I recently came across an interesting situation with one of the smaller ISPs in the nation. I have been trying not to name names, but I'll just go ahead and say that it's Sonic. They're a small competitive local exchange carrier in California, and for several years, they sold an unbundled or "dry" DSL product, which was extremely popular with their customers, because of their transparency, good pricing, equipment flexibility, and a low-shenanigans experience.
In the not too distant past, however, Sonic released and has since standardized on a new service called "Fusion," which in the same vein as U-Verse and FiOS is a more managed service. With Fusion, you get phone (with almost all of the CO-side services), ADSL2+ data service at the rate at which your line will train, and several auxiliary services such as a shell account, hosting, 15 e-mail accounts, and a static IP, included in basic residential service.
The price on this service is $40/mo, plus some fees and taxes. They do not have introductory pricing or contracts, but they are charging the maximum $6.50 FCC line fee, other taxes, and a mandatory $6.50 modem rental fee.
In their attempts to create a product that has a wider appeal, it's interesting to see that they've taken one of the things their customers liked best about their service, and turned it into something that the most technical users on the service believe is a giant nuisance. The gateway itself is fairly nondescript. It's the Pace 4111N, which is the technical and spiritual successor of the extremely venerable 2wire 2700 and 2701 series gateways.
On both DSLReports and the company's own forum (more), a surprisingly passionate and vehement discussion about the merits and demerits of an equipment rental fee (and about "Fusion" as a product.) By and large, the complaints are about how expensive the service will become for new customers, customers that move within a service area, and (somewhat hilariously) how terrible the Pace 4111N is. (I can't speak to that particular issue as I don't have one.)
The oft-cited figure is that a $99 modem (if you buy it at retail price from Best Buy) will cost you $780 over ten years. It's interesting to think about having a single modem for ten years though. I think a more accurate figure is probably $234, for three years. It's a lot, but consider for a moment that some people burn through modems at a much higher rate anyway. When I was troubleshooting my issues last year, I tried three or four different modems, and I now have five on hand, just in case.
It seems that the policy was later clarified – If you aren't receiving promotional pricing (which was confusing to me, apparently $20/mo promotional pricing does exist) then you can mail the modem back and use your own. (Although, Sonic has done some neat things with the Pace 4111N, such as remote management functionality, troubleshooting, and IPv6 support.)
Back to the original thread though, some of the points brought up by Sonic's CEO, Dane Jasper, were pretty interesting as well. He compared the Pace 4111N as an embodiment of the multifaceted service. Fusion isn't just a DSL line, it's a DSL line, e-mail, newsgroups, a shell server, and a phone line with almost every phone service imaginable (including remote voicemail via a smartphone application.)
The inspiration for this, so says Mr. Jasper, is from European ISPs such as Free.fr, Telia, and Swisscom (among many, many others) that provide a single branded piece of customer equipment offering all sorts of different services over the Internet connection. There's a focus on having a single multitudinously useful pipe, and having the endpoint for that pipe be as powerful, prominent, and stylish as possible. This actually sounds a lot like an American company about which I wrote a while back.
This has a few implications. Firstly, I still like the notion that a managed Internet is available. One of the advantages of most all-inclusive Internet packages that charge fees for equipment and maintenance is that you can call up the telco and ask them to do things for you, such as install additional line jacks, qualify you for different types of service, assist in resolving issues with service, etc. I would even take it a step further and register my interest in the existence of a service that put a computer in your home, performed maintenance on it, backed up data on it, etc.
On the other hand, what with most Internet services being regulated as "Information services" instead of a common carrier utility service, it's often not possible for customers to get a plain network hand-off. In fact, right now customers of fast Internet service in the United States are fighting much the same battle that was fought for "unapproved" telephone equipment in the 1960s. By the 1970s and '80s, the idea of replacing "The Phone Company's" lines with your own was so novel that the divested "AT&T" (which still housed Western Electric and Bell Labs at the time) made some amount of money on its own brand of modular telephone adapters, and new phones for the modular system. On the other hand, data networking, which started out quite open (so open in fact, that some tasks were difficult until more recently) and has slowly been becoming more closed, to the point where at least one of the Telcos simply refuses ot let "unapproved" equipment run on its network, and continues to receive a monthly return on rented customer premises equipment that's now nearly a decade old.
Unfortunately, the modern mistreatment of a local monopoly, raising rates that should really be going down, and a failure to improve services have left most Americans hilariously mistrustful of the largest Internet providers (It's gotten to the point where people believe by default that services provided by the incumbent providers are limited in some way, even if they aren't, just because that's what they normally do.)
Of course, I continue to believe that in a perfect world, the incumbent telcos (and maybe the cablecos too) would be coalesced into a single large company, and required to install a giant symmetric fiber network, and then allowed to sell services over that wire, as well as required to allow other companies to sell service on that wire. As I mentioned in my previous article on this issue, it would allow users to choose between a fully managed and integrated telecommunications product, individual services from different companies, and different types of services, such as managed data services, a rental computer situation, and a plain old Ethernet hand-off.
I hate to be the person who says he wishes a particular network service would come to his house, but if Sonic.net were serving my area, I'd almost certainly switch. I like owning my modem, but if the CEO of my ISP hopped on the forum and explained that there was a legitimate use case for it (and, there are a few) then I'd be liable to comply. My understanding is that the Pace 4111N is fairly flexible anyway, unlike some modems which do not allow bridged mode.