At F2C, ISPs and VoIPs Have Similar Concerns

The prospect of a network dominated by a single short sighted company threatens the freedom to connect—and innovate—of small businesses everywhere.

by Alex Goldman ISP-Planet Managing Editor [May 10, 2005]

At the Freedom To Connect conference, two service providers were asked to talk about competition in the marketplace. The speakers were Cynthia de Lorenzi, CEO of Fairfax, Va.-based ISP Patriot.net and Jack Baron, CEO of Fairport, N.Y.-based VoIP outfit PAETEC.

de Lorenzi took over the company when her brother passed away—he was not married and had no children. Her mother inherited Patriot.net and passed on the company's leadership to Cynthia de Lorenzi. When she took over the company, it was losing residential DSL customers. "I was questioning my own leadership, and of course it was the result of hostile regulation," de Lorenzi remembered.

The business had been built with money from a mortgage on her mother's home—no government money funded this business. Now Patriot.net specializes in telework and offers broadband in addition to dialup, hosting, and managed services. de Lorenzi talks at conferences about Patriot.net, telecom regulation, women and business, and telework initiatives.

Baron said PAETEC also is going through tough times due to regulation. "Our competition is Verizon and the LECs," he said. "The UNE-P providers are going out of business and we're serving small businesses and home users. We're still in business but paying exorbitant rates. The last mile is our biggest stumbling block."

Any initiative to bring competition to the last mile would be welcome. "I think what's going on in Philadelphia is wonderful. With WiMAX, companies like ours will have an easier time."

He was optimistic about innovation in the VoIP space. "We've got IP hoot and holler and IP ringdown for Wall Street," he noted.

According to Cisco, "Hoot and holler networks provide 'always on' multiuser conferences without requiring that users dial into a conference." They are popular with Wall Street traders. Ringdown appears to enable VoIP calls to bypass the PSTN completely, especially for large organizations (such as financial companies) that have dedicated IP circuits connecting their various offices.

Asked how they find their customers, both de Lorenzi and Baron said they're serving a market the Bells ignore.

de Lorenzi said, "the Bells do not want our customers. We're a Linux/UNIX shop. If a customer is interested only in price, we're fine with them going to the Bell. It's customer care that brings people in the door to us."

Baron agreed. "The Bells run screaming from customers like hotels and hospitals. These businesses will typically get the 800 number for customer service when they want a live body to build customized products for them.

de Lorenzi said that Verizon is being shortsighted. "Verizon is not my problem. I think they have customer service issues but every large company has customer service issues. I don't think they understand what they're doing to themselves. They should look at innovators like us as assets, not enemies. I was one of the first to do Audiopoint, e-mail by phone, and VIDITalk video e-mail."

"The LECs are now better at T-1, but if you were in UNE-P, you're out of business," added Baron. "It's too bad the regulators erased an industry with a stroke of the pen."

In summary, we at ISP-Planet believe that the competitive VoIP providers and the competitive ISPs (and CLECs) will be facing the same issues with regard to the freedom to connect. The business climate, and especially the nurturing of innovation, depends on the non-monopoly behavior of companies that now have a monopoly in many parts of the nation.

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