First there was BBS Land. Buy a few modems; add some phone lines; go to work. Fix stuff at night, while collecting mailbox money. (What's mailbox money? Passive monthly income).
The Dial-up Days meant paying $125K for a TNT or Livingston Portmaster and ordering a PRI from the ILEC. Monthly credit card billing filled the coffers, while many went to the day job. A single yellow page ad was all the marketing you needed. Your only competition was AOL and its 40 Billion disks. In many cases, you were the only ISP with a local dial-in phone number. Your ILEC was mainly just your vendor, because the RBOC's had not yet seen the need to go heavy into Internet Access.
Then in 1999, Covad went public in January; Rhythms in April and Northpoint's IPO was in May of 1999. Now the RBOC's couldn't ignore DSL, a product that had been sitting on the bench at AT&T Labs since 1965. In 1999, I first started offering the BellSouth Wholesale DSL program to ISP's (both directly and through a volume agreement from FISPA). At this point, ISP's in metro areas were learning about competition, but it wasn't a price war - yet. By 2001, however, Northpoint had shut down and filed BK liquidation, selling assets to AT&T for $135M. Rhythms had closed and by September of 2001, Worldcom had bought their assets for just $40M. These failures were due to a number of factors, including RBOC policies to crush the competition, and poor business sense. By that I mean, all these DSL companies - Northpoint, Covad, Rhythms, DSL.net, New Edge - all competed in the same NFL cities at the same time without truly understanding how they were doing to provision and implement service through the ILEC machine.
The DSL business was not mailbox money. The DSL business required an ISP owner to move from technician to business manager (in the E-Myth scale of evolution). (You can read this 8-page summary of the E-Myth Revisited). That meant he had to start doing marketing, hardware fulfillment and installs. This wasn't dial-up where most computers came with a modem. Now the ISP had to pay for activation of the DSL circuit from the ILEC plus buy a DSL modem and install it for the customer. This was a new and expensive endeavor.
Marketing against your vendor, the monopoly machine was even tougher. This was an uphill battle that many ISP owners were not prepared for nor wanted to engage in.
In 2005, "the FCC's intent in the TRRO is an unqualified elimination of new UNE-P orders as of March. 11, 2005". So many CLEC's lost their business model in 2005. Then on August 5, 2005, the FCC allowed the forbearance petitions of the RBOC's to stand; thus ending regulation of DSL. (At the same time, many states were lobbied to add laws that unregulated not just DSL but POTS service too). The ISP World changed.
I write this history because I have often talked about - even again today. When you look at it, many ISP owners are no different than GM execs, music industry stalwarts, or newspaper CEO's - they just didn't want to accept that the landscape of their industry was changing forever. COMPTEL still doesn't get this concept.
No longer is it about dumb pipe access. The ILEC's are moving into managed services in the B2B realm and adding services to increase that consumer ARPU beyond the $100 triple play bundle. VZ and T announced that their next gen will be all cellular. Ma Bell even filed with the FCC a plan to sunset the PSTN on 12/21/09. What do you think the next step will be for your business?
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