The real problem with those ‘crybaby Bells’

What really bugs me is instead of investing in new ways to grow their business, the Bells are spending millions of dollars on lawyers and lobbyists to protect a revenue stream that’s hopelessly out of date.

You’ll recall that baby Bells have been lobbying for years to undo the FCC-mandated discount rates they must charge other carriers for use of their facilities. The Bells’ argument is that these artificially low rates unfairly depress earnings and favor competitors.

The FCC recently ruled that individual states could continue to mandate these rates. The Bells cried foul and let it be known that they would not be making further investments in telecom equipment as a result of the ruling. FCC Chairman Michael Powell reportedly responded by calling the Bells “crybabies” and declaring himself tired of the “passion play between billion-dollar self-interested actors.”

In past columns I’ve said the Bells’ position lacks integrity, and I’m not happy with the FCC’s halfway concessions to the Bells.

But what really bugs me is instead of investing in new ways to grow their business, the Bells are spending millions of dollars on lawyers and lobbyists to protect a revenue stream that’s hopelessly out of date. Last year the number of local loop circuits sold had dropped for the first time in history. You’d think the Bells would figure out that consumer dial-up service isn’t exactly the wave of the future.

Here’s an example of what the Bells should think about: My company recently needed to switch Web hosting providers. One of the primary selection criteria was 24-7 telephone customer service. Cost-effectively operating a quality call center is a specialized skill, so we looked for companies with known abilities in this area.

You’d think the Bells would dominate this market, yet they don’t even show up on the map. Oh, every one of them offers hosting – but none of their offerings make it to the top 25 of hosting services, and their prices are high compared with the top-tier providers, with no clear justification for the price differential.

That tells me that either the Bells’ Web hosting offerings aren’t competitive or they’re not doing a good enough job marketing them.

How about instead of wasting millions of dollars on passion plays, the Bells were to invest those same millions on their hosting offerings? It’s a multibillion-dollar market that’s predicted to grow between 80% and 90% year over year for the next several years, even in the current economic environment. And the bulk of the growth will be in the small-to-midsize customer market – a base that the baby Bells should have locked up.

Listen up, you crybaby Bells: Quit whining and get out there and compete in the free market. You might not be used to it, but you’ll get the hang of it if you try.