So, What This Means to Me Is
?
What all of this means to all of us is yet to be determined. However some things are certain. First, carrier and service options will increase as telecom carriers, ISPs, and other data service providers, CATV providers, cellular and PCS carriers, and others compete for business. Second, products, and services will be bundled in interesting ways in order to capture all of that business. Third, costs will drop, and drop again, and probably again as competition heats up. As an indication, long distance dropped about 40% in the last decade. (Note: Dont expect further reductions in this area, but there are lots of other areas.) Fourth, there will be a major shakeout in the industry over the next five years, and another five years later. Fifth, those with the deepest pockets (read RBOCs and IXCs) will continue to invest in or acquire their weaker rivals, including CATV providers, cellular, and PCS providers, WWW content providers and Internet software developers, manufacturers of LAN internetworking products, and DBS satellite carriers. They also will continue to invest in or strike strategic alliances with large content providers, such as Hollywood studios. Finally, they will continue to acquire each other, in the vein of the SBC/PacTel and Bell Atlantic/NYNEX mergers.
As the competition heats up, bundling of products and services promise to work to the advantage of the consumer, as in the case in the cellular world. Creative packages might include CPE and a full range of such services as cellular, PCS, long distance, In-WATS, Internet access, facsimile, and local service. Also, dont be surprised when carriers begin to offer flat-rate long distance within a given area, like a LATA. In other words, for $50 a month one might make unlimited calls within that area. Extending the area to all of California, for example, or perhaps all of the Eastern Seaboard, would be a real incentive for customers to switch carriers.
In the meantime, and quite surprisingly, some rates are going up. US West, for instance, filed (early 1996) local service rate increases. In Washington, the company proposed to increase local service rates from $10.75 to $26 over the next four years; the state attorney-generals consumer advocate countered with a suggestion that rates should be decreased to $10 a month [16-37]. Other LECs have filed similar plans in an attempt to price local service closer to actual costs, eliminating business/residence cross subsidies in the process. The IXCs also have been busy increasing rates. AT&T and MCI both have increased (July 1996) rates on popular services utilized by large client organizations; affected at the time of this writing are VPN and certain 800 services [16-38].
The end result is impossible to predict, but it is certain that those who keep their options open will find it to have been to their advantage. As the old Chinese saying goes, May you live in interesting times. There is no doubt that the next few years will be very interesting, indeed!
References
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- Seattle Post-Intelligencer. March 25, 1996.
- [16-38] Rohde, David. AT&T, MCI Ratchet Up Rates. Network World. July 29, 1996.
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