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Umm..I pay for it...

10/31/05 @ 7:20 pm · By Steve Hoffman · Comments (3) · Leave one

I read this article today and nearly fell off my seat when I read this...

How concerned are you about Internet upstarts like Google, MSN, Vonage, and others?
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?

The Internet can't 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!

I can only wonder how such an idiot can land a position as CEO of a company as large as SBC.  I read what he wrote and aside from the fact that he sounded like an uneducated teenager, what he's saying simply can't happen.  I feel for him...well, no I don't.  If I'm a huge company and I pay all that money to make this great infrastructure for internet related traffic I make my money back by charging my customers to access the internet. Now what Vonage and Google and Yahoo do is actually create demand for this guys billion dollar network by having a product that entices people to get on high speed internet. Now he wants to turn around and charge the very people that make his product popular?  I'll ignore the fact that SBC is already in bed with Yahoo (offering their SBC Yahoo DSL package), but I can't ignore his question..."Why should they be allowed to use my pipes?"  I'll tell you why, because your customers (your paying customers) will demand it.  I actually dare him to start charging Google and Vonage and others to use his "pipes".  If I were these companies about to be extorted I'd tell him to "piss off" in no uncertain terms.  The see how quickly SBC's high speed market share declines when their customers can't get Vonage through SBC, but they can through the local cable company.  I would actually like to see this one play out.  Let's see them try to get a little ROI when they've got no customers left....

Comments

Explain · 11/01/05 @ 7:54 pm · AP
Explain what is wrong with this. I read the article but don't understand all the terminology. It sounds to me like what happened with the deregulation of electricty and natural gas in some states. Companies that had the monopolies had invested millions in
continued · 11/01/05 @ 7:55 pm · AP
lines and infrastructure so when other marketers wanted in on the action they were made to pay fees for use of the lines and the monopolies were allowed to recapture the expense they incurred.
Explained · 11/01/05 @ 9:21 pm · Steve
I guess the easiest way to say this is that I pay for telephone service so I can make calls. My monthly bill is designed to generate a return on the investment of all the telephone wires. If everyone in my neighborhood decides to call a guy in California for stock quotes (who also pays for a dialtone), the analogy would be the phone company going to this guy in CA and saying, you are using my lines for free...I want money. I disagree with that.

I pay a certain dollar amount for unlimited internet traffic at a certain speed. This is an example of one phone company whining because someone out there provides a service that allows me to use more of what I'm already paying for (you really only use 1/100th of what you pay for each month). Make sense now?