Speeds n’ feeds

Everyone all excited about PaeTec’s acquisition of McLeodUSA. Not as much news about the looming issue that every CLEC is facing, access to the last mile. The CLEC’s argued, over 10 years ago, that they needed low cost rights to rent copper pairs to a customer premise while they built their own infrastructure. Well, 10 years later, no infrastructure, still renting cable pairs from Verizon and now, amazingly enough, arguing that Verizon should rent them access on newly installed fiber optic cable. Dream on. Verizon’s got them dead to rights. While no immediate death to the CLEC’s, the long term outlook isn’t too rosy.

Speed is the game afoot. Let’s look at a real life example. My own high-tech office. Today, we have a 6 megabyte connection into the Internet, it’s provided by a national CLEC using 4 bonded T-1’s lines (the actual copper rented from Verizon). For this, we’re paying $2,200 a month for the service. Figure the CLEC has a 50% gross margin, this means their cost is $1,100 a month.

Now let’s look at Verizon FIOS for Business. Below is lifted straight from Verizon’s website.

Let’s see for $210 a month I get a 5 megabyte circuit from Verizon. I’m not too smart, but the Verizon sales pitch has got to be incredibly easy. They could send me a $0.50 post card in the mail with the headline "Drop a ZERO from your internet access costs". It’s a brain dead decision.

Granted Verizon FIOS for Business isn’t in many places, but for every street they wire up, the CLEC customers on that street are gonna drop like flies. Excellent service or not, the CLEC’s have a looming problem.