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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
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» The telecom payola gang strikes again from mathewingram.com/work
Theyre at it again. As Om Malik reports, a story in the Wall Street Journal (which is now behind the pay wall), says the big U.S. telecom players are continuing their campaign for a multi-tiered Internet in which Google and Yahoo and Microsoft ... [Read More]
Tracked on Jan 6, 2006 9:31:30 PM
» Jealousy of Baby from Polarman
Fred Wilson says that when the Baby Bells are talking about charging Google to deliver their pages at the same fast rate as everyone else that the telco's are jealous of Google's margins and stock performance. I am outraged by [Read More]
Tracked on Jan 7, 2006 9:27:49 AM
» too little, too late from gapingvoid
A real gem from Fred Wilson. All to do with the US telephone companies trying to muscle in on Google and iTunes' action. Dream on. Like Fred says::The Telco's had their chance back in the mid 90s to develop all... [Read More]
Tracked on Jan 7, 2006 11:15:38 PM
» too little, too late from gapingvoid
A real gem from Fred Wilson. All to do with the US telephone companies patheticly trying to muscle in on Google and iTunes' action, for no other reason than jealousy. Sounds like they'll have an uphill struggle. Like Fred says::The... [Read More]
Tracked on Jan 8, 2006 1:52:14 AM
» too little, too late from gapingvoid
A real gem from Fred Wilson. All to do with the US telephone companies patheticly trying to muscle in on Google and iTunes' action, for no other reason than jealousy. Sounds like they'll have an uphill struggle. Like Fred says::The... [Read More]
Tracked on Jan 8, 2006 1:54:40 AM
» too little, too late from gapingvoid
A real gem from Fred Wilson. All to do with the US telephone companies patheticly trying to muscle in on Google and iTunes' action, for no other reason than jealousy. Sounds like they'll have an uphill struggle. Like Fred... [Read More]
Tracked on Jan 8, 2006 3:13:08 AM
» too little, too late from gapingvoid
A real gem from Fred Wilson. All to do with the US telephone companies patheticly trying to muscle in on Google and iTunes' action, for no other reason than jealousy. Sounds like they'll have an uphill struggle. Like Fred... [Read More]
Tracked on Jan 8, 2006 3:14:38 AM
» The VCs Lips are Moving from The Wired GC
Its early in 2006, and thoughts of many in business turn to new ventures. And of finding the money to finance them.
So who ya gonna call? One option is your friendly neighborhood venture capitalist. For those of us a long way from Sand Hill... [Read More]
Tracked on Jan 8, 2006 10:36:09 AM
» It’s Time to Worry About RBOCs from Fractals of Change
It’s time to worry that the remaining strong Baby Bells, having devoured their parents, will manage to further slow Internet usefulness in the United States. Both our economic competitiveness in a quickly flattening world AND our future ability to acce... [Read More]
Tracked on Jan 8, 2006 6:52:32 PM
» A VC on: Jealousy from Lifeblog
Indeed, indeed. Link [via Hugh]: A VC: Jealousy. 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 [Read More]
Tracked on Jan 10, 2006 7:47:54 AM
» Net Neutrality War Breaks Out from Mark Evans
So, the net neutrality war has finally begun in earnest after BellSouth confirmed it is moving to charge Internet content and ser... [Read More]
Tracked on Jan 16, 2006 8:29:57 PM
» BellSouth drops the gloves on neutrality from mathewingram.com/work
My friend and fellow Canuck blogger Mark Evans points to a story from Marketwatch about BellSouth following through on its promise (threat?) to start charging service providers such as Apple or MovieLink extra to ensure that their content gets through... [Read More]
Tracked on Jan 16, 2006 11:10:38 PM
Posted January 6, 2006 in Venture Capital and TechnologyComments
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.
Posted by: Andy | Jan 6, 2006 9:09:10 PM
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.
Posted by: James | Jan 7, 2006 1:26:57 PM
"Tell him he's dreamin'" -Darryl Kerrigan
Posted by: Simon | Jan 7, 2006 4:38:36 PM
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."
Posted by: Jake | Jan 7, 2006 10:59:56 PM
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.
Posted by: David Hambric | Jan 9, 2006 12:39:31 PM
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.
Posted by: Stephen Hamilton | Jan 10, 2006 4:11:03 AM
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
Posted by: Brian | Jan 16, 2006 1:21:39 PM
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