Why a small company thinks it can beat big telecom with gigabit fiber internet and good customer service.
Image: Mark Kaletka/Flickr
What does a company that rose to prominence selling domain names know about offering gigabit fiber internet access? Well, it at least knows that customers can't stand Comcast and other huge telecom companies, and are desperate for an alternative.
Today, Tucows Inc., an internet company that's been around since the early 90s—it's generally known for being in the shareware business, registering and selling premium domain names, and hosting corporate emails accounts—announced that it's becoming an internet service provider.
Tucows plans on becoming an ISP in Charlottesville, Virginia, where it intends to offer ultra high-speed internet. It eventually wants to expand to other markets all over the country.
"At the simplest level, we'll be offering a lot more product for the same price, and a much better customer experience," Elliot Noss, the CEO of Tucows, said in an interview. "We want to become like a mini Google fiber."
it's our responsibility to make sure content like Netflix is fast on our network
The decision seems like it comes out of left field, but it's actually in line with some recent moves the company has made. In 2012, Tucows launched Ting, a wireless provider that operates on the Sprint network. Ting has won accolades for its customer service and transparent pricing, in which customers pay only for the data they use and the calls they make.
It seems like a minor development for a medium-sized city, but Tucows entry into the broadband world signals that small- and medium-sized companies are realizing that monolithic ISPs are vulnerable, either because they are offering poor connections or because they have poor customer service.
The development could breathe life into a broadband market that has been plagued by companies who are willing to divide up the country so as to not compete with each other (Time Warner rarely competes with Comcast, for instance). But small ISPs—such as MonkeyBrains in San Francisco, Sonic in the Pacific Northwest, and Brooklyn Fiber in New York City—that are dedicated to fast speeds and good customer service have thrived.
"Everyone who has built a well-run gigabit network has had demand exceeding their expectations," Noss said. "We think there's space in the market for businesses like us and smaller."
The Charlottesville service will operate under the Ting name, but the company's wired networks will eschew with the pay-for-what-you-use pricing scheme, and will instead be set up like a traditional internet service provider—albeit with better customer service, Noss said.
"From the outside, it seems odd, but we do email for 2-3 million email boxes. When your emails aren't working, people get angry. We're used to being in a business where things absolutely have to work," he said.
"When we got into mobile, we just took the same business processing and billing and applied them to mobile, which was suffering from incredibly high pricing and a low level of service," he added. "We thought, where else can we take these things we've gotten good and apply them to?"
So, wired internet it is.
In this first deal, Ting will take over Blue Ridge InternetWorks, which already has the fiber infrastructure laid in Charlottesville, a city of roughly 45,000 people and home to the University of Virginia. Ting is expected to start serving customers in the first quarter of 2015.
In the city, Comcast charges $90 per month for a 50 mbps service; CenturyLink charges $40 per month for 10 mbps connections.
We won't spend a lot of time convincing people of the need for a fiber network
Though pricing for Ting isn't set yet, Noss says that he's hoping to charge less than $100 per month for a gigabit connection. He said it won't be "out of touch" with gigabit connections offered by Google Fiber or municipal fiber connections offered in Chattanooga, Tennessee or Lafayette, Louisiana.
Noss wouldn't speculate about what Comcast or CenturyLink might do in response to the entry of a new competitor, and didn't want to take any shots at any of the big companies, other than to say that, in general, "people don't feel very warmly toward the incumbents in existing markets, so we think there's a real opportunity there."
Ting's wireless service, meanwhile, was just rated among the best in the country by Consumer Reports.
In the past, when a competitor has entered the market (especially when it's been a municipally-run one) large ISPs have dropped prices and built out new infrastructure, a sign that competition is a boon for consumers.
Noss said that the company is dedicated to net neutrality as a "sensible business practice" and said "it's our responsibility to make sure content like Netflix is fast on our network. We're not looking for content providers to pay us in a double-sided fashion."
He said he doesn't have any particularly strong feelings on Title II (the reclassification of the internet as a utility, which large ISPs have said will cost them money and affect infrastructure investment), suggesting that "it'll have an impact," but that it will affect all ISPs, so it's simply a different set of rules the company will have to play by.
So, Ting's entry into the marketplace is likely to be good for the people of Charlottesville—but what about the rest of the country? Noss said the company is looking to either buy infrastructure or partner with local governments to lease fiber in a couple of other cities in 2015, with a big push expected in 2016 assuming all goes well with the initial cities. He said the company will consider building its own fiber networks (rather than using existing infrastructure) if it makes sense.
"The one thing we won't do is spend a lot of time convincing people of the need for a fiber network," he said. "We think that's a waste of time, and I think people already see the value."