to monopoly levels. This demonstrates the true value to a community of having a competitive provider. Having at least one competitor in a market improves pricing for most businesses since the telco is forced to lower their prices or lose most of their customers.

Socket also thrived by being the only provider to offer naked DSL (DSL that doesn’t required a telephone line). The company purchased their own telephone soft-switch to be able to provide the full range of telephone products, but they didn’t force the customer to pay for a voice line as required by the telephone company.

In recent years the company has turned their focus to building fiber. Customers are demanding faster broadband speeds than are available through UNEs and the company can see the writing on the wall hinting at the slowly dying telco copper network. They can see that their long-term survival depends upon having customers on their own network.

The company has now built over 500 miles of fiber. They typically build fiber when they can find an anchor tenant that can justify the cost of construction, or a large group of residential customers who sign up through their “fiberhood” pages, showing where speeds are lacking. The company has done well over the years in serving the health care and banking industries and much of their network expansion is to reach customers in these industries. They will also build to reach a cellular tower or large business that requires significant broadband. They then sell to customers living near the anchor routes in order to maximize the revenue stream generated by an individual fiber build.

Like many competitors, Socket provides the kind of customer service that businesses and residents have never had in the past. For example, they recently talked to a new potential business customer who would only consider using them if they promised to resolve billing disputes quickly. Apparently, this customer had numerous billing disputes with the telco that took many months to resolve. Socket surprised them by promising that they could normally resolve billing disputes on the first phone call, and certainly within a day.

As part of my consulting practice I’ve interviewed hundreds of rural businesses and I’m always amazed at how poorly they are treated by the incumbent providers. They are still charged high monopoly prices from decades ago, they often wait too long for repairs and they have to fight to fix problems like billing errors. Companies like Socket reset customer expectations and in doing so rarely lose a customer.

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