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Subject: [IP] worth reading more on : Telco's Arrogant Stand on Content

  • From: David Farber <>
  • To:
  • Date: Sat, 07 Jan 2006 19:32:56 -0500

Begin forwarded message:

From: Bob Frankston <>
Date: January 7, 2006 7:30:05 PM EST
Subject: RE: [IP] more on : Telco's Arrogant Stand on Content

I had a lot of conversations about these issues at CES and want to write a more complete summary.

For now I&#x2019;ll just pass on some of what I learned. In particular, I spoke to someone who claimed to be a fATT (faux ATT) technologist who didn't know anything about policy but he was able to spout the party line.

He said that fATT is upping the speed of copper instead of deploying fiber -- I actually agree with that. It makes more sense. He said they were getting 25 to 30 mbps (which does demonstrate that DSL can go much faster than VZ claims).

The IPTV stream is within this space and competes with the users&#x2019; other activities. They prioritize voice, then video and the rest of the packets.

From a bellhead perspective this makes perfect sense -- after all, a 25 to 30mbps path isn't all that large if you want to run 10mbps video streams.

But then he spouted the party line about investing 50 billion dollars. Unfortunately he had already said he was late for another meeting so I didn't get a chance to ask him to reconcile the $5e10 which was the number given for a fiber buildout with the more sensible ( approach which should cost far less &#x2013; about the cost of DSL which is being deployed anyway. The premium is far closer to zero billion than fifty.

I did get a chance to ask him what would happen if a city did its own fiber and let fATT use it for free. He mumbled something about needing to control quality and having run it themselves. Even though I have a 15mbps connection from Verizon fATT wouldn&#x2019;t want to sell to me.

The story about video priority is not really about video priority &#x2013; it&#x2019;s about purchased priority. The bit is set if one makes arrangements with fATT. They are open in that they will take extra money from anyone who pays enough.

It&#x2019;s unclear how well the fATT approach scales for those with multiple TVs (or viewing services). Is this the same thing as the VDSL that USWest (now Qwest) once touted? They are provisioning it to assure scarcity for their applications so as to require their selling priority. They have a responsibility to shareholders to keep capacity limited. It would be irresponsible to worry about antitrust if the FCC is there to protect you.

Verizon&#x2019;s story is confused &#x2013; the VZ people say they do the VOD in- band but the rest is via emulated traditional cable. The Microsoft people disagreed but I haven&#x2019;t yet done the definitive research. I do note that the VZ STB looks identical to the Comcast one down to the Coax connection though probably is different inside. The Scientific Atlanta fATT STBhas an Ethernet connection. There&#x2019;s also a Coax but supposedly that&#x2019;s for IP over Coax &#x2013; a standard pushed by the HomePNA organization (originally created for my phone wire networking).

It&#x2019;s interesting to compare the VZ and fATT stories. What additional value is the fiber giving VZ over copper? I like getting FIOS speed as long as the VZ shareholders are generously donating their money to cover the costs.

The confusion works to the benefit of the incumbents.

I had a chance to learn more about Vongo &#x2013; the next generation of the StarzTicket service I wrote about recently. Aside form lower price and increased selection, Vongo goes more directly and uses Akamai caching rather than going through Real. Apparently Real was a chokepoint which might&#x2019;ve been the source of the problems that I had viewing the Starz live. Vongo may work much better but I haven&#x2019;t gotten it to work because of something deep in the DRM bowels of my system that I have yet to resolve. I&#x2019;ll continue to try to find a solution.

There was an IPTV section at the show and it showed the confusion between IPTV as a closed offering and a more general video over IP. This works to make IPTV (closed) seem to be forward looking. We need to make sure we distinguish between the two. I am trying to say video over IP vs IPTV. Too bad I missed Kevin Martin&#x2019;s visit to the booths but apparently no one asked him impolite questions.

I&#x2019;m still wondering where fATT parked fifty billion. Is that more than MCI and Enron combined? But is VZ better if they actually spent it? I&#x2019;m sure other readers can provide some more information here.

If fATT is indeed letting all packets through does that mean I can get my video from anyone as long as I don&#x2019;t foolishly subscribe to their prioritized bits? If everything is encrypted can they play favorites?

If fATT can run DSL at 30mbps why not 100mbps or more? And why is treating 7mbps as a bold experiment?

The incentives are skewed and the numbers don&#x2019;t add up.

Next I&#x2019;ll ask about cell towers and why a million dollar 3G tower lets the users do less than a $25 802.11g packet router. OK, coverage is wider but that&#x2019;s a matter choice of radio technologies and density and has nothing to do with 3G.

-----Original Message-----
From: David Farber []
Sent: Saturday, January 07, 2006 18:26
Subject: [IP] more on : Telco's Arrogant Stand on Content

Begin forwarded message:

From: Fritz Mills <>

Date: January 7, 2006 5:58:03 PM EST


Subject: Re: [IP] more on : Telco's Arrogant Stand on Content

I don't have any problem with the notion of paying for Quality of

Service, but I think the argument, as it's been presented so far, is

completely confused. First, the statement quoted below from Budde

makes no sense. Google, Vonage, and others do not use the internet

for free. Like everyone else, they pay for access and they pay for

the bandwidth they use. They may not pay SBC, but that is beside the

point. I, on the other hand, am a customer of SBC, and I pay them for

access to the internet, and I pay for a certain amount of bandwidth

(throughput). I may or may not choose to use my access to connect to

Google or to use Vonage's services, but the point is, that *I* am

their customer, not Google or Vonage, and if they want to charge me

more to guarantee a certain level of quality of service for some or

all of my internet access needs, that's something we can negotiate,

but that has nothing to do with Google. Conversely, even if I do

choose to use my access to visit Google, It is because I have paid

SBC for the bandwidth to do so. Google has paid their provider for

the bandwidth to accept my visit, but they should have no obligation

to pay SBC as well.

To put it in terms that perhaps the telcos can better understand: If

I pick up my telephone and make a call to Google, I must pay my telco

for my phone line and telephone service, and Google must pay their

telco to provide the telephone service that allows them to answer my

call, but there is no obligation on the part of Google to pay my

telco, too. Nor is it true in that situation that Google has &quot;used

[my telco's] pipes for free.&quot;

> Begin forwarded message:


> From: Dewayne Hendricks <>

> Date: January 2, 2006 5:25:14 PM EST

> To: Dewayne-Net Technology List <>

> Subject: [Dewayne-Net] re: Telco's Arrogant Stand on Content

> Reply-To:


> [Note:  This comment comes from reader Andrew Odlyzko.  DLH]


>> From: (Andrew Odlyzko)

>> Date: January 2, 2006 8:34:30 AM PST

>> To:

>> Subject: Re: [Dewayne-Net] Telco's Arrogant Stand on Content


>> Dewayne,


>> There is plenty of arrogance on both the telco and content provider

>> sides.  But statements such as this one from Budde, and Whitacker's


>>    &quot;What [Google, Vonage, and others] would like to do is to use my

>>    pipes free. But I ain't going to let them do that.&quot;


>> make clear is that the key issue behind much of the posturing about

>> open access and deregulation is the division of revenues from content

>> sales between the content owners and the service providers.


>> I don't know what Budde is referring to when he talks of telcos

>> getting under 50 percent of revenues from content.  In general,

>> service provider takes are far higher.  If you look at cable

>> companies,

>> they spend around 25 percent of their revenues on content, and get

>> to keep 75 percent or so for the maintenance of the networks,

>> profits, ...

>> Satellite radio pays someplace between 5 and 10 percent of its

>> revenues

>> for the music they play.  And NTT DoCoMo's i-mode pays only about

>> 15 percent of its revenues for content.  (I don't know what the

>> revenue

>> split is on cellphone music ringtone downloads.)  So it is natural

>> that the content industry is salivating at the prospect of getting

>> more competition in delivery, and boosting their takes.  Getting

>> something like 50 percent would do wonders for their finances.


>> But what both the content industry and the telcos forget is that

>> there simply is not enough money in content to pay for all the

>> telecommunications networks.  Connectivity, not content, is where

>> the real money is, as has been clear for a long time,


>>   <>


>> So yes, the content providers and Internet companies like Google and

>> Yahoo! can build backbones, but they can't afford to provide

>> universal

>> local connectivity.


>> Happy New Year,

>> Andrew


>> P.S.  There are lots of other comments one could make about this

>> piece

>> by Budde.  For example, his rosy prediction for tele-presence

>> flies in

>> the face of numerous failures in video telephony.  But that is

>> another

>> subject.


> Weblog at: <>




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