See this article for details. (Pay attention to the update.)

Given this, I don’t think anyone’s suggesting Google et al. is expecting to use SBC’s copper for free. I think Ken’s more likely on the mark with his comments about SBC allowing Vonage to compete over SBC’s DSL lines.

Wow, I gotta bow to the libertarians: Behold the brilliance of our our ruling economic class, they obviously get their 400x multiples on pure merit despite my unworthy suspicions to the contrary.

What do you think he is suggesting? Certainly not that SBC would block particular websites. All he is saying—and SBC, Verizon, BellSouth, etc., would say the same thing—is that competitors who are providing internet access can’t expect to use SBC’s network for free. In other words, if Google is providing Internet access for $25 a month, and SBC’s lines are the only lines that run to your house, Google can’t sign you up as a customer and rake in $25 a month without paying SBC anything at all. No: It has to pay SBC a portion of that $25 for the privilege of using SBC’s lines.

This is pretty basic telecom law, and it has absolutely nothing to do with blocking content.

When he comments on SBC’s service provider competitors, he’s rightly talking about the main players in their market space, such as Verizon or Comcast, who own their own infrastructure to deliver product.
To think he’s implying some sort of ideological free speech direction here, rather than his focus on SBC’s making money and winning against a Verizon, is to miss his point.

Rather, I think Whitacre is talking about VOIP providers. Look at his list: he’s talking about the major players in paid or free VOIP, which is a direct challenge to his POTS. And he’s got some legitmate gripes vis the cable companies: legacy costs, third party ISP access requirements, 911 services, guaranteed “Universal” access mandates. He’s certainly not talking about blocking Amazon or ESPN.com or blogs.

But Whitacre’s bigger problem is that the phone companies blew it. Cable companies were rolling out residential broadband fairly rapidly in the late 1990s, at very high data speeds relative to DSL. Phone companies, by contrast, focussed on the initially more lucrative business market – which was lucrative precisely because larger companies could invest the capital to take advantage of early VOIP for their in-house phone networks! But they didn’t embraced high-speed residential access until much later, by which time DSL was simply outclassed.

At the same time, the cost of phone service has remained absurdly high. It’s more than broadband, even though the phone lines were installed 50 years ago and the equipment’s all paid for! It’s more than cell phones, even though its a fixed location!

I’ve got DSL, but only because I don’t have cable. For me, the marginal cost of cable broadband speeds is quite high: $15 more a month for the ‘net, and an extra $50/mth for basic cable. But if I can eliminate my local/long-distance land-line phone bill in the process, that comes close to breaking even. And then I get cable TV “for free”!

POTS has only a few real advantages: 911 support, very clear transmissions, and it’s independently powered so it works in a blackout. And once those are gone (3 years tops), Whitacre needs a new job.

MSN Broadband would fall into this category, and I note from their home page that SBC is not listed as one of their partner companies. Vonage is roughly analogous as well, as an ISP for voice, rather than data.

Sigh—that is exactly what I said. Comcast and SBC aren’t analogous to TV networks, but Google and Yahoo ARE much closer. If you’re going to worry about these kinds of things in the internet domain, Google and Yahoo are the companies to worry about, not Comcast and SBC. Service providers deciding to block certain web-sites is a ridiculous worry (unless, of course, you happen to live in mainland China)—but Yahoo declining to carry certain political banner ads could well happen (just as TV networks have declined to accept some political commercials).

That is an absurd scenario—not because there might not be a telco company that favored a particular candidate and was willing to accept a loss of revenue (though it is pretty far-fetched), but because any action like that would so offend the voting public’s sense of fairness that any such blatant action would cause the telco’s favored candidate to lose.

Can you imagine the furor that would result if, in your hyptothetical future, Comcast tried to block access to left-of-center political sites? Ridiculous. Would never happen.

A more likely concern—and one that is parallel to what we’ve seen in TV is one where Google, say, might refuse to accept certain kinds of political ads to display on its search pages. That, however, has nothing at all to do with ISPs, infrastructure, or ‘common carrier’ requirements.

Let’s say that I start up an online service that allows people to share home movies with each other. I agree to host the movies at great expense to myself and to serve up the content from my servers and my pipes. I pay hosting charges, I pay massive bandwidth charges, and I pay people to maintain my servers and add new features.

The service takes off and is a hit. I start to make money and get good press. Things are doing well until I get a letter from AT&T’s general counsel that says they are going to cut off their customers’ access to my website unless I pay them a “small percentage” of the money I’m making for using their pipes. Nevermind that my hosting and bandwidth is provided someone complete separate from AT&T and I’ve never engaged in any sort of contract with the company. Yet, here they are demanding a sort of digital protection fee. If I don’t give them a kickback, my site and service is going to disappear to a large portion of the Midwest. This raises a few questions:

1. If I give in and pay AT&T, will I have to give in and give a cut to every ISP of every customer that uses my service?

2. What exactly are AT&T customers paying for anyway?

3. In places where AT&T is the only choice for Internet access, do customers have any recourse when SBC and I fail to agree on a fee schedule?

4. Is this any different than a monopoly phone provider deciding which catalog companies you can call on the basis of the companies paying this digital protection fee?

5. What are the consequences for the Internet when Verizon decided that it spends too much money routing packets from SBC customers? Will the network become completely balkanized? Or will the largest entities negotiate a deal to forward each others traffic while extorting from the smaller hosting companies and service providers? Will the only way to guarantee your service is available to everyone to use one of the providers in the cartel?

Can this even be a valid clause in the lease. As in, is there any court that would enforce this if it came to a head? It seems like it would be equivalent to your landlord dictating what long distance carrier you used. I can’t imagine this being legit.

Problem: Our apartment complex only has one option for Internet access: SBC.

We cannot get Comcast (and that provider has it’s own nest of issues).

We cannot affix dishes to our apartments.

We cannot, in the terms of our lease “subscribe to broadband providers not sanctioned by leasing company name here.

Welcome to the endgame. They don’t have to block blankety-blank. They can subdivide customers. As cynical as I was about it a few years ago, it looks as though free municipal wireless might be the most egalitarian solution to these draconian partitions set up by the broadband jerks.