Integra Telecom announced yesterday, May 11, 2011, that they will no longer accept new orders from businesses with a single location that bill less than $200 a month.
Integra won’t abandon existing customers that fit into that category and still accept new orders from those customers.
This is an interesting move because Integra had positioned themselves as the low cost leader in their markets. They were the “other” choice when a business was looking for POTS & DSL. They flood their territories with sales reps that routinely canvas business parks looking for any available new business.
But this business brings low profit margins with the same customer service requirements. Bottom line, it’s not very profitable.
So what happens when the cost of bandwidth continues to drop while the performance of DSL and other low cost connections improve?
It seems there will be a market sector that will have one or two choices available – the incumbent phone company and cable TV provider. Everyone else will be competing for larger customers. The phone and cable companies should experience an increase in this lower profit business, gauge the market place and recognize a drop in competition. That should lead to price increases and unhappy customers looking for other options.
And there we have the circle of life for small business telecom.