Jealousy

The past two post titles might make you think I am starting a series on the seven deadly sins but I am not.

When one company looks at another's business model with envy, they often get upset and start thinking about how to fix the situation.

Today's Wall Street Journal had a cover story on the Telco's desire to charge consumers extra to download video from Google or a song from iTunes.

Sure, the Telcos might be able to get more money from people who need super fast, six sigma reliability Internet connections.  There has always been a business model around super high performance networks.

But this is really just marketing spin. What's really going on is the CEOs of Verizon, AT&T, Bell South and the other Telcos are looking at their margins going down month after month while the service providers like Apple and Google, who deliver their services to consumers over the Telco's networks, are watching their margins go up and up.

We are witnessing some serious jealousy.  These Telco guys want to do something about it.  They want to charge Google or the customers of Google (ie us) for the privilege of that delivery.

Fat chance guys.  The consumer is already paying for the Internet connection.  They aren't going to stand for another monthly payment to the service provider because the service provider has to pay the Telco too.  Double dipping doesn't work as a business model generally speaking and certainly not in a commodity business where there are less barriers to entry every day.

The Telco's had their chance back in the mid 90s to develop all these value added services to run on their networks.  They didn't do it.  They bought back stock, built golf courses, defrauded their shareholders, took on enourmous debt, and generally did everything other than take advantage of the incredible opportunity that they had with the coming of the Internet.  Bottom line - the screwed up.

Jarvis calls the Telcos "robber barons" and Om Malik calls this hairbrained scheme a "chimera".  I had to look that up.  Om's either calling this money grubbing scheme a "fire breathing she monster" which sounds about right, or a "creation of the imagination" which it clearly is.

I have two words for it:

Dream On

Comments

[Andy]

Reminds me of 1973 sitting in a long gas line on the highway.

A muscular man comes up to my Mom's window, as I'm sitting in the backseat, she rolls down her window.

It's hot, we have been in the line, in the summer for 2 hours.

Guy says, "Hey lady, $10 bucks to fill up your car, and het into the station."

Mom replies, - "For what, the gas?"

Guy - "No, so you can GET on the property to fill up, 10 bucks or get outta the line lady.."

Mom - "OK."

She paid it, (there was no choice, the tank was empty, we had already been on the line for 2 hours, and I missed Magilla Gorilla) and WE NEVER went back to that station again. (on the corner of Ryders Lane and Milltown Road) ---

Moral: You can do it ONCE, and it will cost you forever.
That $10 probably cost about $500 in extra gas, just to drive the extra distance to fill up at another station over 30 years.

[James]

I think this idea has merit, but not as they are implementing it. If these firms “tax” itunes, I’ll just visit more great sights like nugs.net more often. Under this scheme everybody loses.

A better approach would be to charge strictly for bandwidth usage. Does it really cost Frontiernet more per month for me having a 3 meg connection compared to my neighbors 250K? I dare say it doesn’t. Does it really cost frontiernet more per month if I download 3 gig worth of torrents or 3 gig worth of itunes? What matters is bandwidth; data is neutral. Remove the user fees, monthly surcharges, and all other dated methods of collecting revenue and charge strictly for bandwidth usage.

[Simon]

"Tell him he's dreamin'" -Darryl Kerrigan

[Jake]

Forget it. I think they would be very foolish to try to put surcharges on internet users. Don't they realize that the cat is out of the bag when it comes to the internet? It wouldn't be too hard for a group of frustrated users to put together a community (a grid) of shared wireless access--which completely bypasses the big telcos. Giving users a strong incentive to create a peer to peer network will only make things worse for the telcos. As Esther Dyson said (if it wasn't her it was someone at the EFF) "The Internet routes around censorship." In this case it would be "The Internet routes around BS surcharges."

[David Hambric]

It seems the universe of telecoms is closed. The big bang of AT&T's break up has evolved into the Baby Bells rushing back together. And with this comes some of the same the old crap from yesteryear as well. It seems conterintuitive to double charge your customers, unless, of course, you have a monopoly of the good/service those customers want. Yeah, the telcos miss the good ole days, for sure.

[Stephen Hamilton]

I agree with the conclusion drawn by Simon above - they are dreaming. If they think that people will accept this they have another thing coming.

I also agree that perhaps paying strictly for bandwidth (or at least with a heavier emphasis placed on this) could be a way to keep everyone happy. I have no problem with a user pays system.

[Brian]

With the advent of high speed internet and telecomm. companies starting to climb on board this ever growing sea liner, (ie vonage) it will all be net based within the next ten years as progression is going to be as brisk as cabbage patch was back in the day.
good stuff,
B. http://valueprep.com/jealousy.html