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Teaching an Old Dog New Tricks?

Asked about Internet firms such as Google, Microsoft Corp.'s MSN and online phone service Vonage, Whitacre told Business Week that those companies were dependent on SBC's lines -- or "pipes" -- for their success in reaching consumers.

"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," he said, according to Business Week Online's edited excerpts of the interview.

"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 free is nuts," he said.

SBC CEO Ed Whitacre - a Man in Full after gaining approval of the acquisition of ATT

SBC spokesman Michael Balmoris said Whitacre was not talking about charging companies for letting customers access their Web sites. Rather, he said, Whitacre was referring to access Internet companies may want to the "managed and secure" portions of the fiber-optic network SBC is building largely to deliver video to customer homes.

"SBC has not and will not block or limit access to lawful content or applications on the Internet," he said. "Mr. Whitacre's comments are being misinterpreted. They were not made in the context of the Internet, but rather SBC's $4 billion investment in its new fiber network to provide Internet-based video services," Balmoris said. The spokesman said SBC might strike commercial agreements with companies such as Google, Yahoo and Vonage to give them access to that part of its network.

Hmmmmmmmmmm ... that dog won't hunt in my house...

SBC Head Ignites Access Debate When is a monopoly not a monopoly? Can a former monopoly act like a competitive company, even as it turns back into an even larger company and takes back its old name? Can former monopoly executives stick to their new scripts? Stay Tuned!

Watch for more Freudian slips as cable companies and telecom companies learn how to compete in this newly deregulating world - in this particular clip you'll find an amusing series of events as PR types try to spin SBC CEO Ed Whitacre's comments that applications coming over "his pipes" would have to pay a toll charge, saying to let those applications flow unimpeded would be "nuts." Has Ed W ever surfed the Internet?

Content providers like Yahoo, Google, and most especially, Vonage, are not altogether reassured that their content will proceed unimpeded over "SBC's pipes" - what would be the appropriate analogy here? How about: Ford having roads that Ford cars can use for free, but Chevrolets will have to pay a toll? Something is fishy about this reasoning.

Add this item to your file of why the company that owns the infrastructure should not be the same company as the company that provides the content.

So,if this is ridiculous behavior on the Internet, how can it be tolerated over other networks? Well, it can, I guess, if its a cable network, which wrote the book on monopoly content...check this this item I ran across the other day in Forbes at the doctor's office.Playing Hardball is about Comcast's buying the exclusive broadcast rights to pro sports games, leaving viewers on competing infrastructure networks without the content.

As the Philadelphia Phillies struggle for a wild-card spot, fans are glued to Comcast's SportsNet. Except fans who happen to have DirecTV or EchoStar satellite service. A quirk in the 1992 Cable Act known as the "terrestrial loophole" allows Comcast (and any other broadcaster) to withhold programming if it is transmitted from a stadium to cable boxes entirely over wires as opposed to satellite. Comcast takes advantage of the loophole to keep games in Philadelphia away from DirecTV and EchoStar.

And you wonder why Philadelphia wants its own network? Seems that if you have satellite TV and live in a town where Comcast has purchased the rights to the hometown team, then you are SOL.

This could get even more ugly as we proceed down this path, and viewers will lose out even more. Will infrastructure owners compete to lock up exclusive content, instead of competing on offering the best service?

This is the road that monopolies would like to go down, leveraging their size or market power to gain further monopoly control over content and using it to hurt their competitors, users be damned. Sheeeeeesh.

Posted on November 07, 2005 at 08:43 PM

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