Verizon’s Business Strategy Illustrates Why Your Internet Is Terrible

Senior Contributor
10.18.13 11 Comments

You may have heard, more than once, that America is not exactly cutting edge when it comes to broadband speed. And it’s true. To be fair, a big part of the problem is that the United States is an enormous country and wiring every last farm and cabin is going to be a production. Of course, the other part of it is the fact that huge corporations have essentially ripped state and local governments off for billions of dollars, and nobody involved seems to notice or care all that much.

Take, for example, the contract Verizon has to wire New York City with high-speed fiber cable. The Verge did some digging and turned up that basically Verizon promised to wire every household in the city and is now basically hoping nobody notices it’s, well, not:

…the availability of the service has been frustratingly spotty, skipping buildings, floors, and blocks without clear explanation. Verizon says that’s because landlords aren’t letting them install fiber, but Caprio’s experience suggests that’s not always the case. Since he started telling the story, at least a dozen people have asked him for help getting fiber — including his landlord.

Caprio, there, by the way, is Mike Caprio, a guy who got Verizon FiOS because he complained on-air about how Verizon was refusing to wire his apartment. Yeah, he had to get on the radio and be heard by a Verizon press rep before he could get the high-speed fiber he and every other resident of New York was promised years ago.

Part of the problem is that Verizon makes lots of money as a wireless carrier and relatively less money as a wired provider. In fact, once it “fulfills” its contracts, it’s getting out of the fiber Internet game altogether. But why?

Two reasons. The first, as any AT&T member knows all too well, is that investors hate it when companies build things. Building things is expensive, it takes lots of time, and it takes a long time for them to get their money back. But if you just corner a market entirely, and not build things, then you have lots of profits! Who cares if this means customers hate you and will ultimately flee once they can finally find a better option? Fourth quarter results need a boost, brah! This is why you still can’t get a clear call on AT&T’s network in a major urban area; they don’t want to spend the money to upgrade their network because their stock price will take a hit.

Secondly, Verizon has discovered that wiring “100%” of all homes means you have to cater to people who may not be able to afford your wired internet, and that replacing cable comes with obligations in some areas like providing a public access channel. And, as Techdirt noted, Verizon has found it can just collect the cash and not do anything anyway, so why bother?

The good news is that this won’t last forever. Google Fiber is beginning to expand. Cities are simply building municipal networks. And technologies like white-space broadband will soon essentially make wireless carriers, period, irrelevant. But until then, gotta get those quarterly results in!

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