Chapel Hill Technology Advisory Committee

["Chad A. Johnston" <johnston AT thepeopleschannel.org>]

This is a little old, but still pretty interesting.

-------- Original Message --------
Subject:        [cc-mediareform] "Why should they be allowed to use my pipes?"
Date:   Fri, 4 Nov 2005 08:17:08 -0500
From:   Lauren-Glenn Davitian <lgdavitian AT cctv.org>
To:     cc-mediareform AT list.commoncause.org



> From washingtonpost.com 

SBC Head Ignites Access Debate

By Arshad Mohammed

 The head of a major telecommunications company stirred up a hornets'
nest this week by suggesting that he wants to charge companies like
Google and Yahoo a fee for bringing them into consumers' homes.

SBC Communications Inc. Chairman Edward E. Whitacre Jr.'s comments to
Business Week magazine prompted Internet companies to accuse him of
aspiring to block access to their Web sites and to extort money from
their businesses.

A spokesman for San Antonio-based SBC said the second-largest U.S.
telecom company is committed to giving customers unfettered access to
the Internet and that the comments were misinterpreted.

But Whitacre's characteristically blunt remarks -- published as his
company this week won federal approval to buy AT&T Corp. for $16 billion
-- revived a debate on whether Congress should make sure that consumers
can go wherever they want on the Internet and keep phone and cable
companies from blocking legal Web sites and services.

Asked about Internet firms like Google, Microsoft Corp.'s MSN and
online phone service Vonage, Whitacre told Business Week that those
companies were dependent on SBC's lines -- or "pipes" -- for their
success in reaching consumers.

"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,"
he said, according to Business Week Online's edited excerpts of the
interview.

"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 or Vonage or anybody to expect to
use these pipes free is nuts," he said.

Internet companies said Whitacre was stating what they have long feared
-- that SBC and others may manage their networks to choke off access to
Web sites or to target competing firms like Vonage Holdings Corp. and
Skype Technologies SA, which provide Internet-based phone services.

"It seems like a rather monopolistic attitude," said Michael Jackson,
vice president for operations at Skype. "If the line were free to the
user, or the bandwidth were free to the user, then perhaps he'd have a
point. But the line isn't free to the user. The customer is paying for
the bandwidth. . . . He's already paid for it. Why should he pay more?"

"It sounds like SBC is going to block me, try to block me, or try to
charge me for something," said Vonage Chairman Jeffrey Citron.

"Any notion that SBC or anyone else . . . can get paid twice on the
same service is a bit ludicrous," he added, saying it would be like UPS
demanding the sender and recipient of a package both pay for delivery.

Citron and others said Whitacre's comments strengthened the argument
for "net neutrality" legislation to ensure that consumers can go where
they want on the Internet and that network operators like SBC do not
favor some sites over others.

The issue has become more prominent in Washington since the Federal
Communications Commission in March stepped in to stop a broadband
provider from blocking an Internet phone service.

FCC Chairman Kevin J. Martin declined to comment directly on Whitacre's
remarks but said he does not think new FCC rules are warranted.

"I don't think that there is evidence of the kind of activity of
blocking consumers' access to the Internet that would justify us
adopting new rules at this stage," Martin said in an interview. In
approving the SBC-AT&T merger this week, the FCC put conditions on the
deal that would prohibit the company from restricting access to Internet
content for two years. Martin had initially opposed imposing any
conditions for the merger.

Most people have at best two choices for high-speed Internet access --
phone lines and cable wires -- giving them few options if their provider
interferes with their Internet services.

"The real issue here is exactly what Mr. Whitacre owns up to. They have
market power -- if not monopoly, then duopoly -- and there are no other
choices for consumers," said Paul Misener, Amazon.com Inc. vice
president for global public policy.

Misener said he wanted SBC and other broadband providers to prosper
because they bring droves of customers to Amazon.

"But to sort of flip it around and to be able to extort fees from
Internet companies because there is nowhere else for their [SBC's]
customers to go, it seems to us an untoward exercise of their market
power," he said.

SBC spokesman Michael Balmoris said Whitacre was not talking about
charging companies for letting customers access their Web sites. Rather,
he said, Whitacre was referring to access Internet companies may want to
the "managed and secure" portions of the fiber-optic network SBC is
building largely to deliver video to customer homes.

"SBC has not and will not block or limit access to lawful content or
applications on the Internet," he said. "Mr. Whitacre's comments are
being misinterpreted. They were not made in the context of the Internet,
but rather SBC's $4 billion investment in its new fiber network to
provide Internet-based video services," Balmoris said.

The spokesman said SBC might strike commercial agreements with
companies like Google, Yahoo and Vonage to give them access to that part
of its network.

Whatever Whitacre meant, critics said his remarks strengthened their
hand.

"He is basically making the case for regulation," said Gigi B. Sohn,
the president of Public Knowledge, a nonprofit group that advocates an
open Internet.



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Chad Johnston - Executive Director
The Peoples Channel 
300AC South Elliott Road
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"As far as the laws of mathematics refer to reality, they are not certain; 
and as far as they are certain, they do not refer to reality."
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