The chairman of AT&T has a tunnel-vision problem:
Ed Whitacre, AT&Tâ€™s chairman and chief executive, warned on Monday that internet content providers that wanted to use broadband networks to deliver high-quality services such as movie downloads to their customers would have to pay for the service or face the prospect that new investment in high speed networks â€œwill dry up.â€
â€œI think the content providers should be paying for the use of the network â€“ obviously not the piece from the customer to the network, which has already been paid for by the customer in Internet access fees â€“ but for accessing the so-called Internet cloud.â€
Soooo, let’s break down how dumb these statements are.
First of all, the content providers are paying for service already, in the same way that the end-users do. They might not be paying AT&T directly, but they are paying some provider. AT&T connects to other backbone providers via peering arrangements, which are based on mutually beneficial data exchange of similar volumes of traffic. In some cases, where a smaller provider wants to peer, they are probably already being charged a fee.
Second, If an AT&T customer is streaming video from a site that isn’t paying AT&T’s extortive quality-of-service fee, and the download is too slow, the customer is going to blame AT&T. Oh, they may try to shift the blame, but that facade is going to crumble as soon as the customer talks to a friend whose cable-modem works just dandy for streaming video from the same site.
Lastly, if they are trying to bully sites like Google into paying these fees, as some articles claim, that’s just a dumb move. Google’s market cap is $30 billion higher than AT&T’s. “There’s always a bigger fish.”