I saw a short article in Business Wire that said that Comcast Business had landed a project to provide a private wireless network for the guests of The Sound Hotel Seattle Belltown. This is an example of the continuing convergence in the industry where the big cable companies, ISPs, and wireless carriers are freely competing on each other’s turf. For decades we’ve neatly categorized companies as telcos, cable companies, or wireless carriers, but this convenient categorization is starting to fray around the edges, and its getting a lot harder to distinguish between the big industry players.
If we look back ten or fifteen years, the distinctions between these companies were clearly defined. The big telcos served residences and small businesses using DSL. The big telcos were clearly structured in silos. There was practically no interface between the wireless companies at Verizon and AT&T and the broadband business. Verizon went so far as to set up Verizon FiOS, its fiber business, separately in every aspect from the copper and DSL business.
The cable companies had faster broadband than DSL after the upgrades were made to DOCSIS 3.0. Speeds up to 300-400 Mbps blew away the capabilities of DSL. Once those upgrades were completed, the cable companies took market share in cities from the telcos year after year until the cable companies had a near-monopoly in many markets.
The market with more balanced competition has been the large business market. This is the market where fiber quickly became king. At one point the telcos controlled most of this market, with their fiercest competition coming from a handful of big CLECs. Verizon responded to this competition by buying MCI, XO, and others in the northeast. CenturyLink become one of the nationwide market leaders through the acquisition of Qwest and then Level 3. The big cable companies cautiously launched fiber ventures for this market twenty years ago and have picked up a decent market share.
But those simple explanations of the business plans of the big ISPs is now history. As the Business Wire announcement showed, the big companies are crossing technology barriers in new ways. Comcast
Providing a private wireless network for a large hotel is emblematic of a new trend in competition. In doing this, Comcast is crossing technical lines that it would never have considered years ago. From a business perspective, Comcast is going after the full suite of services for businesses like this hotel, not just the wireless network. The newest word in the competitive market is stickiness, and Comcast is likely tying down this hotel as a customer for a long time, assuming it does a great job.
These crossovers are even more evident in the residential and small business markets. Comcast, Charter, and other cable companies are bundling cellular service with broadband and the triple play, something that the telcos have never managed to pull off. Telcos have decided to reclaim urban market share by building huge amounts of fiber. And the cable companies are reacting to that threat by rushing some early versions of DOCSIS 4.0 to the market in order to fix the upload bandwidth issues. The big wireless companies have joined the fray with the FWA cellular wireless broadband products. While these products can’t compete with the bandwidth on fiber or cable networks, the product is still adequate for many homes and hits the market at a much lower price.
This has to be confusing to the average residential consumer. Consumers who abandoned DSL years ago are being lured back by to the telcos by fiber. Folks who have been paying far too much for cellular service are moving to the more affordable cable company wireless service. And people who can’t afford the high price of cable broadband are seemingly flocking to the more affordable FWA wireless. I have to imagine that the customer service desks at the various ISPs are being flooded by customers canceling service to try something different.
Markets always eventually reach an equilibrium. But for now, both the residential and business markets in many cities are seeing a fresh new marketing efforts. A decade from now, it’s likely that we’ll reach a predicable mix of the various technologies. We know this from having watched the markets where Verizon FiOS battled with the cable companies for several decades. But much of the country is just now entering the era of refreshed competition.
Unfortunately, this new competition isn’t everywhere. There is already evidence that new investments are not being made at the same pace in lower-income neighborhoods. Some cities are seeing widespread fiber construction while others are seeing almost none. There will still be a lot of work to do to make sure that everybody gets a shot at the best broadband – but the obvious convergence in the industry shows that we’re headed in the right direction.