Tuesday, January 31, 2006

Telecom Carriers Make Grab for Cash...

Recent articles in the Canadian media are pointing out an initiative by telecommunications carriers to charge additional fees to consumers and content providers. Citing increasing costs of operation due to high bandwidth demands of internet users the carriers want to stick it to the providers of internet services and content and to the end users!

Check out Michael Geists writings on the topic> Link at Bottom of page or www.michaelgeist.ca

I am a 30+ year veteran of the telecom industry and I can assure you that unless there is significant outcry from the public this attempt to gouge consumers and content providers will succeed.

The carriers are desperately looking for ways to compensate for losses in other areas. Lost revenue in PSTN, local access, business services and LD are all affecting the top and bottom line for the corporate entities. They are well represented in government through lobbyists and have a track record of beating back consumer friendly FCC or CRTC rulings.

The facts are that technology innovation is ahead of the traditional telecom carrier business model and the carriers are without a solid strategy to build their business in a competitive environment.

Innovators on the content and consumer service side are so far ahead and have such great momentum that the carriers cannot catch up let alone keep up.

Another reality is that there are already extra value for extra cost services available from the carriers. Low bandwidth broadband for consumers, high bandwidth broadband for users with more money and need, business grade service packs that provide better end user support and SLA's etc.

The logic of extending these pricing structures to other areas through add-on charges is something the regulators could be convinced of agreeing to. And I would be concerned that the regulations governing Tarifs do NOT adequately address this matter.

Not that I agree with the arguments of the carriers. I believe that the carriers are looking for an easy way out of a tough situation. Rather than dealing with the realities of the market and the business model they work in ( which pretty much dictates that at the end of the day if they want to win customers they have to provide better value than their competitors) they are seeking to have governments force consumers to subsidize their inefficient methods of operation.



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