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SBC CEO wants a Internet Civil War

Posted by geeknews at 12:28 PM on November 1, 2005

Recent comments by the CEO of SBC has caused a lot of raised eyebrows. His declaration of war on companies such as Google, Yahoo and Vonage should make Net citizens sit up and take notice. Essentially he has declared if companies want to move there traffic through his network they should first have to stop and pay a toll.

In a question during an Interview with Business week his response has probably made lawyers coast to coast smile.

“How concerned are you about Internet upstarts like Google (GOOG ), 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? ”

First of all in my opinion these are words of a desperate CEO who’s company has not not done well on the performance side. But lets look at the facts.

1. Customers Pay SBC for Internet Access and use Services like Google, Yahoo and Vonage
2. Google Pays large sums of money for commercial internet access likely millions per month in charges.
3. Commercial providers that sells bandwidth to Google have peering arrangements with other networks, and sometime pay a fee to move traffic through other networks.

So if his company wants to erect a toll both in the middle of the highway and hold a gun to these companies to pay up before their traffic can pass, I am afraid that this will be a war of monumental proportions. One thing we need to remember also is for years we paid ridiculous additional taxes and fees on all of our dial up lines so that companies like SBC could build the infrastructure that this countries telecommunications travel through.

But I am here to tell you the general public is sick of these types of comments from over zealous company executives. I have a simple word, route around these idiots. One thing is for sure the landscape is changing and these companies who have controlled so much are not in the position used to be. [Business Week]

3 Comments

  1. From treocast at 8:43 am on November 2, 2005

    Keep in mind who is declaring this war. He is the head of a company that takes over 229 days (and counting) to install a single DSL circuit… I seriously doubt that they could erect such a “toll booth” any time soon.

  2. From Adam M at 10:13 am on November 2, 2005

    I don’t think he is trying to start a “war” he is sick of the government forcing his company to give the competition a free ride. The Telecommunications Act of 1996 required the local Bell Co’s to allow other providers buy Bell services below cost, and set up their equipment in the Bell Co’s buildings.

    Here is an example of how this works. You are contacted and told there are not enough tech podcasts in your area and the people deserve an alternative. There are several other people that want to do a tech podcast but they only have a microphone. You are told they will bring their microphone to your house, and use your PC, connection, and hosting to create their podcast. You can charge for this help but it must be less than it costs you. Part of your listener base now moves to the new podcasts and dropped their subscription to your podcast. You can see where this would be frustrating for any business, but the Bell companies have been doing this for nearly 10 years.

    One thing we need to remember also is for years we paid ridiculous additional taxes and fees on all of our dial up lines so that companies like SBC could build the infrastructure that this countries telecommunications travel through.

    Do you mean this?
    http://www.fcc.gov/cgb/consumerfacts/usfincrease.html

    Go here for more taxes and services telephone companies have to provide.
    http://www.fcc.gov/cgb/information_directory.html
    The money used to build infrastructure is everything but the taxes. Phone companies have even spent advertising dollars trying to explain this fact, and the fact that they have to resell services to their competition at prices below cost. Apparently those dollars were not well spent.

    The Telecommunications Industry is one of the most volatile and competitive industries that exist. This has been especially true since the Worldcom/MCI fiasco because Wall Street doesn’t have much confidence in the industry. Look at Telco stock prices before and after the Worldcom/MCI collapse.

    I don’t think SBC wants a war they just want to turn a profit. I don’t know of any business model where you try to lose money.

  3. From Xibo at 5:21 pm on July 30, 2007

    With the purchase of AT&T the SBC Clients are caught in the middle. As a SBC Client I don’t like what I see when it comes to AT&T. They are an out right rip off! They lie and steal if you let them. If anyone has any question about what I am saying feel free to contact me. I will be glad to elaborate. SBC… the ISP to avoid!