Ed Felten quotes a disturbing snippet from an interview with SBC CEO Edward Whitacre concering traffic flowing through SBC pipes:
Q: How concerned are you about Internet upstarts like Google, MSN, Vonage, and others?
A: How do you think they’re going to get to customers? Through a broadband pipe. Cable companies have them. We have them. 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. 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 [for] free is nuts!
Ed (Felten that is) rightly notes that calling the service free is hardly correct when SBC customers (me being one of them) pay monthly fees for it. He then goes on to discuss some other problems with the quote. But I want to focus on one particular issue having to do with SBC’s status as a common carrier.
Randy Zagar correctly points out in the comments to Ed’s post that common carriers are legally prohibited from monitoring the content of the traffic that flows through their pipes, which means that they cannot legally discriminate among content the user requests. So how could they do what CEO Ed Whitacre is suggesting? I’m not a legal scholar nor am I up-to-date on possible recent developments, but I am quite sure this law is still in effect. I welcome clarification.
The conversation on Ed’s blog regarding this matter seems to focus mostly on prices and commercial considerations. But how about political ones? What if an Internet service provider company had a leadership that was especially supportive of a certain political view (whether backing a particular political candidate or taking a certain side in a debate over, say, abortion or gay rights). Let’s say the leadership in said company was aligned enough with a particular perspective that they did not care if restricting access to certain content perhaps even led to lost revenues (in the short term or long). Let’s assume they were more interested in pushing a certain political perspective and decided to block access to Web sites that disagreed with these views. What then? If there are several players in town then the user can perhaps switch providers. That said, blocking usually happens in a way that doesn’t make it at all clear to the user what happened and why a certain site is inaccessible. So it is not clear that the user will know what alternative route to take to access the desired content.
The reason I decided to get DSL at home instead of cable is precisely because of the law concerning common carriers and their neutral stance with respect to content. I don’t want my provider to discriminate among the types of material I request. I went so far as to bother getting a land line installed just for my DSL connection despite the fact that I am already paying for basic cable anyway as part of my building’s assessment fees and so getting Internet access on cable would have been easier (and possibly cheaper). I realize this level of obsession with having guaranteed access to different types of content is probably not common, but I believed it to be an important enough distinction to bother. But what was the point if the CEO of my common carrier believes in what is articulated in the above quote?
Do head over to Ed’s post for more on problems with Whitacre’s comments.
UPDATE: I just came across this piece that points to a draft of the new broadband legislation. Among other things, it “[e]nsures network neutrality to prevent broadband providers from blocking subscriber access to lawful content.”
{ 19 comments }
Chris Karr 10.31.05 at 8:30 pm
I thought I was the only one paranoid about the different legislative regimes of cable v. DSL that I went with SBC over Comcast. :-)
From the comments that I’ve read elsewhere, the SBC CEO’s remarks should be seen in light of traditional POTS customers abandoning the local carriers for phone service. In this case, SBC is worrying that allowing VoIP competitors will kill their phone business.
I’m in full agreement about the sanctity of network neutrality and the end-to-end principle. However, I worry how long it will hold out as the phone companies began getting out of the data pipe service and begin offering things like television content and rich communications technology over their pipes.
In particular, if it takes a set amount of bandwidth to push video content to consumers, will these hybrid DSL/content providers be prohibited from implementing quality of service technologies that unfairly impact competitors? I would hope so, but given that SBC’s cut off all access to outside servers’ port 25 (used for sending e-mail) in the name of spam management, what’s to stop them from killing technologies such as Skype or Vonage under the pretense that Skype and Vonage “adversely affect” the quality of SBC provides?
You don’t have to cut off access to a service completely in order to violate the principles of content neutrality and end-to-end. I remember as an undergraduate when the university started throttling Napster traffic at the router level. It effectively killed P2P until new alternatives were found.
Chris Karr 10.31.05 at 8:31 pm
Err…
“the quality of SBC provides” should be “the quality of service SBC provides”.
Doctor Memory 10.31.05 at 10:18 pm
*cackle*
Let me be the first to go on the record as publicly urging… nay, begging Whitacre to go through with this. Block Google. Block Skype. While he’s at it, block Ebay, Amazon, Yahoo, AIM and iTunes. Make a big deal out of it. Claim it’s a matter of principle. Dig in for the long haul. Get lawyers involved. Issue self-justifying press releases on at least a daily if not hourly basis.
Me, I’ll just be over here, shorting SBC over and over again and laughing my ass off as every single customer of their residental and business services that can switches to alternative telcos, cable or satellite, and the remaining poor souls wait for the inevitable multi-billion-dollar class action settlement.
And of course, the fun doesn’t end there! Just wait until Whitacre discovers what’s in those peering contracts that those damned geeks in his IT deparment signed without warning him. Contracts with big or even bigger companies with well-paid legal staffs and a short amount of patience for these kind of shenanigans.
Good times, good times.
agm 11.01.05 at 1:59 am
Perhaps y’all could expand on your concerns a little? Because, based on the quote, he’s saying that SBC isn’t going to pay for infrastructure and then let everyone use it for free. Which is perfectly fine — when I Google something, if I’m with SBC, then energy is expended in SBC relaying the packets I want from Google. Routers wear out. Keeping the pipe lit takes money even if no one is using it, just because of the ancillary equipment.
Without any more context than the excerpt in this post, you are reacting in a truly unreasonable manner by condemning a provider simply for saying that a business is in business to make money.
MQ 11.01.05 at 2:06 am
He’s not letting people use it for free, he’s charging a subscription fee! Now he wants to sell the same customers again by charging content companies a fee to reach them! Digital infrastructure is a natural monopoly that needs to be regulated to ensure common access.
F'in Librul 11.01.05 at 2:28 am
Get lawyers involved. Issue self-justifying press releases on at least a daily if not hourly basis.
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.
Chris Karr 11.01.05 at 7:27 am
We cannot, in the terms of our lease “subscribe to broadband providers not sanctioned by leasing company name here”.
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.
Chris Karr 11.01.05 at 7:55 am
agm, the problem is this.
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?
Slocum 11.01.05 at 8:08 am
What if an Internet service provider company had a leadership that was especially supportive of a certain political view (whether backing a particular political candidate or taking a certain side in a debate over, say, abortion or gay rights). Let’s say the leadership in said company was aligned enough with a particular perspective that they did not care if restricting access to certain content perhaps even led to lost revenues (in the short term or long). Let’s assume they were more interested in pushing a certain political perspective and decided to block access to Web sites that disagreed with these views. What then?
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.
Luis Villa 11.01.05 at 8:34 am
Slocum: You’re totally right. Imagine the outrage if a TV company stopped showing bad news about the war, and instead broadcast blatant lies about John Kerry. Surely,
Luis Villa 11.01.05 at 8:34 am
Feck. Anyway, surely that would cause the candidate to lose?
Slocum 11.01.05 at 9:39 am
You’re totally right. Imagine the outrage if a TV company stopped showing bad news about the war, and instead broadcast blatant lies about John Kerry.
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).
Tom T. 11.01.05 at 9:44 am
The question posed to Whitacre was not terribly coherent (Google, MSN, and Vonage are all quite different businesses), but maybe he interpreted it to be asking about upstart ISPs wanting to use SBC’s pipes? In my area, for instance, the phone lines to my home were all installed by Verizon (or some predecessor), but I have the option of signing up with Earthlink as my DSL ISP. In that case, I would be paying Earthlink every month, and not Verizon, but I assume that Earthlink would be paying Verizon in some way.
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.
Silent E 11.01.05 at 10:20 am
Whitacre isn’t so stupid as advocate wholesale blocking of content to DSL subscribers: there’s a reason people get Broadbacnd access, and its not just to pay their phone bills online.
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.
paul 11.01.05 at 10:35 am
Is SBC in fact a common carrier for purposes of internet access? Of does that apply only to their phone service, rather than “information services” such as DSL?
ken 11.01.05 at 12:32 pm
Folks, you’re getting things mixed up here. In this snippet, Whiteacre is talking about leasing infrastructure to these various lower-tiered service providers (those without the service delivery infrastructure). By leasing infrastructure to a Vonage, SBC is enabling them to access their own markets. He’s not talking about SBC’s interest in competing head-to-head with these same service providers, restricting the end-user’s access to information, or unfairly double-dipping at the revenue trough.
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.
Functional 11.01.05 at 3:04 pm
Randy Zagar correctly points out in the comments to Ed’s post that common carriers are legally prohibited from monitoring the content of the traffic that flows through their pipes, which means that they cannot legally discriminate among content the user requests. So how could they do what CEO Ed Whitacre is suggesting?
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.
a different chris 11.01.05 at 3:39 pm
Ohmigod!! GM is saved, saved!! Just put Mr. Whitacre in the corner office, and he can hit up Walmart for a cut of everything lugged back home in a leased GM car.
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.
Chris Karr 11.01.05 at 4:55 pm
functional, how do you think Speakeasy offers DSL service? You purchase the network service from Speakeasy, which then pays SBC to set up a physical connection to your premises. Speakeasy pays SBC a cut for the copper and charges you for providing the “IP dialtone” on the DSL line.
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.
Comments on this entry are closed.