Home > CDNTech, Commentary, CRTC, Digital Policy, Teksavvy, Telecommunications > Canadian Third Party Internet Providers Need A New Business Plan

Canadian Third Party Internet Providers Need A New Business Plan

One of my first jobs out of college was that of VP of Business Development for a small southern Ontario Internet provider.  That was back in 1997.  Basically I was in charge of signing up corporate accounts to the ISPs, website development and planning.  Back then the Internet was viewed by many business owners as unsafe and a fad.  The three main objections I had when trying to sign up corporate business accounts were:

1) We don’t need to sell world wide

2) Privacy and security of customers data

3) Paying extra up front.  Basically third party providers bill for the month ahead, which incumbent ISPs billed at the end of the month, so they would be double billed on sign up.

The way I dealt with each objections:

1) Grabbed an internet search of related businesses in the area, and displayed competitors websites for the business, insisting that a website is more of a 24/7 customer care addition to the business rather than the selling of goods world wide.  Selling of goods could also be restricted to local customers only if they wished.

2) The privacy issues often required several followups to the business to build trust and an ongoing relationship with the individual directly.  Main rebuttal was that we were different from big corporations.  We deployed top notch security and coding and update the technical side of things to ensure privacy and security of CRM and business data throughout the networks.

3) The paying up front for a month was often a deal killer. About 50% of sold clients failed to sign on to this.  The only time I sold when this objection came up was when the business was irate with the level of service they received from their current ISP, or to sell them on why they should pay the extra amount by bashing our competitors.   I was very strong on the powers at be to get rid of this billing scheme, and closely align billing to that of incumbents to make it easier and a seamless transition to our ISP.  I saw it as a self inflicting wound, and could be very easily dealt with by pre-qualifying those with current connections to incumbents, and allowing more competitive billing options to those with incumbent accounts.

Corporate accounts are the life bread of any third party provider.  A large portion of third party residential customers at the time were coming to us due to falling back on their bills with incumbent providers. There wasn’t very much money to be made at the time in residential, and billing schemes remained a choice for each ISP to determine whether to bill like incumbents do, or to bill a month in advance (guaranteeing monthly payment).  A few months after I left my position for higher ground, several ISPs went under within a few years of each other.  After this, billing options on corporate accounts became more lenient with third party providers, however residential billing schemes largely remained the same (billing a month ahead) to protect the ISP from defaulted clients.

Back then, this renting from wholesale “incumbents” was supposed to be a “temporary” fix not a permanent one. It was determined that when third party providers reached a certain part of the market share (roughly 40 – 45% from what I remember) they would start laying down their own networks.  At least we had a dream and direction back then.

Fast forward to 2013. Third party ISPs still make up a very small portion of market penetration. The business model of bashing incumbents to get consumers so worked up that they will pay for the extra month (which is the main objection to switching) has become not only the norm, but becoming ridiculous.  It’s simply not allowing the expansion of growth needed for a competitive market in the ISP market.  Couple that with now the privacy concerns over NSA (not even a peep on mass surveillance from third party providers) and copyright, and you end up with not just substantially gigantic missed business opportunities to actually separate themselves from the self inflicting wounds of the past, but also become centered around market demands.

From what I’ve observed over the past few years on the policy front regarding third party providers, they are just as good as playing the CRTC up to protect their own business interests as incumbents are (all while claiming to be consumer centered to attract business through their main objection on billing). In fact, third party ISPs have infiltrated consumer advocacy groups to help push that line they care about consumers forward, rather than actually change their business practices to deal with the main objections in the market.

Recently Teksavvy customers have been dealing with long outages.  It’s no surprise that third party providers have been getting the back hand of incumbents.  It’s been a battle for survival and business interests on all sides at the CRTC since the CRTC mandated that incumbents provide wholesale to third parties.  This has been going on for years now if not decades with service issues. Teksavvy has recently filed a part 1 application in an attempt to change that.  I don’t like the circumstances surrounding this.  Why now?  Why not back a decade ago, why not a few years ago?  Why is it just Teksavvy doing this?

I agree with what Teksavvy has done here, I don’t agree with the situation which seems a bit engineered. Teksavvy has just come off of a large successful advertising campaign in Toronto.  It’s entirely possible that Rogers is dealing with a large influx of customers switching to Teksavvy as a result they are understaffed with respect to hooking people up with third party providers.  I agree that regulations need to be put in place to ensure a fair market place, but this is long time coming and should have been dealt with by third party ISPs years ago, if they were actually centered on consumers.

In my opinion, in order to solve the issues surrounding telecom competition in Canada, producers of telecom services need to start focusing on market needs and demands. Third party providers need to stop beating incumbents over the head all while not following market demands for billing and privacy.  There also needs to be regulations set in place for incentives to third party providers to start building their own networks. And above and beyond all of this, government and regulators need to do their own market research and come up with viable solutions to our competitive problem in Telecom.  Simply taking industry geared market research from either side (especially from those with close ties to indie and incumbent providers) is not providing an accurate take on what’s best for the consumer, and how to spark meaningful competition in the telecom market, as almost the past two decades have proved.

EDIT (October 3rd, 2013):  The Part 1 Application brought before the CRTC regarding service issues appears to be filed by the Canadian Network Operators Consortium (CNOC).  CNOC is the lobby arm of several small third party internet providers in which Teksavvy is a part of.  Questions still remain as to why we haven’t seen anything brought forward by the third party internet providers on service issues until now after consumers have been dealing with wholesale service issues for more than a decade.  Interested parties have until October 30th, 2013 to file comments on this application.  I will follow this situation on this blog as it develops.

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