Digital Policy Institute

Competition keeping telecom companies busy

Competition keeping telecom companies busy

Deregulation of the industry was good for consumers, expert says.


January 13, 2008 

MUNCIE -- Who hasn't seen those TV commercials where a Comcast spokesman makes snarky comments about the size of the lines used by competitor AT&T? 

The implication is that Comcast's larger cable -- a combination of fiber optics and coaxial -- allows for faster speeds and better results than AT&T's skinny phone lines. 

The advertising war among Comcast, AT&T, Verizon and other companies -- sparked by Indiana's 2006 deregulation of its telecommunications industry -- is only the most visible sign of the competition for your business. Advances in technology are changing the way we watch TV, talk on our phones and use the Internet. But competition may have an even greater impact than the latest wave of tech breakthroughs. 

One expert said that while the competition can be cutthroat for competitors and confusing for consumers, ultimately it's a plus. 

"We're in a position right now where the need to regulate versus opening ourselves up to competition is the question," said Robert Yadon, a Ball State University information and communications sciences professor. "We and other states have opened it up to competition. 

"This reduces prices for consumers and allows the marketplace to oversee the industry," he added. "We as consumers benefit by having the latest technology from both telephone and cable companies, allowing us as consumers to choose which service we want, based on service or price." 

Thirty firms on the bandwagon
For decades, a monopoly-by-default defined Muncie's cable television picture. 

In the late 1960s and early 1970s, city officials signed a contract with Century Communications for what was then known as "community antenna television." The contract gave Century free reign to erect poles, string cable and provide cable TV service locally. 

Century operated with virtually no oversight from the city until the early 1990s, when then-Mayor David Dominick appointed members to a cable television commission. Those commission members -- including Yadon -- negotiated with Century over issues ranging from cost to community access channels. 

The negotiations continued with Century's successors, including Adelphia and Comcast. Although Comcast won't divulge numbers of local subscribers, the company is the nation's largest cable provider, with 24 million cable subscribers, 12 million Internet customers and 4.1 million voice communications customers. 

Yadon noted that cable TV commissions had decreasing authority as time went by, paving the way for consumer dissatisfaction that led to Indiana's statewide deregulation in 2006. 

Would-be competitors to Comcast and other cable providers began lining up to provide similar services. AT&T was the first to file for a statewide franchise, Yadon noted. It was not the last. 

"Since that time, 30 firms have filed for statewide franchising," he noted. 

In part because of the expense of stringing new landlines, the competition is still somewhat territorial. Verizon, for example, has landline communications service in Allen County, while AT&T does not. 

Although there are limits to coverage areas, there's no limit to the competition. 

Service is key
Verizon, which offers wireless voice and Internet service locally, is benefiting from the increased competition, said company spokesman Michelle Gilbert. 

"As we have built our high-speed wireless broadband network, we are starting to see more people consider going all wireless," Gilbert said. "People will start embracing wireless voice technology, cutting the cord and going all wireless. That number right now is probably eight to nine percent of the U.S. population. Will we ever get to 100 percent penetration? We will, although I don't think you and I will see the day." 

Apple said Comcast is no stranger to competition. 

"We've always faced competition for every product we offer," he said. "There are more competitors in the marketplace than ever before. That competition will make us stronger. We realize we have to give good customer service or lose that business." 

Gilbert agreed, as did AT&T spokesman Molly Cornbleet. 

"As the competition really heats up, on voice or broadband, it's customer service that will really differentiate one company from another," she said. 

"Customer service is right at the top for AT&T," Cornbleet said. "We want to make sure our customers have the best experience possible. Quite simply, our customers come first."

And in regards to the various types of cables and lines used by AT&T and Comcast, does size matter, as Comcast's commercials would have us believe? 

Yadon said it does not. 

"Comcast is trying to differentiate by technology, but that technology is fully capable of delivering multiple signals, voice and data, to households," he said. "It's just an attempt to differentiate in the marketplace."