Last week we listed the advantages an Incumbent Local Exchange Carrier (the Phone Company) has over its competitors. This week we’re covering the advantages the Competitive Local Exchange Carriers have over the incumbents.
Competitor Advantages:
The incumbent is almost always more expensive: Incumbents charge more because they have to and that they can get away with it. They need to charge more because their costs are higher. Competitive providers need to be more aggressive, price and otherwise, to convince businesses to switch. Competitors can pick and choose their customers so they can keep their costs to a minimum.
Competitors are more agile and responsive: Many incumbents are staffed by employees with loads of experience but who have tenures that date back to the days of the Bell companies. They are referred to as “bell heads” and they are used to a certain pace and level of customer service that isn’t as effective in a competitive market place. Competitive providers are leaner and less top heavy. They tend to make decisions that are focused on helping sales and retaining customers.
Competitors only service business customers: Businesses spend more money on their phone and internet services. Businesses are consolidated in business parks and office buildings, they operate during “business hours”, so business customers are easier and less costly to service than their residential counterparts.
Incumbents are required to service every individual in their footprint, no matter how costly. If you live on a farm and are a mile away from your closest neighbor, but you reside in a telephone company’s franchised territory, the phone company must service your home. And they can’t charge you more than a nearby customer that is much easier to reach. If you’re a customer of the incumbent provider in this example, you’re subsidizing the farmer’s phone service.
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