IP: Re: Access Wars between ISPs and Telcos

[David Farber <farber () central cis upenn edu>]

Date: Mon, 16 Oct 1995 09:08:03 +0900
From: sja () glocom ac jp (Stephen J. Anderson)


Shumpei Kumon wrote:


> > Reading this week's Internet Week article on "Access Wars Brewing, Pit ISPs
> > Against Telcos," I was somewhat shocked to learn that MCI, the company for
> > whom Vint Cerf is working, is going to introduce "service level agreements
> > and settlement systems similar to those that the long distance companies
> > currently have to pass long distance traffic" in the Internet access
> > business.


At  8:12 PM 95.10.15 +0900, Martyn Williams wrote:


> Could you elaborate on this a little. I'm not from the US and don't have a
> particularly in depth knowledge of their phone system. What would ISP and
> the telcos have to do under the proposal that they don't do now ?


Let me elaborate:  "Internet Week" is a publication of Phillips Business
Information that just started to incorporate the "Internet Letter" which
will make it a strong weekly brief on developments.  The lead story for
October 2, 1995 (Vol. 1, No. 26) is about the entry of long distance
carriers (the telephony giants, in this case, MCI) into provision of
Internet services.


The core interviews for the article are with Stephen VonRump, VP of data
services marketing for MCI, and William Schrader, CEO of PSIX (PSINet is a
leading Internet Service Provider (ISP)).  The MCI versus PSINet contrast
is interesting, as the common carrier is pitted against the ISP.  A key
strategic problem is that MCI is likely to go to the FCC for regulation to
seek improved Internet quality and standards.  MCI will use standards
issues to wage competitive war against smaller ISP companies that may not
be able to invest in the large capital commitments needed to meet high
standards.


A key point in the article is that Schrader, an ISP executive, has received
assurances that the FCC will be "unlikely to impose regulation on the ISPs
to help the larger telcos compete."   Nonetheless, both executives agreed,
and led the writer of the article to conclude, that just a few larger
companies will survive.  Schrader reportedly thinks that Internet services
will come from telcos and regional companies (ROCs) as well as IBM,
Microsoft, AOL, large ISPs, and a few others.


The issue here is about megamedia and large companies as a barrier to
greater competition.  Across borders, smaller telcos may not survive
aggressive transnational competition either.  Note in Japan, too, the very
basis of competitive positions is being debated at this moment.


Shumpei Kumon writes:


> How will NTT, who is about to launch the project to develop Open Computer
> Network based on the
> "best efforts" principle,  react to it?


If we think of NTT now struggling within the company, as within policy
processes in Japan, there may be an uncertainty in Japan about the
standards that a company such as MCI is seeking to impose.   In other
words, involving regulators (MPT or FCC) is likely to hamper competition.


Since many of us also seek greater deregulation as a goal to improve
services worldwide, the implications are poor.   MCI demanding high
standards, and going to the FCC to enforce such standards, are not likely
to be immediately welcome developments.  The FCC, and regulators
everywhere, should seek to do the minimum efforts necessary to support the
unhampered growth and dynamism that has characterized the Internet in
recent days.






===========================================
Stephen J. Anderson
Associate Professor, Inforum Project Director
Center for Global Communications (GLOCOM)
International University of Japan


Inforum Project http://ifrm.glocom.ac.jp/
===========================================