Living in the Third World of Communications

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Living in the Third World of Communications

If you haven’t heard, a court decided Vonage needs to pay Verizon $58 million in past damages for patent infringement in the following areas:
 
  • Technology used to bridge Internet calls to the traditional phone system
  • Features such as call-waiting and voice-mail
  • Wireless Internet phone calls
 
Now I know many people at Verizon and they are very smart, well rounded and seem nice enough. From an investment perspective they did a good thing by using patents as a competitive weapon against a small provider who has revolutionized the telecom industry and made telcos wake up and realize they need to compete.
 
The question worth posing however is how is the consumer benefiting from this lawsuit?
 
My concern is with the government and the various agencies who are supposed to be protecting me, my family and friends’ from monopolistic practices such as this.
 
When I learn about large companies using the legal and regulatory systems, to flush their competitors down the toilet I have to stop and remember what country I am living in.
 
I am a US citizen. I was born in the US and I am proud of it. I want consumers to have the best of everything. Lower prices, better quality – again, the best of everything.
 
VoIP has afforded consumers many benefits. FCC Chairman Michael Powell realized this and used Vonage as a poster child for competition that was pro consumer.
 
Unfortunately the massive amount of telco consolidation leaves a few large service providers with war chests full of cash and patents they will use to wipe out any and all competition in the market.
 
The system is so broken it is tough to imagine it can be called a system. How could the FCC feel good about this sort of decision? How could it ever be argued that a huge patent portfolio wielded like nuclear weapons can benefit consumers?
 
Merger after merger gets approved and no one puts an end to it.
 
This patent case is but one result of consolidation.
 
The damage of these mergers is not only to consumers but to the very telcos who are merging. I am speaking tomorrow at the VPF in Miami and as I sat through the sessions today I almost started tearing as I heard the amazing technologies and services being rolled out by companies like BT.
 
It seems phone companies in every country in the world are rolling out services that are many years ahead of the US.
 
The United States of America is the third world of telecom. It is an embarrassment and an outrage. Worse yet, we invent the leading edge technologies which actually get deployed on our shores next to last!
 
The few telcos in this country are falling behind in innovation and to be honest I do not blame them one bit. If I were a shareholder I would be proud of these accomplishments. In fact the way things are going, AT&T will be a single telephone company left to battle a single cable company.
 
At what point does the FCC need to stop mergers? It looks like there will soon be one choice in satellite radio for example.
 
Who decides how much competition is enough?
 
I remember a telecom market with no choice. I do not recall any innovation taking place with one company at the helm. Disruption and fear breeds competition and makes companies experiment with new products to get consumers excited. Duopolies do not.
 
When the old AT&T saw the threat from Vonage they rolled out a competitive service called CallVantage and you know what ? Tthey had a bunch of enthusiastic people at the helm of this organization and they innovated regularly. It was very refreshing to see AT&T act like a start up.
 
CallVantage now has pretty much been left for dead.
 
Every day I worry the path the US is going down is very wrong. We have to focus more on expanding competition and stop killing it at every turn. All government officials are responsible for what is happening to consumers through rulings such as the one above.
 
I suppose all I can ask is does anyone want to be responsible for telling their kids they are the reason there are 2 choices for telephone service where there was once thousands? Is this a legacy anyone wants to leave? How do you want to be remembered?
 
One day your kids may read this article – or even your grandchildren. Are you concerned at all? Please tell me you are.
 
I am very interested in opinions to this entry and I apologize if I come out harsh. Unfortunately some things just have to be said and someone has to start protecting consumers and keep them from getting thrown to the sharks.


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