SBC wants to extort VoIP service providers

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Tom Keating
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SBC wants to extort VoIP service providers

Russell Shaw's blog brought to my attention an interesting BusinessWeek article quoting SBC CEO Edward Whitacre where he basically says in so many words, "VoIP providers will have to 'pay to play' on SBC's broadband pipes". Check out the exact quote from the article.

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!

Talk about calling the kettle black. Edward Whitacre is nuts for suggesting VoIP providers should pay a "surcharge" to ride on top of "his" broadband pipes. If you take what he suggests, then not only should Vonage and the other broadband players "pay" to ride on SBC's pipes, but so should all the other Internet applications and Internet application service providers. That includes email, FTP, Web access, IM, video, streaming music, and all the other Internet applications. For example, this would mean that Hotmail should pay SBC a surcharge for using "their" broadband pipe to deliver email to Hotmail subscribers that use SBC's broadband pipes. Gee, I thought when customers paid $50/month for broadband Internet access that included unlimited and unrestricted access to the Internet. If SBC is going to start censoring which applications its customers can or cannot use, then the U.S. is no better than China when it comes to unrestricted Internet access.

Why should voice be treated any differently than any other Internet application? The Internet predated Voice over IP and I don't recall the ISPs saying "we have spent this capital and we have to have a return on it." That is to say, the ISPs have never requested that the email service providers needed to pay a surcharge or that the Web hosting companies had to pay a surcharge to terminate their data in order to recoup their capital investment. You simply recoup your investment by charging your customers a recurring monthly fee and by bundling other applications. Often times the cable companies and the carriers are in a much better position than smaller ISPs or "single play VoIP providers" (such as Vonage, Packet8), since they can bundle multiple services and drive out competition through creative and cost-competitive pricing schemes - not to mention the convenience factor of a single provider, single billing, etc.

Just because voice is a "premium" application that the carriers have traditionally made huge profits with huge margins doesn't give them the right to continue their monopolistic and protectionist ways. The genie is out of the bottle, Mr. Whitacre and there is nothing you can do to stop it - not even stupid, unfounded remarks made to a magazine publication. C'mon Edward, your argument has more holes and flaws in it than the Internet Explorer browser. Get real!

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