Monday, May 08, 2006

Killing Skype and Vonage

From all appearances, the telcos and cable companies appear bound and determined to eradicate network neutrality. The resulting chaos is simple to predict: innovative services like Skype and Vonage would be left to die, unless they could pony up "prioritization tarriffs". And the next Skype, the next Vonage, the next innovation would never see the light of day. What investor would bother funding a startup that the telcos could kill off as easily as flipping a light-switch?

Verizon warns Financial Services Firms

The latest salvos: Verizon warned financial services firms that they, "may not get the secure networks" they need if net neutrality continues to be levied. The reason? The financial firms are getting antsy that the carriers' plans will dramatically escalate their costs. They are right about that - and, in fact, the carriers could enter or dominate any market they so choose.

And Verizon's argument is simply a rudimentary straw-man: net neutrality is enforced today by the FCC. Oh, and guess what? SSL/TLS -- the primary method of encrypting B2C network traffic -- is utterly, completely, and absolutely secure. Therefore, the VZ prediction has all the legitimacy and accuracy of Miss Cleo's Psychic Hotline.

No relief from Cable

In other news, Mediacom Communications -- a cable provider I've never even heard of -- crushed the hopes of consumers who thought that cable might provide competition for the telcos by offering a net-neutral environment. Instead, Rocco Commisso, CEO of the company, noted, "I don't think the government should be coming and telling us how we can work that infrastructure, simple as that... Why don't they go and tell the oil companies what they should charge for their damn gas?"

Perhaps, Rocket Scientist Rocco, because "last-mile" fiber into the home is a natural monopoly. Over the long haul, there will be only one fiber last-mile network in any town or city. Building out two or more expensive and competing sets of fiber loops will needlessly and dramatically increase consumer costs. Like electric power, water, and sewer systems, fiber networks are examples of natural monopolies. In other words, it makes no sense to build redundant last-mile fiber infrastructure.

Thus, as a natural monopoly, last-mile fiber must join the ranks of regulated infrastructure. In this case, the regulated framework is no more onerous than what exists today: an FCC-mandated state of net neutrality.

Anti-American Rhetoric

Put simply, these blathering excretions are anti-American rhetoric that threatens innovation and investment.

Let me get the carriers' arguments straight: erecting tollbooths on the Internet and suppressing those upstart Internet companies (responsible for the creation of a trillion or more in market-cap) is a good thing?

The carriers' intentions are so transparent that you can probably see through their business plans when you hold them up to bright light. I believe they seek to kill or control Skype, Vonage, YouTube, and any other service that threatens their antiquated business models.

For one, the hardware that Cisco markets to the carriers is downright ominous in its capabilities: the marketing lit almost comes out and giggles over the fact that carriers can meter, filter, degrade or even block third-party network traffic.

And instead of investing in layers 4 through 7 (applications or content), the carriers seem to invest mostly in lobbyists. In fact, I can't think of one innovative Internet application introduced by the carriers -- ever. That, by itself, tells me all I need to know.

Hitch a ride on over to Save the Internet and take action. Today.

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