[February 3, 2005]

6. Customer Service

Both Verizon Online and SBC have contracts with third parties to provide certain services. SBC uses Yahoo.com and Verizon uses MSN. MSN provides e-mail and home page service—so it would appear—in lieu of VOL performing at an acceptable level.

You would think that Verizon would be able to provide basic ISP services. SBC uses Yahoo for marketing purposes, which is both a cost factor and probably successful in attracting new customers. Most of their price points are part of their bundled offerings. The difference between a normal, local ISP and customer service offered by an RBOC has to do with what they will and will not do. Basic service with an RBOC subsidiary covers connectivity issues only, while customer service offered by most local providers also cover computer problems such as virus activity, advertising parasites and Spyware that are eating a computer up and the like. As a comment, I can attest that the worst case of advertising parasite—the most difficult to remove—I have every seen was associated with an ad from Verizon Online.

An RBOC will recommend that the customer take the computer to a local repair shop. In rural areas, often as not, the ISP—is—the local computer shop. I should note that most national providers will not provide a high level of computer help and that doesn't matter much in urban areas. It does matter in rural locations where computer repair shops are few and far between.

As more and more rural providers go bankrupt because they are unable to compete, consumers have fewer options for computer service. Fewer options almost always will mean higher prices. As an example, our computer shop discounts service for our online customers and we will clean virus from a customer's computer without charge if they get one—if they maintain a current anti-virus program on their computer.

Plugging into a typical broadband connection is very much like plugging into an open sewer. Hackers, Spam merchants and virus concentrate on broadband connections because all too often they are always online, soft targets. This raises issues for customer service. Simply put, an ISP that provides broadband should do MORE, not less in provisioning customer service.

As I said, both SBC and Verizon have contracted the services of Yahoo and MSN respectively to "Enhance" their "Enhanced Service." My only thought is that this does not speak well of those two RBOCs' ability to provide commonly available services for their customers.

While there are a number of national and discount providers that only provide limited customer service, local providers typically provide additional services that are not available from national, regional or discount operators. This is especially valid in rural areas. Rural providers will often diagnose computer ailments over the phone that are unrelated to connectivity issues, and many also operate computer repair facilities that will diagnose computer problems for their customer base as a free service and repair computers as needed for both software and hardware issues.

In urban areas, there is always going to be plentiful computer help at some pricing level. But as rural Internet providers are killed off due to a lack of ability to compete, the same level of computer help just isn't going to be available.

Here are a couple of examples of the type of service we can expect to see from our friends, the local telecommunications monopoly. The first example comes from the Washington Post [excerpt not reprinted here, available in the original petition on the FCC website].

Then we turn to SBC, who decided to block Port 25. This is the computer port that is used for e-mail outbound traffic. While this didn't stop e-mail with an internal SBC address, third party SMTP e-mail was halted in its track. This meant that—for example—an office associated with a larger enterprise couldn't use an e-mail address associated with the enterprise. For example, someone on SBC DSL or dialup couldn't use Outlook Express to originate an e-mail with an address such as name@xyzcorp.com.

Obviously this created howls of outrage from those blocked once they figured out what was going on. SBC said they were working on it as an initial response.

SBC was attempting to block tons of spam coming out of computers on their network that had been hijacked. There are better solutions to the problem, but SBC apparently operates in a vacuum and didn't consider any of them. I am not sure of the outcome of this issue. My informant hasn't sent me an advisory of late. These are just two examples of institutional arrogance and stupidity that often afflict large corporations attempting to do something positive but lacking a corporate culture of customer service, technological knowledge, and innovation. In other words, phone guys need to stay with what they know and leave the computer business to those who know what they are doing. Yet it would appear that there are regulators and legislators more than willing to turn over the Internet to the phone guys.

When Verizon Online started offering DSL at a rate that I could not match, they were able to convert roughly 20 percent of my customer base to their service. Reductions in staff and expenses (including health insurance) have allowed me to survive for a little while longer. But as more and more customers migrate to what I believe to be the temporarily low rates of Verizon Online, I will be under more and more bankruptcy pressure. And rates for computer repair will rise. As a combined business, we are able to spread our overhead over both the Internet business and computer repair. As just a computer repair shop, we would have to charge about 80 percent more on average for repairs to maybe stay in business—assuming consumers could afford the rates.

Simply put, a lot of people need the one-on-one attention that an independent ISP can provide, attention that is simply not available from large, National Internet Providers like Verizon. As market share for those small, independent companies is reduced because of several factors, not the least of which is predatory pricing by Verizon and other Local Exchange Carriers, the ability of the independent to provide service is not only eroded, but is reduced to the point where they cannot survive.

I have been able to survive competition from a wireless operation that was funded by the Department of Agriculture. I have been able to survive AOL's multi-tier pricing and marketing onslaught and all of the "deals" that come with new computers. I was able to compete on a level playing field with Verizon Online's prices, until that company reduced their prices to the point where I cannot compete because I pay Verizon more than Verizon Online charges for ISP service in some cases, and in other cases, the four or nine dollar margin isn't enough to even provide bandwidth due to the cost of bandwidth in rural areas plus Verizon's charges for connecting that bandwidth to their DSL "Cloud."

 

1. Background

what the RBOCs really think about competition

missing the Internet revolution

Robert Cannon

2. Pricing and Cost Issues: predatory prices crush competition

RBOC costs, for the record

3. Business Practices

4. Slamming and other dubious business practices

5. Networks

6. Customer Service

>7. VNXX

8. Verizon's Petition for Forbearance

9. Unintended Consequences

10. Conclusion

RBOCs, why you need me