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February 08, 2006

Comments

Ben

The problem with your Walmart analogy is your forgetting the fact that the customer is paying for the network connection already!

So the better analogy should be; imagine a building owner charging Walmart for rent and then also asking Proctor & Gamble to pay for shelf space in the Walmart store?

Gary Wisniewski

I don't think the customer is paying enough for their network connection, that's the problem. Here's why:

1. Prices for connectivity have been pushed down to their limit. Consumer connectivity is subsidised by other telco products (such as mobile, commercial customers, and government). Partial evidence of this is the rapid pace at which all stand-alone ISPs have been absorbed or displaced by telcos and the hopeless attempts at profitability the smaller ISPs experienced. Consumer prices are lower than the cost of the service when examined as a separate cost center. If telcos see all of their busiess (VOIP, video) moving to the internet access cost-center, they don't see a sustainable economic model in the long run, and are forced to act.

2. Even if consumer prices are reasonable and assure profits, the general move in domestic spending is moving rapidly toward the net. As more consumers use the net and more and more services are monetized properly, telcos will be under a great burden to increase infrastructure while having no leverage whatsoever to begin to raise prices. Only by participation in the revenue models can telcos assure they can continue run their businesses profitably.

You may not like telcos. I don't. But, looking objectively at their financial performance in internet access alone, any business would be concerned about being squeezed-out of one of the most important financial markets of the next few decades.

jimbo92107

Remember England's "Enclosure Laws" that drove their peasant population into the cities? It was a good example of those in power siezing control of a resource that was, at its heart, part of a public commons.

What became of the peasants? Read Charles Dickens. We're headed in that direction today.

Telco companies build their infrastructure on public land. Broadcast networks use public airwaves. Yet each of them makes enormous profits using these public resources. Now they want more.

Ever see an ATT executive picking through a dumpster? You won't, because he's making a thousand times the income of his worker bees. Even if a CEO drives a company into the ground like GM's, he'll exit out the front door with his golden parachute.

And claiming that "prices for connectivity have been pushed down to their limit" is entirely bogus. The technologies that make the internet possible--servers, switches, routers, optical cables, etc.--are getting more efficient, more capable and less expensive every year. Plus, the major telcos were already paid $200 Billion Dollars to lay down a high-speed optical fiber network for the entire United States.

Where is it, ATT?

Fact is, it takes less effort and less money to push a megabyte from A to B this year than it did last year, yet the price hasn't been coming down. That means profits are going up. What a sweet deal...for corporations.

Greedy people grasping for more money. That's the wholistic picture.

"Please sir, may I have some more bandwidth?"

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