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Telco Chief Explains That We Really Only Pay For Half Of Our Internet Connection

from the break-it-down dept

AT&T's CEO Ed Whitacre was the one who kicked off all the US telcos publicly talking about ending network neutrality when he complained that it was "nuts" that Google, Yahoo and Vonage got to use his network for "free." Of course, he was ignoring the fees they already paid in bandwidth, along with the fees consumers pay for bandwidth (which they're only paying because they get access to various web sites and services). So, now, he's trying to better explain how, despite the fact everyone has already paid, these service providers are really getting a free ride. He does so by trying to split up how internet access is really sold:
"I think the content providers should be paying for the use of the network - obviously not the piece for the customer to the network, which has already been paid for by the customer in internet access fees, but for accessing the so-called internet cloud."
He's actually suggesting that when we buy bandwidth, we're just buying the bandwidth from the end-point to the backbone... and everything else is just free. He's conveniently forgetting (again) that without the content and services provided at all the other endpoints, the value of connecting from the end to the middle is pretty much gone. No one is paying to connect from the end to the middle. They're paying to connect all the ends to each other. That's the value of network effects, and it's what makes it worthwhile to buy internet access. So, he's being both misleading and wrong when he says: "But that ought to be a cost of doing business for them. They shouldn't get on [the network] and expect a free ride." It's a very telco way of looking at things. These are companies that are used to providing centralized services with a government granted monopoly. To them, the only important thing is from the ends to the middle -- where traditionally the telco then provided all the services you needed. They'll conveniently ignore that the only value of connecting to the middle is if you have unencumbered connections to all the other ends as well. In the meantime, with all the big telcos so brazenly talking up how they're going to ditch network neutrality, how is it that FCC chair Kevin Martin can still claim with a straight face that there's no evidence that anyone is trying to break neutral network principles.
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  1. identicon
    Scott, 31 Jan 2006 @ 12:14pm

    Re: Content Provider

    Yeah, funny that huh? I didn't even this black hole of a middle that no one paid for existed. I thought part of my bill was to be sure I could get from endpoint to endpoint not endpoint to middle, then you came out to the middle to meet me, how do you know to do that? Strange I really am going to have to reread how internet traffic works.

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