Friday, November 04, 2005

SBC Is Making A Costly Mistake

This non-PC timely editorial is word for word direct from Ted Wallingford of WebLogsInc.com. Why? Because I couldn't have ranted it any better. Good on ya Ted!

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"The power brokers in the telecom industry, until recently, have always been Regional Bell Operating Companies (RBOCs) like SBC, Verizon, Alltel, and so forth. These are the guys that control a majority of the broadband access infrastructure in the United States. They’ve always sold the voice application alongside that broadband access infrastructure. If you were a broadband data subscriber, you always had the choice of using that broadband service to run just about any application you wanted, be it web surfing, e-mail, or even music downloading, without penalty from the RBOCs.

But now that VoIP technology enables competitors to use the broadband infrastructure itself to deliver telephone service, SBC’s CEO has flipped his lid, threatening to charge VoIP players like Vonage and Packet8 a carrier access charge in order to traffic their vocie applications over SBC’s huge broadband access network. “Why should they be allowed to use my pipes?” he says, portending to blur the line between regulated services like the voice dial-tone he offers and the free, network-independent, unregulated VoIP services like Skype. He wants folks like Skype to give him kickbacks. And this may be well within his rights.

But it’s an awful idea, and here’s why.

SBC isn’t the only game in town when it comes to broadband, and their share of control over last-mile access is shrinking as each day elapses. Their assumption seems to be that because today they control a lion’s share of the broadband business in this country, tomorrow they will too. This is a poor assumption, and it could be a very, very costly mistake. Can SBC not read the signs of the times?

Wireless access technologies such as WiFi and WiMax, new metro-area gigabit fiber networks like OneCleveland, the proposed Google WiFi network in San Francisco, and the growing number of folks who use Voice-over-the-Internet more than a standard phone line (such as myself and many of my contacts) are all strong market indicators. The world doesn’t want to buy network access that costs more for one application (voice) than it does for another (web surfing), and there are plenty of outlets for this frustration if SBC continues in this vane.

SBC’s national access infrastructure is its greatest asset. Its network and staff of infrastructure management experts should concentrate on innovating at the network layer and below, where the company’s true expertise resides! If SBC decides to buffalo its competitors like an 8000 pound gorilla by passing additional fees to broadband customers who choose a different voice caling vendor, they will find those same customers leaving. Forget shareholder value, forget capital investment. Without customers, you have no cashflow. Without cashflow, you go broke. Does SBC want to be in business 20 years from now? Or do they want to be a shadow of their former selves, much like today’s AT&T, whose name they’re about to don?

When are these guys going to stop looking for destructive ways to block competition and start looking for ways to innovate their way to greater success?

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[Whew.....get some Ted my friend!!]

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