What follows is the most disturbing quote I have read in quite some time. Its from an interview with SBC CEO Edward Whitacre that appeared on the BusinessWeek Web site. Heres the exchange:
BW: How concerned are you about Internet upstarts like Google, MSN, Vonage, and others?
Whitacre: "How do you think theyre 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 aint going to let them do that because we have spent this capital and we have to have a return on it. So theres going to have to be some mechanism for these people who use these pipes to pay for the portion theyre using. Why should they be allowed to use my pipes?
"The Internet cant be free in that sense, because we and the cable companies have made an investment and for a Google or Yahoo! or Vonage or anybody to expect to use these pipes [for] free is nuts!"
No, Mr. Whitacre, Google, Yahoo, MSN, Vonage, and the whole rest of the Internet isnt nuts, your scheme is.
My understanding is that everyone on the Internet pays for the bandwidth they use. I am, for example, paying SBC about $80 a month for a DSL connection and some static IP addresses. A company like Google pays for the bandwidth it uses, writing very significant checks, maybe to SBC. Thats where the return on SBCs investment is supposed to come from, not charging extra for allowing Internet content and transactions to reach your customers.
The Internet has worked quite well, thus far. But now SBC, in true telecom monopolist fashion, shows up with plans to change the rules. This is the same company, after all, that claims a patent on the frames technology used on Web sites and once sent a flurry of letters to businesses demanding payment. Some people just dont get it, ya know?
If I read Whitacres quote correctly, SBC wants to charge an additional fee to deliver content to its customers, people like me who are already paying for the bandwidth necessary to receive that content. Is the company trying to charge twice for the same bandwidth?
Or is SBC simply trying to give its online content the benefit of free carriage while charging competitors to reach its customers?
In the voice telephony world, this sounds like besides charging its regular rates, SBC would want to charge businesses extra to do things like call their customers or take orders over the phone. Why they should pay extra for this I cant imagine.
Several years ago, I wrote urging the FCC to prevent Internet service providers, like SBC and the cable companies, from also owning content. My belief is that companies providing Internet access should be common carriers, their facilities available to anyone with the ability to pay, all on the same terms.
Internet carriers are free to charge one another to access each others networks or to carry traffic that isnt from or to their customers IP addresses. Internet users, however, should only have to pay their own ISP for the bandwidth they use. That model has worked fine so far and should work well into the future, provided the SBCs of the world can be stopped.
SBC and Internet providers are entitled to a fair rate of return on the network services they provide. But if someone else can provide them less expensively, SBC deserves only a limited amount of special protection while it makes the necessary adjustments to its business model.
Mr. Whitacres plan could cripple the Internet, which might be a good thing for a company selling dial tone delivered over copper wires into homes and offices, but would be a major blow to everyone else.
Perhaps Mr. Whitacre somehow was misquoted/misunderstood/was really joking. But, for now, I take the man at his word. His plan is the Internets biggest threat. And it must be stopped.
Contributing editor David Coursey has spent two decades writing about hardware, software and communications for business customers. He can be reached at email@example.com.