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SBC CEO: Pay up if you want to use our pipes 613

Posted by Hemos from the the-next-battle-royale dept.
acousticiris writes "If there were any delusions that Ma Bell Wasn't Back, SBC CEO Edward Witacre has cleared that up in an interview with Business Week Online. When asked about Google, Vonage and other Internet Upstarts he responded in typical Ma Bell Style: 'How do you think they're going to get to customers? Through a broadband pipe. Cable companies have them. We have them. Now what they would like to do is use my pipes free, but I ain't going to let them do that because we have spent this capital and we have to have a return on it. So there's going to have to be some mechanism for these people who use these pipes to pay for the portion they're using. Why should they be allowed to use my pipes?'."
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SBC CEO: Pay up if you want to use our pipes More

SBC CEO: Pay up if you want to use our pipes

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  • Somehow (Score:5, Funny)

    by Short Circuit ( 52384 ) * <mikemol@gmail.com> on Monday October 31, 2005 @11:39AM (#13915752) Homepage Journal
    This [bash.org] doesn't seem as funny as it used to be.

  • Uhhhh.... (Score:5, Insightful)

    by ShyGuy91284 ( 701108 ) on Monday October 31, 2005 @11:40AM (#13915765)
    Don't they have ISP fees much like we do, whom probably pay the phone company for using their "pipes"?

    • Re:Uhhhh.... (Score:5, Insightful)

      by BlogPope ( 886961 ) on Monday October 31, 2005 @11:54AM (#13915926)
      This is the same issue L3 and Cogent had. They have the customers, someone else has the content. Their customers want access to the content, but generally don't have any content themselves, creating an unbalanced situation. In days of yore, all ISP's had a mix of content users and content providers, and they all agreed to share access at no cost. No you have providers like L3, Comcast, SBC, and Verizon who specialize in the user side of the equation, and have various mechanisms in place to dissuade content hosting.

      By this very nature, they will wind up receiving far more traffic than they send. Now, these pipsqueaks (in the ISP world, they are small) are causing a fuss, wanting to get paid for all this extra traffic that is being put on their network, far more than they are putting on others networks. But what about the flip side? These ISP's are Leeches writ large, sucking other users content while providing non of their own. They charge clients $$ for access to the internet, then want to charge the internet for access to their clients.

      Bad stuff is coming. This will be fought amonst the smaller Tier 1's, and it will be a bloodbath.

      • Re:Uhhhh.... (Score:3, Insightful)

        by Altus ( 1034 )

        so Big content provider signs up with ISP "A" and pays them to let the content provider ship bits out onto the internet and to the consumers.

        the consumers pay ISP "B" big money to let them recieve bits of content from the content provider.

        this is not an unbalanced situation... it doesnt matter which way the bits are flowing only that they are flowing... neither ISP could exist without the other... if ISP "B" cuts off trafic from the content provider their customers will have no reason to keep using their se

      • Re:Uhhhh.... (Score:5, Interesting)

        by bigpat ( 158134 ) on Monday October 31, 2005 @01:11PM (#13916600)
        They charge clients $$ for access to the internet, then want to charge the internet for access to their clients.

        Yes, this is what the middleman always tries to do, in the case of communications services that is why we impose government regulation, which in turn creates a whole new set of middlemen but this time with guns.

        Really what this fucker, Edward Witacre, is saying that his customers need to pay him twice for access to other people's content which his customers themselves go out and request. If he was talking about Spammers only, then that might be an acceptable point, but he wouldn't exaclty be looking out for his customers if he took kickbacks from spammers. So , really we are talking about content that his customers want and are already paying the content providers to receive. And apparently he is charging those customers enough money to make a profit already, so his "need" to charge the other end of the communciation to be able to respond to his customers requests is purely based upon greed not neccesity or any reasonable notion of equity and fairness.

        Also, we should beware QoS (Quality of Service), it is the ISPs way of charging for differentiation of services. If the ISPs have their way they will delay packets that haven't paid a QoS tax. Far from being a way of providing better service to those that need it, it is a way of getting those that need lower latency (and can "afford" it) to pay more. So, those that have money (businesses, rich individuals) will get screwed by having to pay more for Internet Access and those that are paying less will get screwed when their packets are queued up for whatever arbitrary amount of time will squeeze the most money out of people. QoS will kill the Internet as a flexible communications platform. QoS is the DRM of networking.

        • Re:Uhhhh.... (Score:5, Insightful)

          by electroniceric ( 468976 ) on Monday October 31, 2005 @01:55PM (#13916959)
          in the case of communications services that is why we impose government regulation, which in turn creates a whole new set of middlemen but this time with guns.
          ..and the government at least has a charter to represent the public interest. When regulation is done properly, it means the regulators strike a balance between consumer interests (public as consumer) and business interests (public as worker and investor). The problem is that for 20 years there have been no serious efforts to make any forward reaching regulation, under the various arguments that "regulation always makes things worse", and "the government can't keep up with the market". There's some truth to these criticisms, but AFAICT the main problem has always been that we continue to allow vertical integration between a competitive market (carrier services) and natural-monopoly public infrastructure (phone lines and bandwidth). The minute we separate them, we can deregulate the carrier market all we like, and it will promptly commoditize. Telephone lines can be kept either a a government-provided service (which would probably make their quality work at at about the level of roads), or go back to utility-style control of the maintenance providers.

          This CEO says he "owns" the pipes. Fine, let's get the government all the way out of this venture. I want a reckoning of much money local, state, federal governments have put into the building and maintenance of those pipes. And if SBC's going to "own" them, they'd better cut those governments some big ass checks to compensate them for their investments, and the government can plow that into making the communications market competitive again. Otherwise, I hope the state AG's start looking hard in SBC's direction...

  • Empty Threat (Score:5, Insightful)

    by Godeke ( 32895 ) * on Monday October 31, 2005 @11:40AM (#13915769)
    The comment is interesting, but an empty threat. The *customer* is paying for the pipes. The companies that the customer contacts are not using the broadband pipe except on behalf of the customer: any downstream transmitted across that pipe is paid for by the customer. As a specific example, I can pay for various downstream speeds with my cable company and DSL is ordered with a speed for upstream and downstream. That price breakdown makes it clear that the broadband payment I'm making is for both upstream and downstream, otherwise why would my upstream remain constant but my downstream increase if I throw more money at the cable company?

    On the other side of the fence the "Internet Upstarts" are paying for *their* pipes as well. Even the pipes "in the middle" are indirectly paid for, although that process can sometimes breakdown (as Level3 and Cogent are proving). It isn't like there is some magic way to get access from point A to point B "for free". The costs are just bundled in your access bills. What ticks off a telecom is that the prices for packets are so darn *cheap*. It makes land line voice look expensive, which is driving the adoption of VOIP.

    If they decide that paying for your pipes (both directions) doesn't give you access to the services you want, the only option is to impose filtering. If they decide to filter, block or otherwise prevent the customer from unhindered access to Internet products they will be in violation of the common carrier provisions. Which is fine if they want to then make a stab at blocking *all* bad stuff the Internet contains. However, I suspect that's not where they want to be, as without common carrier status they become liable for anything they *fail* to block.

    Frankly, all this comment proves is that they are desperate for revenue and yet know they can't raise rates on telephone services (thanks to regulation) so they are flailing around for anything they can think of. Legal probably sent him a "memo" right after that comment got back to them though, as I'm pretty sure *they* understand the ramification of the implied threat.

    • Re:Empty Threat (Score:3, Insightful)

      by El Cubano ( 631386 )

      You raise some excellent points, especially about them flailing about for revenue. All I can say is that their service sucks. That is why they lost me as a customer. If they want revenue, they should offer quality service. I mean, this is not a new concept.

      • I remember the noble "Fibre-to-the curb" promises made 15 years ago. Where's my fsking fiber to the curb? I moved into a new neighborhood about 6 years ago and suffered with a crappy dialup that would never go faster than 28k because cheap-ass SBC had my whole neighborhood multiplexed back to the central office. No DSL, no 56k. Screw them. Even Comcast cable, who I really *don't* have a problem with is better.

      • Nowhere for customers to go..... (Score:4, Informative)

        by Danathar ( 267989 ) on Monday October 31, 2005 @02:43PM (#13917339) Journal
        I find it interesting reading all the comments about "Well...if they do that then change providers" as if EVERYBODY as multiple broadband providers.

        FACT:

        The Majority of DSL/Broadband users have one and ONLY one provider available to them. Cable and DSL co-exist ONLY within short distance of CO office facilities. Beyond the DSL length restriction Cable modems are practically (don't start on high latency satelight) the only game in town. If Adelphia decided to block google there is not a damn thing I could do about it besides paying to provision a data line to my house. DSL really is'nt deployed on back roads beyond major metro areas.

    • Re:Empty Threat (Score:3, Insightful)

      by paranode ( 671698 )
      Exactly. His comment is like saying he wants a piece of online gambling profits because people are using 'his pipes' to play.

    • Re:Empty Threat (Score:5, Interesting)

      by AviLazar ( 741826 ) on Monday October 31, 2005 @11:52AM (#13915903) Journal
      100% agreed. Google is not transmitting on XYZ's pipes on their own initiative...the customers are and they are paying for this. They are asking google to send them information - something they ask of ANY website out there. That's how the internet works.

      I hope ma bell actually tries to do this "Sorry you cannot access GOogle because they will not pay us a fee"...then the customer leaves the DSL company for the cable company. Also, this guy doesn't realize that internet transmissions piggy back all the time...so someone could make the same argument against this baby bell. "Yea one of your customers wanted to access XYZ website and because of this their ip route passed through our pipes...pay up or your customers won't get access".

      • Re:Empty Threat (Score:5, Interesting)

        by rk ( 6314 ) on Monday October 31, 2005 @12:14PM (#13916143) Journal

        'I hope ma bell actually tries to do this "Sorry you cannot access GOogle because they will not pay us a fee"...then the customer leaves the DSL company for the cable company.'

        And what of the rumors (confirmed or not?) that Google has been buying up scads of dark fiber? Does this guy really want Google to decide to become a common carrier and eat his lunch too? What are they putting in the water on the executive floor these days?

        I give any company who tries to deny users access to internet services because the content providers won't pay them about 6-12 months to live. They need to come to grips with reality that information transmission has become a utility, and that people mostly just want to buy packets in and packets out. Denying the transmission of information when that's your only product is pretty damn stupid. If SBC tries this, I will buy puts on SBC so fast I'll make their heads swim.

        Well, not really, 'cause I'm a little fish, but you get my meaning. :-)

        • Re:Empty Threat (Score:3, Interesting)

          by Al Dimond ( 792444 )
          You and I "just want to buy packets in and packets out". Most other people could be fooled by the ISP into thinking that any company that does allow unfettered VOIP is a saintly company with special equipment or something, and that there's a good reason for it to be disallowed.

          Hopefully you're right about the quick death of companies that act deny access. Hopefully there are some ISPs that will figure out how to get word out to the people in a way they understand that these scummy ISPs are denying the fun

        • Re:Empty Threat (Score:3, Interesting)

          by thebdj ( 768618 )
          Unfortunately it probably wouldn't kill SBC (who will be changing the name to AT&T before too long). They have plenty of money, I mean they are a HUGE telecom and hold over half the share of Cingular. Their DSL subscriptions might lower, but if they ever come through on the idea of fibre, well people will start switching for larger bandwidth (at least those who care). Not to mention if they follow the plan Verizon is taking with FIOS and intend on offering TV through the service, well I hope the cabl

        • Re:Empty Threat (Score:5, Funny)

          by ozbird ( 127571 ) on Monday October 31, 2005 @02:26PM (#13917222)
          What are they putting in the water on the executive floor these days?

          Greed, which is a bad mix for their existing psychopathic tendencies. They need a commonsense and ethics infusion, stat.

    • Backing Up that Threat (Score:5, Insightful)

      by woodsrunner ( 746751 ) on Monday October 31, 2005 @12:23PM (#13916210) Journal
      There is software that can detect VoIP traffic and even identify the carrier. Telcos use this to *protect their networks*, but it can also be extended to protect their profits.

      While it is illegal for Witacre to drop all VoIP traffic, it doesn't mean he won't be identifying this traffic and providing it with highly degraded service with added noise, especially if the call's destination is one of his clients. This way he can do his best to maintain his customer base since the average customer will believe that using VoIP is like talking through a tincan.

      Sure in the end the buggywhip tech of the old Ma bell will loose out, but it will be a prolonged fight. Witacre rebuilt ATT, he's pretty shrewd. -- the guy just single-handedly overturned one of the largest anti-trust cases ever. I don't think he's going to be easy to presuade with some little "laws".

    • Re:Empty Threat (Score:5, Interesting)

      by billn ( 5184 ) on Monday October 31, 2005 @12:34PM (#13916314) Homepage Journal
      From http://www.ftc.gov/bcp/guides/baitads-gd.htm [ftc.gov]:

      "Sec. 238.0 Bait advertising defined.1

      Bait advertising is an alluring but insincere offer to sell a product or service which the advertiser in truth does not intend or want to sell. Its purpose is to switch consumers from buying the advertised merchandise, in order to sell something else, usually at a higher price or on a basis more advantageous to the advertiser. The primary aim of a bait advertisement is to obtain leads as to persons interested in buying merchandise of the type so advertised.

      Sec. 238.1 Bait advertisement.

      No advertisement containing an offer to sell a product should be published when the offer is not a bona fide effort to sell the advertised product. [Guide 1]

      Sec. 238.2 Initial offer.
              (a) No statement or illustration should be used in any advertisement which creates a false impression of the grade, quality, make, value, currency of model, size, color, usability, or origin of the product offered, or which may otherwise misrepresent the product in such a manner that later, on disclosure of the true facts, the purchaser may be switched from the advertised product to another.

              (b) Even though the true facts are subsequently made known to the buyer, the law is violated if the first contact or interview is secured by deception."

      If an ISP (as in P stands for Provider), they can't filter/block access to anything and still sell 'Internet Service.' To do so means they become a Publisher, since they're controlling what you can access (I think AOL fits into this role in certain aspects), and that's a bundle of liability to make many companies tread lightly. If I buy service from a company offering 'Internet' access, I have a reasonable expectation that any IP based technology will work with it, be it software I run on my computer, or an off the shelf consumer device designed to work with the Internet. Companies providing bundled services need to step lightly on this subject. Selling me 'Internet' access, blocking VOIP transit, and offering a comparable VOIP service (for a fee, of course), is asking for trouble.

  • Who is paying the bills... (Score:5, Interesting)

    by Anonymous Coward on Monday October 31, 2005 @11:40AM (#13915770)
    Why should they be allowed to use my pipes?

    Because the customer is paying for them there pipes. Last time I checked, yip billed yesterday, I paid for my phone line, cable TV with broad band and if you want to include the cell phone, that is mildly broadband, then that too. Now Polyester Ed, if you are paying for my bills then you can say what can and can't go over the line; you want to regulate the neighbors line then you'll have to pay for that one too. I bet Google has some kind of leased line also but I doubt you can pickup their bill though; you'll have to ask them as I think they have some kind of business model or some other buzz word that will confuse you.

    Now I believe Poly Ed is talking about the backbone network infrastructure that becomes a little shady. Does it make sense to pay 7 cents a minute to cross these main backbone lines? I wouldn't push a $100 billion gorilla too far; you may find that they'll replace your lines with something they own and then you'll be paying them.

    • Re:Who is paying the bills... (Score:4, Insightful)

      by Anonymous Coward on Monday October 31, 2005 @12:55PM (#13916488)
      There's a lot of misinformation in these posts about Ma Bell and the network.

      The prevalent theory on Slashdot is that Ma Bell gets the infrastructure paid for by government subsidy, and triple charges the users for using it (consumer + ISP + content provider). The theory seems to go on that Ma Bell just sits there raking in billions of dollars a year by doing nothing.

      The fact is, the Bells put a *HUGE* amount of their own money into the ground. They run copper and fiber to approximately 100% of the houses in their areas, along with the DSL switches, fiber switches, and other pieces of expensive equipment. Just the maintenance on that investment is in the *billions* of dollars per year.

      You all seem to think this investment should just be written off, and the pipes be free for everyone.

      Fact is that they are NOT charging more than once for the infrastructure. The Consumer pays for the infrastructure from the intr-LATA network up to the side of their house. The ISP pays for the facilities (the OC3 or OC12 big pipe) that connects their infrastructure to the internet back-bone. The content provider pays either for the consumer network (for very small providers) or something similar to the ISP model, they are paying for a big pipe to get deliver more content.

      Interestingly, in this model, no one is directly paying for the internet backbone. All of that is paid for via the other plans -- ie, some portion of the consumer, ISP or content provider payment is diverted to pay for that. So instead of triple charging, they are really just charging for the piece of the network the customer is using, and using part of that revenue to pay for the backbone.

      Yes, Ma Bell is in business, which means she wants to make money. Its just not as unfair as this site would make aout. Also with the entrance of cable, cell phone, satellite, and VoIP, they are also not a monopoly.

  • rephrase the debate (Score:5, Funny)

    by the arbiter ( 696473 ) on Monday October 31, 2005 @11:40AM (#13915774)
    Better question: Why the hell should I use SBC's pipes if they're going to be such dickheads about it?

    Now I feel better.

    • You don't remember Ma Bell, do you? (Score:4, Interesting)

      by Overzeetop ( 214511 ) on Monday October 31, 2005 @11:57AM (#13915966) Journal
      $0.25/min long distance, and if you didn't like it, you could write a letter - cause Ma Bell owned the system. Telephones? Oh, no, you couldn't buy them, they could only be leased from Ma Bell on a monthly basis.

      There was a reason that Bell was broken up. It seems that everyone at the FCC was born after that decision, and only feels pity for the poor, destitute baby bells taht just can't compete as little guys. And they're so darned cute, wouldn't it be great if they were just one big company. Think of the efficency! Phone rates could be cut in half and in half again, if they just weren't made to compete with one another. *shakes head*

      The whole separation of infrastructure from service is a good thing, in general, for prices (California's f*cked up electrical system notwithstanding). If you let one company control the lines and the service, all you'll get is lousy service and high prices.

      This is where we're headed, and taking your business "elsewhere" won't mean much when most of the system ends op owned by one company, whether through buy-outs or mergers.

      • Re:You don't remember Ma Bell, do you? (Score:4, Interesting)

        by Grishnakh ( 216268 ) on Monday October 31, 2005 @12:37PM (#13916344)
        People have very short memories. I'm barely old enough to remember the days of $0.25/min long distance from Ma Bell (I'm 31), and I certainly agree with you. But my mom, who's in her 60s, wishes we could go back to those days because it was so much simpler than having all these different companies to deal with, plus the customer service these days is so horrible.

        I try to remind her about how expensive it was to use the phone and how much we were held back technologically, but that doesn't seem to matter much to her.
    • Why the hell should I use SBC's pipes if they're going to be such dickheads about it?
      Because you don't have a choice. I believe that's how monopolies work, yes?

      --LWM

  • Why should they be allowed to use my pipes? (Score:5, Insightful)

    by dsginter ( 104154 ) on Monday October 31, 2005 @11:41AM (#13915782)
    Better yet, why should we continue to subsidize a dying business? First, you bitch when municpalities try to install subsidized internet for the masses, then you bitch when people try to use a monopoly connection to eliminate your services.

    Stop whining and change your dying business model.

  • I knew that.. (Score:5, Funny)

    by SillySnake ( 727102 ) on Monday October 31, 2005 @11:41AM (#13915783)
    I knew that slashdot was going downhill, but why are they posting stories about CEO drug use? Who really cares who uses which pipe to smoke thier stuff in. It's all about puff puff pass people!

  • Wait a minute . . . (Score:3, Insightful)

    by scarolan ( 644274 ) on Monday October 31, 2005 @11:41AM (#13915789) Homepage
    Whoa, wait a minute there. The customer has *already* paid to 'use the pipes'. I pay a monthly fee for internet access - why should I or Google, or Vonage have to pay extra to use the pipe for whatever I want?
    • It's simple. This CEO wants more money so he can buy a couple new Bentleys and his own jet, so he wants to add extra fees to pay for all this by using a slimy argument about VoIP, even though there's no real difference between VoIP data and any other data which people are already paying his company for.

  • I guess I'm confused (Score:4, Interesting)

    by amliebsch ( 724858 ) on Monday October 31, 2005 @11:42AM (#13915791) Journal
    What am I supposed to be outraged about? Broadband providers have never, as far as I can recall, provided bandwidth free of charge to their customers; nor would I expect them to. What am I missing here?

    • Re:I guess I'm confused (Score:5, Insightful)

      by meringuoid ( 568297 ) on Monday October 31, 2005 @11:48AM (#13915852)
      Broadband providers have never, as far as I can recall, provided bandwidth free of charge to their customers; nor would I expect them to. What am I missing here?

      Your man here runs a phone company. His customers pay him for voice service, and also he gets paid by broadband providers for the right to run internet connections over the same line (or possibly he sells broadband himself - I don't know exactly how it's done in this particular case).

      He has now noticed that some people are using the broadband connection instead of the voice service. There go his profitable long-distance and international charges! He charges a nontrivial amount per minute for a call to Tokyo, but these people are rolling it all into their modest monthly broadband fee! Aargh!

      The words 'buggy whip manufacturer' spring immediately to mind.

  • Because they are in part, public property... (Score:5, Interesting)

    by sycodon ( 149926 ) on Monday October 31, 2005 @11:42AM (#13915797)
    You installed these pipes while you were part of a regulated monopoly, using public right of ways.

  • Back... but too late (Score:4, Insightful)

    by eSims ( 723865 ) on Monday October 31, 2005 @11:43AM (#13915799) Homepage
    Ma Bell is back, but it's too late...

    This isn't 1905 and as long as I have a few choices Ma Bell won't be one of them. I've got cable... if they blow it I can go satellite, Power, Fiber, and worst case scenario I'll become an activist to set up a community Coop ISP.

    Ma Bell is to late in coming back to the game!

    • No she's not (Score:4, Insightful)

      by geekoid ( 135745 ) <dadinportland@y[ ]o.com ['aho' in gap]> on Monday October 31, 2005 @11:52AM (#13915902) Homepage Journal
      She is going to come in, claim to fix all those nasty problems with the internet, and get money to do so.

      People will pay to have a 'cleaner','smarter' internet, and she will have a contract that basically lets her control anything comeing into or out of the computer.

      These people are really good at this game. They will stand in front of congress and lie, they will cheat, they increase there rates and call it a tax so people will think it's cause of the government.

      SHe's a bitch, she is smart, and she has no morals. Don't turn your back on ma bell, she'll put a shiv in it.

      • Relax - Ma Bell doesn't have her own teeth (Score:5, Interesting)

        by avronius ( 689343 ) * on Monday October 31, 2005 @12:35PM (#13916319) Homepage Journal
        1. The majority of lawmakers utilize the internet at home. Many of whom pay attention to the bills they pay at home, even if they are willing to spend 40k on a toilet seat at the office. Most adults do not allow their child to *call* overseas, but would think nothing about allowing them to visit an overseas website. If there were suddenly surcharges for every node hit along the way, the internets usefulness for the majority would suddenly decrease dramatically.

        2. The US is not the only country that provides access to (or content on) the internet. Lobbying the US govt. for the right to bill website owners will not fly. If the EEU says "No, we don't agree", what would the US government do in retaliation? Fortunately, congress does not have the power to legislate communication billing methods for the globe.

        3. Connection fees are already paid by parties at each end of any transmission. So, technically, there is already a double billing going on. What they are looking for is a third (and fourth and fifth...) helping.

        4. Monopolies are illegal in the US (and Canada, and probably most of the other big trade countries. Haven't checked tho). "Ma Bell" will never again be a monopoly. The law isn't the only reason, either. People are more informed today about the impact that monopolies have on prices and availability of service. We expect choice, and will not tolerate a single vendor option.
    • worst case scenario I'll become an activist to set up a community Coop ISP.

      and lease the lines from.. Ma Bell? This is the joke of so-called competition. The lines belong to Ma Bell (at public expense), so you're just dealing with the same crap, different face.

      Cable companies are no picnic either. Many offer their own VOIP products and use QoS on their routers to make sure that their packets get priority routing over Vonage and other 3rd party providers. What kind of competition can you have when they're

    • Re:Back... but too late (Score:4, Insightful)

      by demachina ( 71715 ) on Monday October 31, 2005 @12:11PM (#13916113)
      "if they blow it I can go satellite"

      Nice empty threat but I think if you actually had to do it you would be in for a rude awakening. Satellite internet is expensive(like $60/month), downloads are capped(like 200 MB/day), uplink is very slow and ping times are horrible. Ping times of 1 1/2 to 2 second kill online gaming and is somewhat annoying for things like VoIP and video conferencing. You are behind a firewalled server so you wont be serving any web pages over it, the uplink speeds preclude that anyway. VPN is difficult at best, requires additional charges and special accelerator gear to not be unusably slow and it is still annoying slow for OpenSSH. I don't think the satellite providers are investing much in new capacity, because no one will buy their product unless they have no choice so its not a growth business, which leads to deteriorating performance as they cram more users on the same satellites.

      Satellite is only desirable, or maybe tolerable, if you live in rural areas with no other option.

      You're only real options are likely to be:

      - a cable monopoly
      - a phone company monopoly
      - maybe a power company monopoly someday
      - wireless

      It remains to be seen if wireless avoids being monopolized, because for example the above monopolies sue if a city tries to provide it as a free service. If Wimax becomes the dominant wireless medium I believe it also has licensing structure that can create monopolies depending on who snaps up the license in a give area.

      Luckily you do have several monopolies competing with each other which is better than have no competition, but as you see with oil companies if you have several big players who decide to collude they can maintain artificially high prices so they all still profit at the expense of consumers.

      P.S.

      Probably wont win any points saying it but it is true that cable and phone companies have invested vast sums in copper and now fiber infrastructure. You do need to insure they make a profit, and are able to service their debt as long you want that infrastructure in your home. Now if wireless could be made to work and provide similar service it obviously eliminates a lot of that infrastructure cost but I'm not sure you can get anything close to the same performance on wireless anytime soon. The other downside is wireless means we get bathed in some more potentially carcinogenic radiation.

  • Now you know... (Score:5, Interesting)

    by Noryungi ( 70322 ) on Monday October 31, 2005 @11:43AM (#13915803) Homepage Journal
    ... why google has been buying tons of dark fiber in the past couple of years.

    One of these days, this jerk^W typical CEO will realize -- too late -- that he has painted his company in a corner with that type of statement. By then, it will be too late to save SBC, but not too late to grant himself a huge, last-minute bonus.

  • Free? (Score:3, Insightful)

    by Boss, Pointy Haired ( 537010 ) on Monday October 31, 2005 @11:44AM (#13915805)
    Unless i'm on the wrong tariff, there's nothing "FREE" about the £19.99 I throw at my cable provider each month.

  • "We've Spent Capital On This" (Score:3, Insightful)

    by kah13 ( 318205 ) * on Monday October 31, 2005 @11:47AM (#13915842) Homepage
    • The investment on the local loops was largely made under the Bell days, and is depreciated
    • The capital on the DSLAMs was invested long enough ago that it should be depreciated (and some of it wasn't invested by SBC in any real form)
    • The fiber interconnects have been available at rock-bottom prices due to overbuilding

    I appreciate that I've been getting all this broadband for free all this time. Oh, wait, I pay a monthly fee for that. Hmm, perhaps I can pay that fee to someone else who won't be so restrictive? Where is that number for Speakeasy...

    The gentleman seems to have an odd understanding of how this all works. Google pays him to get to me, and I pay him to get to Google. The second that changes, I'll pay someone else who doesn't feel that it's a privledge to get my business.

  • Consumers paid for access, not "pipes" (Score:5, Insightful)

    by MDMurphy ( 208495 ) on Monday October 31, 2005 @11:48AM (#13915851)
    What a moron.
    What the hell does he mean by people using his "pipes" for free? I pay every month for my access. And I'm not paying for wires strung to my house, I'm paying for bandwidth, for the ability to get packets in and out of my router. Nothing free here, I paid for it.

    Yes, there's someone on the other end making money on this and the greedy bastard thinks he should get "his share". Does he want that to apply to every transaction?

    I called and ordered a pizza for delivery last night. Do they get a cut?
    I checked my bank balance and paid a couple bills this weekend. Do they get a transaction fee?
    I do work from home some days. Do I need to give them a portion of my pay when I do that?

  • Hasn't anyone learned from previous failures? (Score:3, Informative)

    by url80 ( 927250 ) on Monday October 31, 2005 @11:49AM (#13915863) Homepage
    Hasn't anyone learned from the failures of the CIX effort in the early nineties?

    I mean.. let's get real.

    Best, url the bounty network [bountynetwork.com]

  • This is why Google is dabbling in Wireless (Score:5, Interesting)

    by Gumber ( 17306 ) on Monday October 31, 2005 @11:50AM (#13915878) Homepage
    This sort of mindset is exactly why Google is dabbling in setting up WiFi networks and why Microsoft has been investing in community mesh networks. They need a credible alternative to DSL & Cabel internet access, or the providers of last mile connectivity will start looking for a share of revenue of everyone who delivers services over IP for access to "their customers" That's right, they want to charge you for the pipe on one end, and turn around and charge the people you are connecting to, on a per transaction basis, if at all possible.

    Don't think they aren't determined to find a way to do it.

    What's needed is enough competition to make it impossible for them, and that is going to take more than a choice between the cable company and the phone company, even better if some of that competition has ways of turning a profit beyond simply gouging for connectivity.

  • It's about VOIP (Score:5, Insightful)

    by quentin_quayle ( 868719 ) <quentin_quayle AT yahoo DOT com> on Monday October 31, 2005 @11:52AM (#13915896)

    In context, he is talking about VOIP.

    In effect, SBC is providing the means by which VOIP providers are competing with SBC's phone line business. That's what bother him.

    But he has to understand, if SBC is going to offer generic internet service, they have to tolerate customers using it for whatever they want. What Whitacre and his ilk would like is to regulate what customers can do with the service. This would start with shutting out competition and progress to charging for each protocol, port, destination, etc..

    We have to preserve the common carrier principle in internet access.

    • Re:It's about VOIP (Score:5, Interesting)

      by Control Group ( 105494 ) on Monday October 31, 2005 @11:56AM (#13915954) Homepage
      He may think he'd like that, but he's wrong.

      If he starts regulating the content of data on his wires, he loses common carrier status. Now he becomes liable for every snuff/rape/bestiality site that crosses his wires in the US. He's liable for every pipe bomb HOWTO, every warez download, every mp3 stream, every alt.bin.illegal.stuff post, every pedophile in an IRC channel, et cetera, et cetera.

      At that point, SBC either goes out of business or spends truly profligate amounts of money - even in comparison to current business spending on Capitol Hill - to try and get common carrier redefined.

      • he can cripple without sniffing packets (Score:4, Insightful)

        by steve_l ( 109732 ) on Monday October 31, 2005 @12:17PM (#13916167) Homepage
        If their routers deliver a consistently bad QoS to all packets sent over the wire: a bit of jitter, nothing to affect bulk throughput, just the whole VoIP experience, then you can get a bad skype/google talk experience without ever having your packets sniffed.

        then you sign up with the cable telco's "high quality VoIP solution", which pretends to mean better pipes upstream but really means TCP without the jitter, they get their tax.

        -steve

      • Re:It's about VOIP (Score:4, Informative)

        by Holi ( 250190 ) on Monday October 31, 2005 @12:18PM (#13916176)
        SBC broadband internet does not have common carrier status , nor does any other internet service provider in the US. Why this common misconception persists is a mystery to me. They are coverd by the term Enhanced Service Provider (ESP), in the telecom world common carrier status carries may burdens and regulations that no ISP wants nor does the fcc want to grant it. so please lets stop making this claim as it is completely false.

  • The Pipes are already paid for... (Score:5, Insightful)

    by fallen1 ( 230220 ) on Monday October 31, 2005 @11:54AM (#13915924) Homepage
    since the American people subsidized them through TAXES and SURCHARGES WE FUCKING PAID. How about we, The People, take back the part of those pipes WE paid for and then you, "the corporations"*, can pay The People for using OUR pipes that you're making money off of. That way we, The People, can choose who WE want to be in control of the pipes. Just so long as Google stamps out an iron-clad privacy policy where they don't frigging data mine everything on the pipes I'd give all my pipes to them in exchange for fast access (something along the lines of 10mb/10mb would be nice) and the ability to host my own servers.

    *Please note that corporations are lower-case and should be treated as such. They should not hold the same status legally as The People (we're mentioned in the Constitution, not them). Period. I'm all for the "American Dream" but not at the total expense of We, The People.

  • Coming soon.... (Score:5, Insightful)

    by JWW ( 79176 ) on Monday October 31, 2005 @11:55AM (#13915939)
    Wow after comments like these I can almost feel the next article coming on about how far the US is lagging behind the rest of the world on broadband.

  • What Brewster Kahle (internet archive founder) say (Score:3, Interesting)

    by OlivierB ( 709839 ) on Monday October 31, 2005 @11:56AM (#13915948)
    This has been quite intelligently commented on NerdTV Ep4 Juicy bits [pbs.org].
    He mentions AOL initial business model to have content providers pay AOL rather than AOL paying the providers and how they totally missed the opportunity to rule the internet.
    Not a totally stupid idea...

  • What was his previous job ? (Score:5, Insightful)

    by Alain Williams ( 2972 ) <addw@phcomp.co.uk> on Monday October 31, 2005 @11:57AM (#13915965) Homepage
    By any chance: did Edward Whitacre work in the music industry ?

    Pretty much sounds like it: trying to defend a business with an out of date business model by attempting to 'regulate' rather than trying to compete and give their customers what they want.

    It may take a few years but unless he changes business tactics his company will slowly die, just as the dinosaurs did when conditions changed and they did not adapt fast enough.

  • The next question is just as worrisome. (Score:5, Insightful)

    by Irvu ( 248207 ) on Monday October 31, 2005 @11:59AM (#13915985)
    What's your approach to regulation? Explain, for example, the difference between you and Verizon in how you are approaching regulatory approval for Telco TV [digital-TV service offered by telecoms].

    The cable companies have an agreement with the cities: They pay a percentage of their revenue for a franchise right to broadcast TV. We have a franchise in every city we operate in based on providing telephone service.

    Now, all of a sudden, without any additional payment, the cable companies are putting telephone communication down their pipes and we're putting TV signals. If you want us to get a franchise agreement for TV, then let's make the cable companies get a franchise for telephony.

    If cable can put telephone down their existing franchise I should be able to put TV down my franchise. It's kind of a "what's fair is fair" deal. I think it's just common sense.


    Clearly this is a man who is comfortable with the idea of monopolies being granted to him (and not his competitors) and uncomfortable (even angry) about anyone figuring out how to compete with him. My read on this is that, given a choice between innovation and staying in a monopoly world where he is king he'll choose the latter.

    Welcome Back Ma Bell, we haven't missed you!

  • Legal liability (Score:3, Interesting)

    by It doesn't come easy ( 695416 ) * on Monday October 31, 2005 @12:05PM (#13916065) Journal
    So SBC charges Google to "reach" their customers or they block access. Google decides to be fair that they should charge SBC for each search that SBC customers instigate on Google or they block access. Whom do you think would be in breach of contract from the user's point of view? Google who provides a search service without commitment to the user or SBC who contracts to the user to supply internet connection services?

    Sounds like at least one position is unsustainable...

  • He doesn't even know what he's saying. (Score:4, Insightful)

    by Control Group ( 105494 ) on Monday October 31, 2005 @12:06PM (#13916070) Homepage
    He doesn't want what he says he wants, at all.

    If SBC starts regulating content on their wires, then they open up a huge legal can of worms regarding liability. VOIP is just content. It's conceptually no different than a video stream or an .iso download. The only difference is that the specific content is perceived as a threat to SBC's business model.

    But that doesn't change the fact that it's content.

    I sincerely doubt SBC wants to be responsible for all the content that crosses their wires. The last thing any company needs, even one as big as Ma Bell, is an endless stream of lawsuits about kiddie porn, bomb making tutorials, warez downloads, DVD rips, mp3 streams, so on and so forth.

    Common carrier means common carrier, and changing the definition of common carrier would cost an asinine amount of money, even by the standards of corporate fund-slinging on Capitol Hill.

  • What an... what is the word... %(*#$ (Score:4, Insightful)

    by peterjhill2002 ( 578023 ) <peterjhill@NOSPam.cmu.edu> on Monday October 31, 2005 @12:11PM (#13916104) Journal
    And how do they propose to get .com's to pay them to "use their pipes?" What can they really do? Block access to google or Vonage? I don't think so... If they tried that with me... I would immediately switch ISPs... They would not be able to pay me to stay with them...

    It is such an old school business attitude... The phone companies need to realize that the days of monopoly are over... The gig is up, the cat is out of the bag... etc... VoIP works great... Vonage is so simple to use... someone's grandparents could use it...

    Even if there were some widespread blocking of Vonage... it would not be hard for them to get around it... It isn't like they have to stick to standard SIP ports... Their service could easily run over port 80... If they tried to block their IP address, could they not start using IP blocks from their ISPs? And hey.. aren't the ISPs already making money on transit costs for these companies...?

    This guy is a real loser... Sell your stock in SBC

  • Let him try it (Score:4, Interesting)

    by Krystlih ( 543841 ) on Monday October 31, 2005 @12:11PM (#13916106)
    He can try to charge for VOIP, but as soon as he starts, thats when more innovation will go into beating his detection methods. Such as encrypting the call, tunneling through other protocols, etc. I understand that VOIP is very latency sensitive, and every layer we put on top of it could possibly lower the quality of the call, but I still believe we can achieve better quality than cell-phone while encrypting the information. The real question will be, will the US Government support him in his desire to charge. I guess it will be interesting to see, hopefully other companies like Vonage will step in and work against him.

  • very old-school phone thinking (Score:5, Informative)

    by jjeffries ( 17675 ) on Monday October 31, 2005 @12:17PM (#13916170)
    I work for a small CLEC/ISP...

    In the circuit-switched telephony world, carriers exchange CABS (Carrier Access Billing System) records, which are redeemed for cash at the end of each month. For example, you call your Uncle Zed long-distance for one minute and are charged six cents or whatnot by your phone company for the privilage. Well, Zed's phone company will charge CABS to your phone company, and at the end of the month, Zed's phone company will get a check containing a cent or two in payment for completing your call. It's not a lot of money but the volume is very, very high, and a phone co. can make some decent cash if they terminate a lot of calls (think dialups.)

    Pretty obvious now where this guy is coming from, eh? Too bad the internet doesn't work like that! The best they will be able to do at this point is to work on screwing up peering agreements in their favor.

    IMHO, the big telcos will be the first with their backs up against the wall when the revolution comes.

  • Dark fiber! (Score:3, Funny)

    by Eric_Cartman_South_P ( 594330 ) on Monday October 31, 2005 @12:35PM (#13916324)
    I think Google and all that dark fiber they are buying is going to soon be a "FUCK YOU" response to this guy. OK, we won't use your pipes! Suck on this... get on the web with free WiFi via google.

  • eTrade, here I come! (Score:4, Insightful)

    by ediron2 ( 246908 ) * on Monday October 31, 2005 @12:35PM (#13916325) Journal
    Note to self: Sell all SBC and T stock. I'd wondered if T would climb to SBC valuations or vice versa. This toxic rube just answered my question fairly clearly: he has NO idea what is going on in the industry. He's like some halfwit lovechild of Michael Eisner and Darth McBride.

    A hint to Mr. WitLacker: Due to overbuilding that was done by SBC and others during the dot-com years, dark fiber is still stupid cheap. Now, if you want to strip money from google, you'll have to ruin your own market among other customers, since I can imagine a dozen tricks ranging from buying up existing contracts to teaming with owners of existing contracts to upgrade endpoints to increase per-fiber bandwidth. Your own client base is in a position to compete with you if you get greedy.

    Or Google can short-circuit past you by renting/leasing dark fiber and buying their own endpoints. And anywhere you've got a rock-solid monopoly, they can explore stopgaps like microwave. In a phrase, you can't put this genie back into a monopoly bottle, no matter how hard you try.

    Next, I'm not sure how you plan to detect which endpoints are google's, or how you intend to increase charges to those endpoints without getting excessive on all other datapoints, given the rather ambiguous nature of data packets. But, if you are able to differentiate the data, all Google has to do is refuse to pay. Every time you block a paying customer from reaching Google, you'll be drowned in loud screams. After questioning your parentage, customers will insist someone's in of breach of contract (either you or google) and since they don't pay google for access, They'll blame you. If you try to shift the blame to google, we all *know* who'll win those legal/PR battles.

    This isn't your grandma's ol' monopoly: for every tactic you can think of, the data infrastructure (which is what geeks like me consider the REAL internet) is creating alternatives. And every time you squeeze, you'll lose PR and goodwill and customers. You'll piss off shareholders. You'll piss off techies (ask your canine mom, Darth McBride about the wisdom of doing that). Oh, and the state public-utility regulatory commissions: act like a monopoly and various state legislatures and their consituents will shove your sorry ass deep into regulatory hell: imagine a world where the regulators deem that dark fiber will be repriced downward until it is fully utilized.

  • Maybe not as unfair as it first sounds? (Score:5, Insightful)

    by tobybuk ( 633332 ) on Monday October 31, 2005 @12:39PM (#13916355)
    The guy who supplies a cable to your house has fixed costs and variable costs associated with supplying it.

    The fixed costs are the physical line, maintenance, exchange equipment etc.

    The variable costs are basically the calls, or are they? It costs them a fixed amount for the infrastructure to enable you to make calls. Once the mainly fixed costs of providing the infrastructure is met then profit starts. I know this is a simplistic description but it mostly hold water. So in effect the business is built around mainly fixed costs.

    However if you take away the revenue associated with the making of calls then something has to give to meet these costs which remain largely the same.

    This can either be reduced profit, reduced costs or an increase in the fixed charge.

    Reducing profit is something companies are unlikely to want to do. In SBC's case their profit $1.2 billion from $10.3 billion represents 11% profit. Not bad and they can afford to lose some from that. But get much below say 6-7% and alarm bells will start ringing. Not least they won't be keen on investing speculative money on a high risk, low margin business like say next gen. ADSL.

    Reducing costs. I dare say there could be some of this going on in a business of this size but after not too long they would have to reduce their infrastructure costs. And reducing infrastructure costs would eventually mean reducing service.

    The third option is to move the fixed costs onto the fixed costs the customer pays. IE The line rental and the Broadband supply.

    Doubtless there are other ways of looking at it but any way must address the issue of fixed costs being paid for.

  • Don't read too much into this ... (Score:3, Interesting)

    by __aadkms7016 ( 29860 ) on Monday October 31, 2005 @12:44PM (#13916401)
    Every time Ed or his Verizon equivalent gives a free-wheeling interview, the corporate PR types spend the next few days issuing retractions and clarifications ... you can't take what these guys say in the newspaper as anything but stream-of-consciosuness. Sort of like a football player talking in the locker room to the press after a game ...

  • Missing the Big One (Score:3, Funny)

    by johnos ( 109351 ) on Monday October 31, 2005 @12:47PM (#13916419)
    All this stuff about broadband and Google is chump change. Why aren't the shareholders of SBC demanding a stop to the free ride for Domino's and Dell and all the other businesses using SBC's phone lines to support their business models? SBC has made a considerable investment in those lines and they have to have a return on it. Do these freeloaders think phone service comes free?

  • Post office jumps on the bandwagon (Score:3, Funny)

    by jridley ( 9305 ) on Monday October 31, 2005 @01:03PM (#13916554)
    We have to buy all these trucks, and pay drivers for all of these routes. Then these companies come along, and they decide that they can use OUR infrastructure to send THEIR packages. Our service is intended only for sending postcards to granny. If those companies want to use OUR service to facilitate THEIR business, then they better pay m/e/ /a/ /k/i/c/k/b/a/c/k/ us for the priviledge of using our facilities.

    Lately it's even come to my attention that people and even businesses in FOREIGN COUNTRIES can send mail through our system. If they don't pay up, we're going to start burning their packages for heating fuel.

  • What is the TRUE value of Internet Content? (Score:5, Insightful)

    by Atryn ( 528846 ) on Monday October 31, 2005 @01:06PM (#13916569) Homepage
    Ok so I was about to post a gut response and then I went back to RTFA and thought it through again...

    Let's try the legacy Ma Bell perspective:
    You make a phone call to Joe. You initiated the transaction but both you and Joe pay for access to the network. Even further, in the wireless phone world both you and Joe likely pay per minute for the call.

    Now let's try a cable perspective:
    You want subscribers who will pay a monthly access fee. To get them, you need the best available content. You MUST get networks such as ESPN, CNN, ABC, NBC, MTV, etc. into your content package. You don't charge ESPN for access to your "network"...

    Similarly, newspapers:
    You need subscribers. You pay content creators (reporters, comic authors, etc.) for the content necessary to attract and retain subscribers.

    It seems the battle is which model does the data backbone (the Internet, if you will) fall into? Is it simply a network by which people and organizations can communicate with no guarantee or claims as to the quality of that content (a la the phone network) or are you selling end-subscriber access to a content service (a la cable TV or newspaper)?

    I think for SBC the answer is "yes". It's both. They have end customers who want access to the Internet FOR the content that's there. They also have customers who just want a communications network for data. Here is another way to look at the power of the organizations involved:

    Could a major Internet content/service provider (Google, CNN, Apple iTunes, Yahoo, etc.) approach a network provider (SBC, Comcast, AOL, etc.) and threaten to cut off those network's subscribers unless the network provider PAYS them for their content?

    This would be the true coup de etat in the industry. When a single content or service source becomes so demanded by end consumers that it MUST be available on your network to keep those subscribers. I don't know that any website is yet that important... Maybe Windows Update could be, if anyone used it. :)

  • Not to state the obvious, but... (Score:5, Insightful)

    by jalefkowit ( 101585 ) <jason AT jasonlefkowitz DOT com> on Monday October 31, 2005 @01:50PM (#13916918) Homepage
    "[T]here's going to have to be some mechanism for these people who use these pipes to pay for the portion they're using. Why should they be allowed to use my pipes?"

    Maybe because the more compelling bandwidth-intensive apps there are, the more demand there will be for bandwidth (i.e. "your pipes")?

    Vonage isn't stealing from you, they are selling your product! You can't use Vonage without a broadband connection. And if customers get used to running several apps like Vonage, they'll find that they have saturated their cheap $19.99/month DSL plan, which means they'll start wanting to bump up to the pricier plans.

    Nothing sells a platform like apps, and if you're the phone company or the cable company, you're the platform. You want to encourage the growth of these apps, not shut them down.

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