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CenturyLink Slowly Strangling Independent ISPs; Choices Dwindle in Upper Midwest

Phillip Dampier May 1, 2012 Broadband Speed, CenturyLink, Competition, Public Policy & Gov't, Rural Broadband 5 Comments

Back in the days of dial-up Internet access, consumers could choose from a dozen or more independent providers selling service from prices ranging from free (for a limited number of hours per month) to $20-25 a month for unlimited dial-in access.  As long as an ISP maintained a local access number, they could set up shop and sell service at competitive prices in virtually any community in the country.

For awhile it seemed that this competition would continue as the days of broadband DSL arrived.  Phone companies like Qwest opened their network to third party competitors who could lease access to company facilities and lines and market their own DSL service.  In states like Minnesota, Qwest customers could choose from several providers, including Qwest itself, and receive service at competitive pricing.  But in 2005, the Federal Communications Commission announced phone companies no longer had to share their phone network with other providers.

It was the beginning of the end for independent service providers in that state and others.  The Minneapolis Star-Tribune reports that out of 47 independent ISPs that existed in the Twin Cities area alone in 2005, only about a dozen remain today — and many of those can count customers in the hundreds.  In fact, business has dwindled so badly, many providers no longer actively market DSL services to consumers.

The 2005 FCC policy allows phone companies to cut off the independents as network upgrades are completed. What service can be sold by independents in Minnesota is speed restricted as well — only up to 7Mbps. Even at those increasingly uncompetitive speeds, CenturyLink makes sure customers are notified they can no longer buy DSL service from independent companies once their upgrades are finished.

Today, the march forward for incrementally faster DSL broadband speeds at CenturyLink (which acquired Qwest), continues to force more and more competitors out of the broadband business.  Many of the remaining customers are located in rural or suburban exchanges only now seeing network upgrades.  But some companies are not waiting for the last of their customers to depart.  Implex.net saw the writing on the wall and decided to exit the business, telling the newspaper they could not compete with CenturyLink, much less Comcast.

“It was a dying business because we could only sell old technology,” said Stuart DeVaan, CEO of Implex.net in Minneapolis.

US Internet of Minnetonka also realized selling DSL was not going to be a growth business under current FCC rules.

“If you are a traditional Internet service provider from the mid-’90s that relies on someone else’s network, you’re at a serious disadvantage,” said Travis Carter, technology vice president at US Internet.

CenturyLink denies the FCC policy limits competition, pointing to cable operators, Wi-Fi, and wireless mobile broadband as all viable alternative choices for consumers.

But Bill Kalseim, who lives in rural Stillwater, having received notification he is about to be cut off from his ISP — ipHouse — thinks otherwise.

“I had a choice of DSL providers before, and now I don’t.” Kalseim told the newspaper.

Currently there are 5 comments on this Article:

  1. txpatriot says:

    As long as you’re bashing the telcos, how about comparing the relative bandwidth of the telco’s DSL compared to the cable company’s coax.

    Then explain to us why it’s OK for the cable company to keep all that bandwidth to itself, but the telco has to share its meager bandwidth with its competitors . . .

    • It’s my personal view the FCC’s decision locking out would-be competitors from wholesale access to both cable and phone facilities was anti-competitive and bad for consumers. If we are to believe industry proponents who suggest more competition is unnatural in the wireline space (cable/telco) because of infrastructure capital costs, then the natural solutions to this would be:

      a) Nationalize one broadband network on which all competitors could market services (the Australians are effectively buying out Telstra, the national telco, and putting the copper network in the rubbish heap, replacing it with fiber to the home in all but the most rural locales).

      b) Incumbent networks must open their networks to fair and reasonable wholesale access by third party competitors. This means telcos and cablecos.

      The contrary view to this is usually “they paid for the network so it is theirs,” but in most cases a lot of those capital costs are now largely paid off -and- if we are to believe the companion argument for natural wireline duopolies like some of the folks at groups like ITIF seem to argue when opposing things like municipal-owned networks, then it is unrealistic to expect a third provider anytime soon.

      Right about now, we’ll get a few people advocating that WiMAX is superior to fiber to the home and everything else, so we should all just go wireless. :-)

      Trust me, I’m technology neutral when it comes to advocating for increased competition. I don’t care where it comes from as long as it is reasonably priced and not constrained by unreasonable usage caps.

      Thanks for sharing your view!

  2. gare says:

    txpatriot’s comment does not make sense.

    2 wrongs do not make a right — just because the Cable Company is corrupt does not make it okay to give in to the Phone Company. Instead, the consumer should get some protection from the Cable company.

    Thank you for writing this article.

    rural Midwest dweller here. I just signed on to CenturyLink as an ISP, After 6 years of holding out from them and paying a 3rd party a little more. They would only allow the 12Mbps from them directly as ISP and offered it cheaper than the 7Mbps from the 3rd party ISP. The sales guy claims I will be able to go back to a 3rd party ISP if I ever chose to.. (I don’t believe him..)

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