AT&T: Pay More For The Internet Or Else

AT&T’s CEO Ed Whitacre is complaining once again, that it isn’t fare that web content owners are allowed to use large volumes of communications companies’ bandwidth for ‘free’. He wants big sites such as Google and others to pay for access to their clients. I read this a month ago but it has come up again. Don’t these people realize that Google doesn’t just plug into the Internet for free? Google must pay for several optical connections to their server farm and ISP fees, which their ISP pays to connect to other networks, such as AT&T’s network. Then the consumers, you and me, pay to connect to AT&T’s network, my Mediacom cable connection connects to the AT&T network. Why should Google and others pay twice for their Internet connection?

The real problem lies with what lies before us in the next five to ten years. About ten years ago we were promised fiber to the wall and all the bandwidth we could suck up, well about 100mbps both ways. What happened was the web 1.0 bubble popped. Suddenly around 2001 these big Telephone Companies found themselves with some fiber upgrades and a large amount of dark fiber, since the demand shifted, they stopped investing in their networks, except when they absolutely had to.

Now as the so called Web 2.0 movement catches fire and begins to run with the economic torch, the telephone companies realize that demand has increased (shifted to the right on the demand curve graph) but their supply capacity has remained the same since they foolishly lined the pockets of their CEOs and management instead of investing in their networks. The entire Web 2.0 movement will heavily push VOIP and IPTV. POTS will more or less die soon, as in by 2010. Once POTS dies as everyone uses VOIP, SBC/ATT will find itself with a bunch of worthless copper. They should have upgraded ever last inch to fiber but now it’s too late. That’s what Ed Whitacre is seeing, though he could be just seeing a plan to line his pockets since as a general rule of thumb all CEO/CFOs are corrupt, self-centered, evil rats. Their profits will dwindle and the new ATT will die a quick painful death, just like Enron.

Here is the link: The 200 Billion Broadband Scandal

-John Havlik

[end of transmission, stay tuned]