IP Convergence: Beyond VoIP, Beyond Cost Savings

I was reading Susan Crawford's blog and was very disheartened to see her start to abandon her resistance to Washington involvement in the net neutrality debate. I really don't understand why otherwise rational people, and very intelligent people like Susan, lose all sense of perspective on this issue. I think a review of the facts is in order.

First, the RBOCs have not done anything. They have not degraded Internet service. They have not blocked any Internet sites. They have not even put a tangible offer on the table for "premium access". All they have done is talk non-sensically about how they want to charge for premium delivery on the Internet. The comments from Whitacre and Seidenberg and other senior managers demonstrate their ignorance about how the Internet works more than anything else. Yet somehow their statements have triggered wide-spread panic in the Internet world and caused everyone to forget how they built their business in the first place.

None of the content providers or non-RBOC Internet backbone providers built their business with the help of Washington. So why are so many of them rushing to Washington now? What is it they want Washington to do? The Stifel/Nicolaus report I have referred to previously does an excellent job of boiling down the net neutrality debate to its essence. As the report states, the essence of the debate is a tug of war over the value chain in the Internet. The RBOCs see themselves at the wrong end of the value chain and want to put more of the value into their pockets. They are not asking Washington to assist them in this. In fact, they are asking Washington to sit this debate out. For some reason, it is the content providers and other Internet companies that are inviting Washington into this debate.

This is beyond foolish. The companies that feel most threatened by the RBOCs and have been most vocal on this issue are some of the most successful Internet companies out there - Google, Yahoo, AOL, Amazon, MSN. The old saying "dance with the one who brought you" applies here. These companies were successful despite Washington's mis-handling of the 1996 Telecom Act, not because of it. These companies succeeded because of the entrepreneurial drive and spirit of their leadership, their business savvy, and their relentless competitiveness. Why are they abandoning that now in favor of a Washington strategy? Their business sense brought them their success, it is their business sense that will continue their success over the RBOCs - dance with the one who brought you. Don't switch tactics now and try and dance with Washington.

Since this is a tug of war over the value chain in the Internet, these companies should be striking the business arrangements that will allow them to retain the value in the Internet and prevent the RBOCs from putting the value in their pocket. As a Tier 1 Internet backbone provider, Global Crossing is trying to work with content providers to establish a strong value chain for our mutual benefit. We hope to be far more successful in this market arena than we can be in the Washington arena and if we are then there is no need for a Washington strategy until the RBOCs go into Washington whining that they can't compete in the Internet space. Then we can respond in Washington with the upper hand, the moral high ground and a successful argument.