By Frank Barnako, MarketWatch Last Update: 1:59 PM ET Nov. 1, 2005 Disable MW live quotes | E-mail it | Print | Discuss | Alert | Reprint |
WASHINGTON (MarketWatch) --- The chief executive of SBC Communications Inc. thinks companies doing business on the Internet, such as Microsoft Corp. and Vonage Inc., are due for a wake-up call.
SBC chief says it's time to pay to play on the Web
"How do you think they're going to get to customers? Through a broadband pipe. Cable companies have them. We have them," said Ed Whitacre in a BusinessWeek Online interview. "What they would like to do is use my pipes for free. I ain't going to let them do that."
He argued that because SBC
"There's going to have to be some mechanism for these people ... to pay for the portion they're using. Why should they be allowed to use my pipes?" He offered no details how his idea could be accomplished.
For an Internet company to "expect to use these pipes free is nuts!" Whitacre added for good measure.
Maybe that's why Google is building its own network. The problem, however, then becomes just how many "pipes" can be sent to one destination? If VZ runs their fiber to my house, just because I want to use Google, does that mean Google then has to run fiber to my home? Now, THAT is "nuts"! We will get right back to the Bells and cable companies enjoying a duopoly. That means more FCC regs, which means we'll get taxed on the internet before you can turn around and say "VAT". I guess they'll just put a set fee that the owners of the "pipe" can charge the content providers. Which would only be fair. It would have to be a model similar to phone lines. But it will lend to a better business model in building those pipes.
Think this Whiteacre is on to something, but at the same time, the timing of his comment is totally stupid.
SBC wants federal legislation allowing TV franchises. Do you think the Congress will give it to them if they know SBC is going to restrict content by charging access fees.
If this is SBC's plan, they dhould have kept it under wraps until after the telecom deregulation legislation is passed. Now, lobbying efforts will likely be mounted by MSFT, GOOG and YHOO for imposing a condition to stop this strategy. I see it as something that will just delay the adoption of the legislation, which will hurt the RBOC's in the end.
What is Whiteacre thinking? He needs general counsel to tell him to keep his mouth shut.