Debugging The DSL Marketing Debacle
The next time we fund high-speed access technologies, they will not be marketed to the masses. And a company without that strategy wont get funded.
If we look back to 1998, offering high-speed Internet access to every home and business seemed to make sense: Lower the price enough and everyone would want DSL. Doing that would quickly get you enough market share to become profitable. Once you amassed customers, you raised prices and made a killing.
It sounded good, but the financial troubles at companies like NorthPoint and Covad ended that particular business myth. The PacBells and Ameritechs could afford to sell DSL for $49.99 a month; the startups, like Covad, could not.
In 2001three years and a generation later the market is gearing up for round two. But this time the target audience is the business sector, specifically all the companies paying too much for T1 and T3 access. And the service will be in the hundredsif not thousandsper month.
For the business customer who needs high-speed access between .5Mbps and 100Mbps, there are two technology breakthroughs currently showing the most promise and opportunity: fiber deployments in the access network and mesh-configured broadband fixed wireless networks. But when the next iteration of technology appears, the access industry wont target the bandwidth void between dial-up and T1 speeds. Businesses with a T1 or T3-plus speed will be the target.
On top of that, the industry will not drastically underprice legacy services like DSL, for example, which only forced service providers offering such capabilities into bankruptcy. Look for feature-rich, breakthrough access technologies to use existing infrastructure in new, economical ways and to be deployed operationally. If they dont meet those requirements, the venture-capital community wont fund them. In the end, the old business models will prevail for those new services.
Roland Van der Meer is a partner with ComVentures, a VC firm that invests in communications companies. Comments on this column can be sent to smartletters@ ziffdavis.com.