more on : Telco's Arrogant Stand on Content

[David Farber <dave () farber net>]

Begin forwarded message:

From: Fritz Mills <fritz () fritzmills com>
Date: January 7, 2006 5:58:03 PM EST
To: dave () farber net
Subject: Re: [IP] more on : Telco's Arrogant Stand on Content

I don't have any problem with the notion of paying for Quality of  
Service, but I think the argument, as it's been presented so far, is  
completely confused. First, the statement quoted below from Budde  
makes no sense. Google, Vonage, and others do not use the internet  
for free. Like everyone else, they pay for access and they pay for  
the bandwidth they use. They may not pay SBC, but that is beside the  
point. I, on the other hand, am a customer of SBC, and I pay them for  
access to the internet, and I pay for a certain amount of bandwidth  
(throughput). I may or may not choose to use my access to connect to  
Google or to use Vonage's services, but the point is, that *I* am  
their customer, not Google or Vonage, and if they want to charge me  
more to guarantee a certain level of quality of service for some or  
all of my internet access needs, that's something we can negotiate,  
but that has nothing to do with Google. Conversely, even if I do  
choose to use my access to visit Google, It is because I have paid  
SBC for the bandwidth to do so. Google has paid their provider for  
the bandwidth to accept my visit, but they should have no obligation  
to pay SBC as well.

To put it in terms that perhaps the telcos can better understand: If  
I pick up my telephone and make a call to Google, I must pay my telco  
for my phone line and telephone service, and Google must pay their  
telco to provide the telephone service that allows them to answer my  
call, but there is no obligation on the part of Google to pay my  
telco, too. Nor is it true in that situation that Google has "used  
[my telco's] pipes for free."



> Begin forwarded message:
>
> From: Dewayne Hendricks <dewayne () warpspeed com>
> Date: January 2, 2006 5:25:14 PM EST
> To: Dewayne-Net Technology List <dewayne-net () warpspeed com>
> Subject: [Dewayne-Net] re: Telco's Arrogant Stand on Content
> Reply-To: dewayne () warpspeed com
>
> [Note:  This comment comes from reader Andrew Odlyzko.  DLH]
>
> > From: odlyzko () dtc umn edu (Andrew Odlyzko)
> > Date: January 2, 2006 8:34:30 AM PST
> > To: dewayne () warpspeed com
> > Subject: Re: [Dewayne-Net] Telco's Arrogant Stand on Content
> >
> > Dewayne,
> >
> > There is plenty of arrogance on both the telco and content provider
> > sides.  But statements such as this one from Budde, and Whitacker's
> >
> >    "What [Google, Vonage, and others] would like to do is to use my
> >    pipes free. But I ain't going to let them do that."
> >
> > make clear is that the key issue behind much of the posturing about
> > open access and deregulation is the division of revenues from content
> > sales between the content owners and the service providers.
> >
> > I don't know what Budde is referring to when he talks of telcos
> > getting under 50 percent of revenues from content.  In general,
> > service provider takes are far higher.  If you look at cable  
> > companies,
> > they spend around 25 percent of their revenues on content, and get
> > to keep 75 percent or so for the maintenance of the networks,  
> > profits, ...
> > Satellite radio pays someplace between 5 and 10 percent of its  
> > revenues
> > for the music they play.  And NTT DoCoMo's i-mode pays only about
> > 15 percent of its revenues for content.  (I don't know what the  
> > revenue
> > split is on cellphone music ringtone downloads.)  So it is natural
> > that the content industry is salivating at the prospect of getting
> > more competition in delivery, and boosting their takes.  Getting
> > something like 50 percent would do wonders for their finances.
> >
> > But what both the content industry and the telcos forget is that
> > there simply is not enough money in content to pay for all the
> > telecommunications networks.  Connectivity, not content, is where
> > the real money is, as has been clear for a long time,
> >
> >   <http://firstmonday.org/issues/issue6_2/odlyzko/>
> >
> > So yes, the content providers and Internet companies like Google and
> > Yahoo! can build backbones, but they can't afford to provide  
> > universal
> > local connectivity.
> >
> > Happy New Year,
> > Andrew
> >
> > P.S.  There are lots of other comments one could make about this  
> > piece
> > by Budde.  For example, his rosy prediction for tele-presence  
> > flies in
> > the face of numerous failures in video telephony.  But that is  
> > another
> > subject.
>
> Weblog at: <http://weblog.warpspeed.com>
>
>
>
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