What if your phone company dies? To generations of BellHeads, this sort of talk is unimaginable blasphemy of the highest order. Down in New Mexico, SkyWi customers got a taste of the unthinkable.
At the end of 2008, Qwest pulled the plug on SkyWi because, quite simply, SkyWi apparently didn't pay past due bills that added up to $1.7 million dollars by the end of December. Reports say more than 10,000 customers were affected, including public safety organizations, local governments and hospitals.
Fast forward to last Monday, March 9, where Qwest and four other phone companies serving New Mexico -who also had not been paid by SkyWi, some since July 2008 - disconnected circuits for the final time. The local paper said only 153 or so customers were affected by the final shutdown; a testimonial in part to the work of the New Mexico PRC and the local telecommunications providers to fill the gap.
Unfortunately, this isn't the first time we've seen problems of bad business affecting telecommunications services, but this might be the worst in terms of initial impact. VoIP provider SunRocket simply closed its doors, leaving its customers without phone service, but its customers still had their broadband connections live for alternative means of communications - email and chat. SunRocket's customers were also either stock consumers or SOHO businesses.
Pulling the plug on SkyWi was much different, the impact more severe. SkyWi's subsidiaries had managed to embed themselves into the proverbial fabric of the community, extending into county governments and public safety. SkyWi didn't own its circuits; someone else did, so shutting down those circuits effectively cut off all alternatives for communications. Further, public safety and local governments can't simply grab a cell phone and keep on ticking - their inbound numbers are necessary and critical to daily operation.
Back in the days of Ma Bell, when BellHeads ruled the phone company, we didn't have to worry about the phone company going bankrupt. There was one phone company, it was big, it paid steady dividends, and, while boring as hell and only offering phones in one color (black), it provided five 9s (99.999%) of reliable voice service.
Today, we have many types of voice service companies and services (long distance, local, wireline, wireless, cable, pure VoIP), some of whom have taken on some very ugly debt.
The FCC needs to get ahead of the curve and start discussing the heretofore unthinkable. Regulatory tweaks - such as requiring carriers to provide formal 10 to 20 business day notification of service cutoffs to affected customers and the local regulatory agency - may be necessary.
- Doug [1]
Links:
[1] mailto:doug@fiercemarkets.com