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The broadband rebound
This column originally ran in ComputorEdge on June 7, 2002
(Issue 2023, Picture-Perfect Computing)
Just a few, short months ago it seemed that high-speed residential Internet access was irrevocably in the tank. Most of the independent DSL providers had bowed to the seemingly invincible monopoly of the local phone companies, and even Excite@Home was in trouble – despite having a dominating market presence through its contracts with cable TV companies.
But things are looking better today, thanks in no small part to new home broadband initiatives from EarthLink and DirecTV.
And unlike earlier independent DSL and cable access providers, both EarthLink and DirecTV would seem to have the staying power to outlast the monopolistic machinations of the Baby Bells.
EarthLink has spent the past few years slowly but surely climbing into the upper echelon of Internet service providers. Just a few years ago, if you got a floppy or CD-ROM in the mail offering you Internet service, it was almost assuredly from AOL or its CompuServe subsidiary. Today, the odds are about even that the pitch is from EarthLink.
Unlike AOL, EarthLink doesn't have a slick interface to replace your basic Internet experience – it's simply a connection to the 'Net over which you can browse the Web, send and receive e-mails, or ftp files.
For its part, DirecTV has spent the last couple of years taking on the cable companies in offering television service. For the better part of a decade, if you wanted premium, non-broadcast channels like A&E or HBO, you had to subscribe to cable. (And if you live in an area like San Diego or Denver, where mountaintops play havoc with TV signals, you pretty much need cable to watch more than a channel or two.)
But by leveraging customer discontent with the cable companies' arrogance (derived from their local monopolies, and which almost always leads to bad customer service) and by using a distribution network built around Radio Shack, DirecTV has become the leading dish-based alternative to cable.
Big enough to last
And so now we have two outfits with a realistic chance of providing long-term competition to the Baby Bells and cable companies in offering high-speed Internet access for home users.
EarthLink recently added San Diego to the markets where it offers its DSL (including Denver), and is rolling cable access out in different markets as well. It even offers high-speed satellite service as an alternative to dial-up for rural customers and others who don't have the availability of DSL or cable.
DirecTV's home broadband offerings are currently limited to DSL and satellite; not every neighborhood is presently eligible for hookup to the DSL service, but they seem to be expanding fairly quickly.
The end result of both companies' efforts is likely to be increased competition for residential customers – meaning prices will remain stable in the $45-$55 per month range. Were the Baby Bells and cable companies to have the residential broadband market to themselves, I don't know of too many economists who would predict that prices wouldn't rise.
Now, it may be that in a few years we'll view EarthLink with the same suspicion we view any business that's too successful. With its ubiquitous cheeriness and seemingly omniscient presence in every market, EarthLink could become the Starbucks of Internet providers. At the least, however, EarthLink seems revved up to give AOL the run for its money that even the over-capitalized MSN never could.
And by adding DirecTV to the mix, we help ensure that EarthLink remembers it has competitors, too – and keeps it from becoming as out of touch as the phone and cable companies that both are now battling for customers.