No Good Retail Pricing Options for One Small Telco

Ogden, Utah is a one-square-mile town with about 823 households, Ogden Telephone Company is the entity providing fixed network communications services to “over 1500 households and businesses” in Boone County, with internet access speeds up to 200 Mbps, costing between $30 a month for 3-Mbps service up to $330 a month for the 200 Mbps version.

Residential phone service retails for about $30, after the taxes and fees. The firm also provides video subscriptions, supplied over a fiber-to-home network. And there is no local cable TV operator competing for customer attention.

Apparently, customers not choosing a bundle including voice service now have to pay an $80 fee. Other telcos seem to “solve” their revenue problems in similar ways, charging more money per-unit for purchases of “naked internet service” without voice than for a bundle including two or three services.

Sometimes, especially on promotional plans, the cost of buying voice service is low enough to entice customers to buy a triple play plan.

Now, though, it appears Ogden Telephone charges customers who do not buy voice service a fee of $80 a month. Obviously, it makes more sense to buy voice service even if a customer does not plan to use it.

The plan obviously is going to irk customers who otherwise would not buy a voice line. Telco executives are likely to say they have an investment in fixed infrastructure that has to be covered. That is true enough.

But there are other ways to structure retail fees, within regulatory reason. Stand-alone service price could be raised, with discounts on full bundle purchases. Charging a basic “network connection fee” with additional sums for discrete services is likely not lawful. Perhaps none of the alternatives are ideal.

And that is the larger problem. One might question the future viability of most smaller telcos in the United States as all legacy services mature and as service alternatives proliferate. Ogden does not seem the type of community where a new competitor would want to build a fixed network.

So wireless or mobile alternatives, some more exotic than others, would seem to represent the hope for heightened competition in the market.

One is not popular suggesting that, in many situations, any fixed network solution is the “wrong” way to supply communications services in the 21st century. Nevertheless, that might become a reality. And even that outcome might be debatable, in many nations, as even mobile or wireless access businesses face revenue and profit pressure.

Simply stated, without subsidies, there is no viable business model for many rural and small telcos. Those problems are exacerbated as consumer demand for telco products shifts and drops.