TELECOM Digest OnLine - Sorted: SBC's VoIP End Run

SBC's VoIP End Run

Lisa Minter (
Thu, 18 Nov 2004 12:11:14 -0500

Om Malik on Broadband

Someone at SBC Communications out to be nominated for the best media
strategist of the year award. What a masterful strategy! Announce VoIP
plans, then to layer it thick, announce IP-TV plans, and while the
whole world was gushing over SBC embracing the future, stick a knife
in the back of every potential VoIP rival with a simple, relatively
little know yet lethal regulation. In other words, thanks to a
regulatory filing, SBC has brought to a quick end the 'lets not pay
any termination fees' party that had VoIP upstarts drunk.

There is shock and outrage in the blogger community. I am not a little
bit surprised. My stance has been that Bells will win the VoIP
sweepstakes. Now take this ruling as an example. Folks at Vonage and
Sunrocket are busy building their brands and are spending their money
on advertising. AT&T, MCI and Sprint are financially hobbled and are
basically saying: we got no friends in Washington anyway. So where are
the millions of dollars needed to spend on lobbying efforts. Think of
this as a classic Silicon Valley hallucination. The techies believe
innovation will change the world. Eventually -- meanwhile Washington,
the soft dollars, and powerful groups control the future.

Bells have what they want: no regulation and interference from pesky
state officials. They have monopolistic control of the last mile of
today and the future. They have near total ownership of the wireless
waves. They have now basically imposed the old order on the world, and
they are going to print money. Good for their share holders, too bad
for venture investors. It happened with DSL, and it will happen
again. Why does anyone get surprised by all this, I don't
get. Listen up guys: when Bell's livelihood is threatened they
firebomb the opposition. As simple as that. I am told Michael Powell
is very upset about this end run by SBC. He cannot do anything much
right now.

So you think, it is over. Think again. Many overlooked the fact that
Cisco bought a company called P-Cube recently. One of the things
P-Cube can do is prioritize the traffic flows on an IP network. SBC
could use it and lower the priority of the traffic coming from say
Vonage or AT&T. Nothing illegal here: SBC's network and it can do
pretty much what it wants on its own network. Poor quality, lags,
dropped packets and soon Vonage customers could be switching to SBC
VoIP: which is more expensive, has better quality and of course is
highly profitable. Do I like it? No! Will I use it? Of course! Like I
will have an option. You thought I was joking when I said monopoly for
next 100 years.

[Jack Decker Comment: I am not quite as pessimistic on this as
Mr. Malik -- SBC has burned a lot of bridges in the past few years and
I have some doubts that the skids are greased as well as they might
like to think. But for the moment this is a matter of considerable
concern, and I would certainly hope that the FCC and/or congress will
do more than just some hand wringing over the matter. Also, bear in
mind that if *everyone* were to move to VoIP and other non-traditional
forms of telephony, then SBC's tariffs wouldn't matter much. This is
certainly an issue worth watching, and hopefully we'll see some more
informed analysis on it in the next few days.]

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