More on At SBC, It's All About "Scale and Scope"

[David Farber <dave () farber net>]

Begin forwarded message:

From: "Robert J. Berger" <rberger () ibd com>
Date: October 30, 2005 4:36:33 PM EST
To: Dave Farber <dave () farber net>, Dewayne Hendricks  
<dewayne () warpspeed com>
Subject: More on At SBC, It's All About "Scale and Scope"


The interview with SBC's Whitacre is truely frightening. He is
talking like a monopolost with "absolute power" and with no
fear that anyone will be able to stop him.

To quote from the article:

"It's about owning the assets that connect customers. The assets
that probably can't be duplicated except maybe by the cable
companies. We have that, Verizon has that, BellSouth (BLS ) has
some of that. The cable companies have it. It's the numbers of
customers you can get to. "

He is saying that SBC, Verizon and Comcast control the
choke-points between the Internet and the end user and that they
will use it to keep out competitors.

Then when asked: "How concerned are you about Internet upstarts
like Google (GOOG ), MSN, Vonage, and others?"

He replies that he will definately use this choke-point to
collect tolls from content providers, and total ignores the
fact he would be locking out content providers that aren't in a
position to pay:

"How do you think they're [content providers] 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! (YHOO ) or Vonage or anybody to expect to use these pipes
[for] free is nuts!"

Then add in Daniel Berninger's comment in the earlier mentioned
article on the Cogent / Level 3 Peering spat
(http://www.networkworld.com/edge/news/2005/102805-cogent-level3.html):

"I think this [Cogent / Level 3 depeering] was a trial run,"
Berninger said. "I would not
expect Level 3 to do something similar in the future, because I
think that this was a bad experience for them in terms of the
feedback they got, but it showed that these peering
relationships are very fragile and very important. What happens
when AT&T goes to SBC and MCI goes to Verizon?"

And we see that we are indeed still in the "Empire Strikes Back"
phase of the Telecom epic. We have yet to see the "Death Star"
resurrected by SBC. Its coming soon and our regulators our out
collecting from the lobbyists....



> At SBC, It's All About "Scale and Scope"
> CEO Edward Whitacre talks about the AT&T Wireless acquisition and  
> how he's moving to keep abreast of cable competitors
> <http://www.businessweek.com/@@n34h*IUQu7KtOwgA/magazine/content/ 
> 05_45/b3958092.htm>


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