Networks and Competition

Monday, April 10th, 2006

I remember when my Dell router suddenly failed a few years back. In looking into the matter, I found that numerous other people were complaining about the rapid failure, too, on the forums. Neither Dell nor Comcast would claim responsibility. That’s why I use a Linksys router. It was just one of those things: an operable devise just quit working and yet another worked just fine in its place. I could replace the router; but I couldn’t replace the service provider. It’s not that easy to do. (Now I’m locked out of my course at home and the response from support is, “It’s your fault.” No it ain’t. Yes it is, you dumbass, Texas hick.)

So what to make of this article in The Hartford Courant informing about the demise of Gemini Networks, whose millions were supposedly meant to provide 200 customers telecom service in West Hartford.

Gemini’s demonstration project, a 200-mile network serving about 230 customers in West Hartford, will be shut down and mothballed by the end of the month.

Jophn Moran’s article provides the complaints by Gemini, but very little detail about the actual narrative–this is a piece about telecommunication industry competition, which, as I illustrate above, is a joke in this state and, I’d imagine, in others.

Moran provides an either or case: either Gemini followed the rules or AT&T stiffled them.

Meanwhile, he said, the state Department of Public Utility Control and state legislators did nothing to enforce the order that AT&T lease the network or otherwise foster competition in the telecommunications industry.

A spokesman for AT&T called Chase’s claims “ridiculous.” A spokeswoman for the state Department of Public Utility Control said the agency had no comment.

Chase said Gemini’s inability to expand by leasing AT&T’s inactive network or putting more lines on utility poles doomed the company, which could not operate profitably on the small network it initially built. Lack of competition means that prices will remain high, he said.

“Everyone complains about the high cost of doing business in Connecticut. Yet when branches of state government have an opportunity to create real change, they ignore it,” Chase said.

But John Emra, executive director of external affairs for AT&T Connecticut, said competition in the state remains strong, despite Gemini’s departure.

You tell ’em John. Set us all straight. Tell me where to go when Comcast turns down the water pressure. At the bottom of the article, we have this

The DPUC ultimately ordered SBC [now AT&T] to permit Gemini to lease the network, but SBC appealed and no lease deal has ever been executed.

Typically, competition in any thing can be gauged by a balance of opposing forces. Team A can compete with team B if they are in the same league. How does one compete with AT&T? Yet, what’s the outcome of providing 250 units in West Hartford? On another note, how would someone compete with Comcast? Is inexpensive 56k operability competition? I’d love to see how a small firm would provide data, with what, and on whose backbone. What is Vonage competing with? Deregulation was supposed to, grinningly, promote competetion. It did not. Most users sit in a faily complex space of technology and service provision that amounts to Kafka’s castle.


5 responses to “Networks and Competition”

  1. Josh says:

    I don’t know about competition, but deregulation is (theoretically) supposed to promote lower prices in general. Unfortunately, I just don’t see a business lowering their prices simply because they can.

    The price of gas is another example in my mind. The prices may very well be high because of gov’t entanglements. But on the other hand, prices were supposed to come down when the regulations were temporarily suspended post-Katrina. And they did, but never under $2.00.

    What incentive does a business have to charge lower rates/prices when the customers have been paying long enough to have become “used to it”…?

  2. Steve says:

    Josh,

    The only incentive is choice. If I know that a consumer is likely to find another provider “because” of “scale,” then I must react with incentives. Range Rover doesn’t have to worry about this because their “scale” is smaller. If vegetable oil driven cars could change massive scale markets, then Ford would have to change too. Alas, how likely is that?

  3. Josh says:

    As I see it, “choice” only works when there is at least an A B and C, and no one variable has more than 50% of the consumer base.

    As one example: It’d be interesting to see if the home oil companies and gas stations would actually lower rates if the oil industry got what it wanted and was significantly de-regulated.

  4. Steve says:

    “As one example: It’d be interesting to see if the home oil companies and gas stations would actually lower rates if the oil industry got what it wanted and was significantly de-regulated.”

    When you have the answer, post it here.

    Check ExxonMobile’s profit margin.

    This thread may be helpful in some way: http://angrybear.blogspot.com/2005/04/oil-impact-on-us-economy.html

  5. Josh says:

    It’s less numbers and more the weight of integrity and ethics. I’d be a horrible ExxonMobile executive ;-)