Network Operators Can Prevent Price Wars in Open Access Model, Panel Hears
Network operators can take steps to prevent the biggest risk to open-access networks: A race to the bottom.
HOUSTON, May 4, 2023 – Network operator intervention can prevent a price war between internet service providers on an open access network, said Roger Timmerman, CEO of UTOPIA Fiber at a Broadband Communities event Wednesday.
In an oopen access network, broadband infrastructure is owned one entity, which can be a network operator or a municipality or other form of cooperative governance. The network operator leases the infrastructure to internet service providers. In essence, an open access model brings competition to monopolizing incumbents to the benefit of the user, said Ben Seo from marketing firm Harrison Edwards.
An open access network empowers communities because it gives consumers the power they need to hold providers responsible, continued Seo. Because the model enables direct competition, consumers can use their dollars to demand certain services from their providers.
Although the model is touted as the “gold standard” by UTOPIA Fiber and other network operators, some commentors are concerned that the model will reduce ISPs to price-war strategies to eliminate competition and retain market share.
Price gouging “is a concern” for UTOPIA, said Timmerman. “The providers are stakeholders for us, if the providers are not successful, we have failed,” he said. The company has taken measures to ensure the long-term scalability of its providers. The ISPs on UTOPIA’s network are limited to one price change a month.
According to Timmerman, the rules have resulted in providers finding other ways beyond price to differentiate themselves and their services to consumers. In fact, the most expensive provider on its network is also the fastest growing because it has positioned itself in the public mind as reliable and trustworthy.
We need all types of providers on the network to meet the needs of all the niches of the market, he said. There are providers that focus on connecting multi-dwelling units, those that target government buildings, those that connect school systems, and others that have specialties to fit the needs of the market.
“The network operator does have the responsibility to get involved in [pricing] to protect the ISPs and assure them that they can sustain their business long-term,” agreed Greg Wilson, founder of South African open access model AEX, Automation Exchange
Open access invites innovation in the customer experience, added Seo. Instead of driving down prices unreasonably, it incentivizes providers to find ways to improve the customer experience, enhance lives, and listen to the needs of the consumer. As a result, an open access model sells the product better, he said.
Furthermore, small, local providers are drawn to open access because it alleviates them of the necessity of investing in high-cost infrastructure. In that way, they can focus on selling reliable service to the consumer, said Timmerman.
