Sonic.net, everyone’s favorite Internet service provider, faces an uncertain future.
AT&T has been working for many years to undo the 1984 telco breakup and once again have the advantages of a monopoly. It has bankrupted many competitors with unfair business practices and it has aggressively worked the legislative and regulatory processes to get the rules changed in its favor. (This is a long-term effort. Competitors like Covad and Rhythms were forced into bankruptcy in the ’90s; here’s one of my comments about the situation four years ago, and as an example, here’s one of the specific moments from a couple of years ago when regulators gave away the store to AT&T.)
This is not a true monopoly situation – Comcast is competing vigorously with AT&T for phone service as well as Internet access, and someday AT&T hopes to add video programming to its services. But the door is being shut to anyone except the corporate behemoths. Small independent companies are in jeopardy all over the country.
Until now, AT&T was required to sell DSL circuits at wholesale rates to companies like Sonic. Those days are over; Sonic will apparently be able to sell DSL circuits for another three years, but if memory serves, that’s only because it signed long-term contracts with AT&T. When those expire, Sonic will continue supporting its DSL customers, but it will not be able to sign up any new DSL customers, just watch its existing customer base slowly dwindle.
AT&T is finally promising to get some fiber in the ground, capable of carrying far more data – faster Internet access plus phone and video. It has no obligation to give access to those circuits to anyone. Sonic, for example, will be shut out of that business. AT&T and Comcast will literally be the only game in town. Oh sure, Earthlink is experimenting with wireless networks and satellite providers will still deliver television stations, but for all intents and purposes the telcos and cable companies will reign supreme.
Sonic has drawn up plans to install its own equipment for DSL service that sidesteps AT&T. The Press Democrat has a nice article about Sonic’s plans to save itself. Details are pretty hazy, perhaps because what they describe is wildly expensive and difficult to accomplish.
I believe in Sonic more than almost any other company I can think of (with the exception of my clients, all of whom are the most intelligent and talented people in the world). It’s a tough world for small companies and Sonic has a hard road ahead of it.