Wireless (and Wired) Minneapolis

The FCC has ruled that a community served by only two information providers (the cable company and the phone company) will have real competition. But customers are rapidly discovering that when private companies have a virtual monopoly, competition doesn’t result in lower prices or better services. Instead, the full-page newspaper ads inviting customers to take advantage of the companies’ new deals resemble the old bait and switch game.

For customers, this is a moment to remember the ancient words of advice: read the fine print.

In national ads, Verizon (the nation’s largest phone company, which will get much larger if the FCC approves its merger with MCI next month) offers broadband for $15 per month in some parts of the country. But, as MuniWireless and others have pointed out, the 768 kbps service offered is slow, only half the normal DSL speed. Moreover, the offer requires the customer to also use Verizon’s local residential phone service and sign a one-year contract with a $79 early termination fee. As if that wasn’t enough, after one year, the price goes up by over 100 percent to $38 per month.

In the Twin Cities area, Qwest is advertising a more respectable speed of 1.5 Mbps for $20 per month – double the rate at a cost only slightly higher than Verizon’s.

A terrific deal?   Read the fine print:

1. It’s available only to new DSL customers, not existing customers.

2. A Qwest home phone package is required, which brings the total price to around $50 including “taxes, incremental charges and surcharges”. If you want DSL but not Qwest phone service it’s $35, plus taxes and fees.

3. After 12 months, the price goes up to $40 per month with a Qwest phone line, meaning that phone and Internet service together cost around $70 per month. The cost of Internet without phone service increases to $45 per month.

4. After 12 months, you must either purchase the modem from Qwest for $60, or pay an additional $5 per month rental fee.

5. You must use Microsoft (MSN) as your Internet service provider. You may not use a local ISP.

Introductory offers from Comcast and Time Warner Cable in the Twin Cities also seem very attractive at first glance, but become homely after reading the fine print. Comcast offers a 4 Mbps connection for $20 plus taxes and fees, but after 6 months the price increases to $45. Moreover, the offer is only available with a Comcast video subscription, which costs a minimum of $25 per month. Time Warner’s $30 introductory price also increases to $45 after 6 months.

If this is what we get from competition, imagine what will happen when and if the broadband industry consolidates just as the phone and cable industries have, leaving us with one large provider in each market.

A publicly owned information highway system doesn’t prevent suppliers from abusing their customers. But unlike the current information highways, a public highway would be open to all suppliers, injecting a dose of genuine competition into the marketplace.

Ending bait and switch tactics by big cable and telcos – one more reason we need a publicly owned information network in Minneapolis.