As I read through AT&T’s latest “U-verse” agreement I shake my head in genuine worry. At home we’ve finally traded in our DSL for U-verse, which of course is wise when you consider the volume and speed we enjoy these days. Then I noticed at the bottom of the agreement “U-verse price includes 250 GB of data per month”… oh groan. I may hear “what, is that not enough”? Groan again… You see, I distinctly remember starting my career just as Judge Harold Greene presided over the biggest anti-trust settlement in history. In 1984 (from a 1982 modified final judgment) AT&T was forced to divest itself of local switching facilities and operate only in the long distance space. The so called 7 “RBOCs” or “Regional Bell Operating companies” all of a sudden had their own little monopoly positions in their market area. The remaining “AT&T” was left to compete in interstate long distance markets in what was considered a non monopoly competitive landscape. Indeed,”Southwestern Bell” controlled and enjoyed a nice monopoly position in Texas and other southwest and midwest states.
So let’s fast forward over a LOT of interesting stuff, but get to the point. The point is, in MY opinion we are right back where we started. Most of the local Bell operating companies are right back with AT&T. How did we let that happen? I believe AT&T now enjoys a virtual monopoly. Small companies can’t compete, and AT&T is now, once again telling us what we can do, and how we can do it, and they are charging you a TON of money. Remember when you first connected to the internet? Remember how AT&T or Bell had no interest, and all the Internet Service Providers were local guys? Remember how they really competed to get your business? Do you think if we still had a competitive landscape any of them would be limiting our consumption? I doubt it.
I realize that AT&T, Verizon and other major providers have really improved and I’d say successfully “commoditized” internet connectivity, but at what cost? Are we not once again “shackled” and at the mercy of one provider (serving your area)? Now my question is of practicality, yes you have other inferior options, but why would you pick them? And, where did the money come from to build this new virtual monopoly? Remember the term “predatory pricing”? In my opinion SBC’s prices for DSL were not high enough to cover prices in the early years. The local ISP’s margins were razor thin, and within just a few short years virtually ALL of the local ISPs were out of business. Many of the ISPs argued that SBC must have used monopoly driven local telephone revenues to fund the below cost ISP rates. If that is the case then that would be a huge no-no, and would be called predatory pricing. If that is indeed what happened then the new “almost monopoly” position they hold in the ISP space was obtained off the backs of you, your family and everyone with a telephone. In a nutshell, the local Bells may have created a monopoly DSL service and then once AT&T had enough cash from the lucrative wireless service it “bought its way back into a virtual monopoly”.
It’s easy to get caught up in all the new exciting services we have and lose sight of what we’ve given up. I contend we still would have had even more innovation had AT&T not been allowed to reform (consolidate). It’s time for the DOJ to get back involved and open a new inquiry. We are going to see more and more constraints on internet service and AT&T is going to be more powerful than we could possibly have imagined.
As I said, I worry…..
The opinions on this blog are only from Patrick Bouldin and not of PDB I.T. Consulting or RunThisProject.com.