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Time Warner: Making An Offer They Can't Refuse? 127

Posted by timothy
from the well-lookie-hyeah-padnah dept.
Verteiron writes: "According to Reuters, Time Warner is requiring nearly 40 Internet companies in Texas to give up 75% of their subscriber fees and 25% of revenues from other sources such as advertising in order to gain access to its cable TV network. This seems to be an effort to weasel out of their promise to the Federal Trade Commission; in light of the AOL/TW merger, TW had said it would open its cable network for ISP access. To add insult to injury, the term sheets for ISP access also require that TW have 'approval control' (read: censoring rights) over the ISP's homepage." Maybe they're just used to having municipal monopolies ...
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Time Warner: Making An Offer They Can't Refuse?

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  • That said, I've *never* lived in a place where I had a choice of more than one cable company.

    Then move. Simply because there is a free market on housing that means there is a free market in cable. It's as simple as moving.

    The only response I advocate is refusing to give money to companies that choose to try to screw me. That's a free market tactic if ever there was one. You can screw other consumers if you so choose, but I'm not going to participate, thanks.

    Ah, Liberal Self-Importance Syndrome. Do you really believe yourself to be so important that companies want to "screw you"?

    In any case, corporations do not "want" anything. They are not persons, and only persons can want stuff. Corporations are entities arising out of natural law, whose purpose is to generate profit for investors. It is a known fact of economics that the activities of corporations increase the overall wealth of society, and that this increase reaches everybody in society. Thus restricting a corporation hurts us all, and above all the ones who need the money the most, the poor.

    Communists like Ralph Nader, who holds ideas suspiciously like yours, are the reason that the US lost its lead in things such as the auto industry, and risks its lead in the tech and media industries.

  • Any you feel qualified to comment on things you don't understand? My Lord.

    I was actually looking for clarification from you. I'm not really commenting on anything, I'm just wanting you to explain your point to me further, as I couldn't make sense of it.

    I still don't see how his theology relates to the pros and cons of various economic/political systems. You clearly do, which is why I asked for your explanation!

    Thanks.

    thenerd.
  • by Chas (5144)

    Now, someone gets it.

    Notice there's no mention of any additional payments of any sort.

    Think of it this way. They'll be setting up a virtual ISP inside of the cablemodem network. The only thing their current connection would be used for would be SMTP, POP, and NNTP.

    No modem banks. No phone lines. So two of the four major costs of running an ISP are gone. The remaining major costs are:

    • Employees
    • The ISP's own connection to the Internet.

    The first of which can be severely curtailed, since you don't need as much skilled labor when you're not the one managing dozens of modem banks and scads of servers.

    Small ISP's could, conceivably get away with 3-4 people handling a couple thousand of customers (heck, I know one dialup ISP in NW Indiana that does this now!). Only one or two would actually need to know enough to deal with the servers and their office connection. The others could be techsup drones.

    Medium ISP's, with more than 2000 subscribers, could get away with maybe 8-12 people. Three or four of which would need to know enough to keep the mail and news servers running (as well as the ISP's connection).

    ISP's with more that 10,000 subscribers could probably get away with the most drastic reductions, and staff levels could probably reduced to somewhere between 20 and 30. Again, you'd need 3-4 people who knew enough to keep the computer room running, but the rest could be techsup drones. Note: This is predicated on the notion that the ISP would be starting from SCRATCH, instead of simply adding the user's onto the load of the current techsup staff.

    Currently, cable companies charge around $40-$50 (USC) for cablemodem access. Were a moderate sized ISP to pick up around 1000 subscribers on a cable network, they'd still see $10-$12.50 pre-expense profit per user. Especially if the users are just added into the current techsup staff's load.

    As to the 25% from other revenues, well. If it includes dialup accounts, I can see how this'd be REALLY egregious, but like every other business expense, they'd simply pass the buck (well leech the buck) out of their dialup subscribers in the form of higher dialup fees. If a company doesn't take advertising money, there's nothing to worry about there either.

    The only issue I'd have would be content control.

    It just sounds a lot more horrendous than it actually is.


    Chas - The one, the only.
    THANK GOD!!!

  • you know, you might be on to something :-)

  • This is a particularly nefarious variant of the ad hominem. You disagree with me, yet lack arguments. So you must try to convice our audience that I'm lying about my motives and beliefs. But you must not look like you are attacking me. So you make it look like you are praising me for my "trolling".

    This is a classic example of Orwellian doublespeak. Happily, though, the tides are turning, and you won't be able to get away with this kind of thing anymore. The fascist octopus truly has sung its swan song.

  • Could someone explain to a humble Scot who these Time Warner people are anyway. Don't they make an American current affairs magazine? Jonathan Riddell
  • by Anonymous Coward

    The 75/25 gross revenue split for subscriber
    fees is roughly the same (possibly identical)
    as the split between Time-Warner/Roadrunner
    right now. The split between other cable
    operators (Time-Warner does not ever use @Home)
    and @Home is also 75% to the cable operator
    and 25% to @Home. So @Home typically receives
    only $10/month per customer, for unlimited
    bandwidth. Out of this, @Home pays for
    customer care, a NOC, regional transmission
    fibre, long-haul transmission fibre, its
    core backbone, its data centres, and so forth.
    This isn't a high-profit-margin business.

    So the proposed revenue split is EQUAL to the
    split currently in place with RoadRunner or
    @Home. ISPs wanted equal access. Time-Warner
    has proposed equal access, but now the ISPs
    see that there isn't much profit in being
    a cable network ISP (just as the DSL-based
    services are typically more profitable for
    the LEC than for the ISP).

    Moreover, both RoadRunner and @Home already
    have content/advertising split arrangements
    equal to those proposed by Time-Warner. @Home
    is required to share advertising revenues with
    the cable operators and cable operators have
    veto-power over the default web page that @Home
    provides to that cable operator's customers.
    So again, ISPs asked for equal access and are
    being offered equal access, but really want
    unequal access on terms more favorable to them.

    It is fascinating to watch all this go on.

    These ISPs will also be unhappy once they discover
    that most @Home or RoadRunner outages are due
    to problems with the Hybrid Fibre Coax system
    used for data transmission. The ISP can't force
    the cable operator to fix those problems quickly
    nor can they force the cable operator to have a
    happy interface with the residential customers.


  • Speaking as one who designs the equipment that people like TW will use to provide 'open access',
    by the time TW hands your packet to your ISP TW wil already have done almost all the work.
    As such it is not unreasonable for them to ask for almost all the revinue generated by their work.

    It is possible that ISP's will not be able to make money after giving TW a 75% cut, but that
    does not mean that TW is asking for too much, it may just mean that there is too little left
    for the ISP's to do to make a profit.

    You notice in the article the manager of the ISP is qouted as saying that it is 'ridiculous',
    go and see if you can find an ISP claiming that TW's demands are 'not techincaly justifible'
    and THEN you can become outraged.

  • Those ISPs could start their own cable network if they don't want to pay what Time-Warner are charging.
  • Other than "normal" IP connectivity without AOL's ads, I wonder what traditional ISPs are going to do to add enough value to their services to keep from getting undercut.

    Probably the same things that DSL ISPs do. For example: Verizon DSL in my area doesn't permit me to run servers, won't give me a static IP, and limits me to a pathetically slow upload speed of 90kbps. Since one of my primary reasons for wanting DSL is to access my machine remotely, this sucks. But there are other ISPs that provide all of these services.

  • /.ers,

    If you look at the numbers, AOL currently pays about 60% of revenues to pay MCI/Worldcom for 56K dial-up access. This is a "sweetheart" rate, which is low because of size (AOL is a decent sized ISP ;-), because they negotiated a significant discount during the deal for Compuserve, and because Steve Case is on the board for Worldcom. Keeping all this in mind, is 75% so outrageous if it costs the largest and most profitable ISP 50% for 56K access? In Canada, their version of the FCC has already ruled that 75% is a reasonable rate for "carrage charges", or fees for ISP's to piggyback on cable lines.

    ISP's working with AOL are getting broadband access for their customers and can begin to phase out their dial-up access and reduce maintenance and technical support costs, better for them in the long run. For instance, AOL has a $9.95/plan TCP/IP only access plan that is MORE profitable than a $21.95/month dial-up plan.

    Now, I do admit that some of the plan is very onerous (veto power over external content, advertising space on the ISP's home page, etc.). That is just dumb, dumb, dumb, dumb, dumb, dumb, dumb, dumb. There are legitimate business reasons for flexing your muscle, but this is certainly not one of them.

    Look at the numbers before you fire off your mouth about the evil AOL. When you make a business case (and believe it or not, AOL intends to make money, not build the ultimate weapon and destroy Alderan) this is not so outrageous.

    Let the flames begin!

    Morgan

    ************ DISCLAIMER *****************

    I am a former AOL employee and current AOL stockholder.

    ************ DISCLAIMER *****************

  • Hallelujah, Brother

    There is so much visibility of what's going on currently. Some examples are UCITA, and the DCMA. I have no clue to what extent the current patent grant frenzy is linked to contributions. But what I'm quite sure is that the FSF didn't contribute quite as much as our friends in the movie -, CD - and software industry.

    All this worries the hell out of me. But unfortunately the public (yeah, the guys 'n gals with the ultimate power in terms of votes and purchases) don't seem to have a fscking clue, or is seriously desinterested about what's going on.

  • At the end of last month, TW capped the bandwidth on thier service to two megs a sec. I think this was nationwide, not just central NY, where I live. TW claims it's because some ppl use streaming A/V and others run illegal FTP severs...I haven't talked to too many RR users that heard about this. I thought they did a great job not telling ppl their service was being cut...hmm wonder if they'll cut my bill too...hahaha
  • There is no monopoly in cable services in the US.

    Don't mean to break your bubble, but most towns and small cities in the US are in thrall to a single cable company thanks to sweetheart deals with the local community councils.

    DSS you say, but if I got that I'd have to get in bed with Verizon and I really don't need a dopey landline for fone service so I won't be getting one so my set top box can dial the mothership..

    Still, a company's rights to pursue profits are fine, but when that pursuit turns into abuse of privilege and monopolism, it must be curtailed.

    In theory, the government is there to make my life better, to provide for the benefits of group investments, and to take care of the things (war, sanitation, policing, welfare) that I don't want to, have the time to, or have the skills to deal with.

    The main reason I believe people call for the reduction in size and influence of the government is because they've in many ways failed to implement the theory correctly. Group investment has turned to graft and corruption, the skills in the public sector are often lacking (lower salaries draw lower talent, and it cycles viciously) to deal with the issues delegated to them, and institutional hubris blinds our representatives to the truth that they are _our_ employees, _our_ servants. Our pronounced lack of interest in their doings (as shown by low voter turnout and apathy) both feeds and is fed by that.

    I'm more and more of the mind that we need to consider competition for the public sector as well as the private sector. Part of the appeal of the public sector is the theoretical efficiency of a single large institution being able to provide services at a mass-production scale without the 'waste' of competition (in theory, competition is somewhat wasteful but in practice it's a catalyst for efficiency). Unfortunately, history is proving this to be a false theory, that inefficiency increases to support the scale. I wonder if we need some kind of 'duelling agency' kind of deal, where a particular set of benchmarks are set and different agencies (or branches of the same agency) are set against each other, with bonuses and promotions to the winner. 50 quatloos on the newcomer, perhaps, but alls I knows is what we have now is _not_ working and solutions are _not_ forthcoming from our pupp^H^H^H^Hleaders..

    Happy Columbus Day!
    Your Working Boy,
  • That's a reasonable description of the way things are. But it's no excuse for a legally maintained monopoly. The only reason for a legally maintained monopoly is that someday we might want to disenthrone them, and it might be easier to do this if they weren't government entities. I don't believe this.

    I think that cities should own their own infrastructure, and, perhaps, contract out management of it to companies. Or perhaps do it locally, if they so choose. This includes electric lines, cables, plumbing, streets & roads, etc. And that cities should negotiate with the electric companies over rates, or even put in their own power plants. Local control is almost always better for local consumers. The vote may not be worth much, but it's worth a lot more locally. It's true that this sort of leaves rural homeowners in the lurch. That would need to be seen to (preferably) by the states or (possibly) by the feds. But that's the way it is now anyway. That's what the REA was all about.


    Caution: Now approaching the (technological) singularity.
  • When I pay for my local DSL access, my fees break down as: $40 to the telco, $10 to the ISP. That's up front on the billing.

    Now, to hear that the telco (AOL/TW) wants to get the lion's share of that piddling $10, PLUS all over ISP revenue, AND basically take over the ISP operations AND ON TOP OF IT to get free advertising ... well, any reasonable person would conclude that the telco is trying to put the ISP out of business.


    You misunderstand the situation. With your service, the telco is getting 80% of subscriber fees, and T-W only wants 75%. The money T-W wants is reasonable, it's the editorial control if the ISP's site that is troubling in this situation.

    Ma'at
  • TimeWarner/AOL will not be the only backbone supplier of the internet, becuase they own none of the main backbones. That would of been Sprint/WorldCom before the FTC had the good sense to stop them. TimeWarner/AOL will just control the last mile. (And AT&T/TCI as well). Isn't centralized ownership so much fun! So it's really just 4 companies who own everything.
  • The original article has a decidedly anti-cableco bias. While TWE has obviously got a lot of learning to do about dealing with ISPs, there's much to be said about cable modems:

    * Cablecos are not, under law, common carriers, so they don't have to carry anything they don't want to. Congress said so.

    * Telephone companies are common carriers. Under the law, they have to serve all comers, even ISPs. The incumbent local telcos (ILECs) are trying to avoid their obligations.

    * The above situation is not so unfair. Telcos basically got guaranteed returns on their monopolies, while cablecos haven't, and have been much more marginal, financially. And cablecos aren't legally monopolies (nor are telcos anymore); it's just hard to have more than one cableco in a city. RCN and Knology are trying to make a go of "overbuilding".

    * The cablecos got into cable modems a few years ago by having third parties (@Home and Roadrunner, mostly) set it up for them. They know entertainment, not data, so they were giving the public an alternative source of Internet access (not using telcos) and should be thanked for that.

    * There was no "open access" movement then; the cablecos were basically creating self-provisioned ISPs.

    * Now that the cablecos are successful at selling modems, dial ISPs are feeling competition and want in. Understandable. But remember, cablecos are not common carriers, telcos are.

    * AOL charges $10 for "bring your own" access, which is 25% of the typical $40/month cable modem fee. Of the $40, probably less than $10 goes to the backbone and to run the servers which @Home provides.

    TW's proposed revenue-sharing model is obviously wrong. They should be selling the pipe for a fee, probably around $30/month (which is the range of wholesale ADSL), content neutral. The homepage crap follows from the wrong model. It is in all cablecos best interests to have the ISPs use them, rather than telcos, for their access pipes. But the cablecos are just learning about selling bandwidth, rather than content. It's a foreign concept to them. Don't blast them for trying. They will probably get it right the third or fourth time around.
  • Flat out untrue. The Cable Act of 1992 forbade local governments from giving any monopoly franchises, not that most had official monopolies before then.

    Ever wonder why some cities (like L.A.) have such a crazy-quilt of cable areas? No monopoly! Each of several non-exclusive franchisees just built until they met somebody else's buildout. They didn't have to stop, but it's a hell of a lot more profitable to be the first on a block than the second, so they logically avoided each other.

    Telcos had monopolies enforced in most states until 1996. Very different.
  • Well of course the geeks don't drool over a site who's URL is www.WINFIRST.com. It's probably only going to be supported by WINdows. Kill it now before anyone else knows about it!

    Western Integrated Networks

    I'm sure I'm stating the obvious here, but you never know what kind of stupid shit people are going to spout off around here...


    --
    Turn on, log in, burn out...
  • The old "we pay for the lines so they're ours" argument is the same tired argument AT&T used to avoid being broken up 1982. You know what? The government didn't buy it, AT&T lost, and the common carrier laws were born.

    You see, companies are only able to lay those lines by digging up goverment land. Which is taxpayer owned land. Which means if I, as a taxpayer, want cable companies to be force to open the lines to competition that are on my land, I get to do so. (using 'I' as 'marjority of taxpayers')

    This argument did not work for AT&T the telco in '82, and it won't work for AT&T or Time Warner the cable companies now. It is only going to be a matter of time before the common carrier laws (the same laws that allow you to have a choice in long distance service) apply to cable TV/Internet.

    I fail to see why people who are not major stockholders in cable companies have aginst this anyway... Don't you want choice in cable service? Wouldn't you like to be able to choose between several providers instead of just one? People amaze me...

    -Wintermute
  • This is typical libberish-- "economics is not exact". Hell, physics is not an exact science; just because they use a lot of math doesn't make it so.

    Call me when they build the economics equivalent of a manned mission to the moon.

    Yet after issuing such a statement, they still will try to hold that the Secular Humanist creed (also known as "theory") of Evolution is science.

    Well, various parts of the theory of Evolution are commonly used in Medicine and Engineering. The evidence for the utility of differential reproductive success based on heritable traits as a method for generating specified complexity is so overwhelming that its opponents attack it as a tautology (as if that were somehow damning.) The evidence for common descent is so overwhelming that almost no publishing scientists in the field of biology have raised any specific objections to it.

    Where has the Laffer Curve been used to accurately predict anything in the real world?

    To (try to) bring this back on topic, though, the TW/AOL folks do not in any way fit any free-market model, supply-side or otherwise, so the point is moot.

    Cheers,

    Craig


    --
  • Interesting that you mention that, because every town I know of grants a monopoly franchise to the cable company. You're telling me all these towns are breaking the law?

    BTW: I did a search on thomas [slashdot.org], and the bill you talk about does nto forbid local governments from giving any monopoly franchises, but places limits on the abilities of local governments to govern rates on cable services, even if they are a monopoly in the area.
  • ...AOL pulled Gnutella as soon as they realized what "evil" Nullsoft hath wrought.. :-)

    -Wintermute
  • This whole thing cracks me up!

    ISP: We want to provide high speed access to our customers using the Time Warner netork.

    TW: Well ok guys welll let you in but since we're shouldering the majority of the costs we want the majority of the profits from those customers.

    ISP: ARE YOU NUTS?!!?! I'm gonna go complain to all the people who think profit is a dirty word and get you blacklisted!
  • When Adam Smith came up with the term "Free Market", he said it had 2 enemies - Government and Monopoly. That is as true today as it was then.

    An efficient free market needs to be free of monopolies. Here in the UK we have much weaker anti-monoploy laws than the US, and the US is seen as being much more free market friendly because of it.

    Oh, and BTW -

    liberalism: The creed of those who believe in individual liberty. More specifically, since "no government allows absolute liberty" (Locke), it is the belief that it is desirable to maximize the amount of liberty in the state. [Encyclopaedia Britannica]

    Despite the efforts of right-wing politicians, the word "liberal" is not an insult. I would be proud to be called it.
  • from the well-lookie-hyeah-padnah dept.

    I resent that! Only west Texans talk like that :)
  • Makes you wonder what it takes to make an ISP -- if you're not providing infrastructure, what are you providing? A high-speed uplink, but so what?

    Other than "normal" IP connectivity without AOL's ads, I wonder what traditional ISPs are going to do to add enough value to their services to keep from getting undercut. Not that it's necessarily "fair" for ISPs to do that, but this is a market eventuality -- I can't buy Coke from the grocery store and sell it at a profit for very long unless I do something else with it that the grocery store can't or doesn't. ISPs can't buy high speed connectivity for customers and charge the same as AOL/TW..

    The only way it would seem to work is if you didn't provide *ANY* services -- just IP connectivity (and maybe optionally DNS secondaries and SMTP MX queuing), but how big is the market for that type of a consumer service?

  • I figure it will be about another 8 years until we see the FCC and/or the FTC intervene to break up the _one_ company that will be providing backbone bandwidth on the Internet.
  • "Not when the dictionaries are made in institutions controlled by liberals, jews, feminazis, black separatists and masons. That is, so-called "universities"."

    Produce evidence for this disgusting and appalling statement, or shut the fuck up.
    --
  • Makes you wonder what it takes to make an ISP

    If you read Cringely a few weeks back, you would see that it really doesn't take anything but a name. You can farm out pretty much all the operations, and just sign people up.
    Sort of like a digital Amway :)

  • "Nobel Prices" ?

    Surely you mean "Prizes"?

    Or has the Almighty Buck pervaded your consciousness THAT much?

    Radix malorum est cupiditas.
    --
  • Produce evidence for this disgusting and appalling statement, or shut the fuck up.

    Gentlemen of the jury, I present you with USian "universities". The only place a liberal can get a job. Apart from the government, of course, which is too large because it accomodates otherwise jobless liberals.

  • I guess you have to STFU.

    But of course, I'm being trolled.

    Hey, it's a slow afternoon.
    --
  • The problem is, that a cable company essentially runs a monopoly for their respective area.

    From what I hear, US-telcos and - cable companies are notorious for overprizing, rotten customer service and various strong arm tactics.

    If you have a choice, then I agree with you, that the government shall persue more important stuff then regulating cable companies, but if running such a company is essentially a license to steal and the customer has no recourse whatsover, then regulate the sweet bejeesus out of them if they don't behave.

  • Don't mean to break your bubble, but most towns and small cities in the US are in thrall to a single cable company thanks to sweetheart deals with the local community councils.

    So what-- there's a free market in housing. If you don't like your local cable service, you are free to move elsewhere. You don't have to put up with it.

    In theory, the government is there to make my life better, to provide for the benefits of group investments, and to take care of the things (war, sanitation, policing, welfare) that I don't want to, have the time to, or have the skills to deal with.

    In liberal "theory". Experience and reason have shown that these are functions best performed by private corporations. Who do you think brought civilization to America? That's right, corporations.

  • No biscuit!
    --
  • by Anonymous Coward
    In eight years, there will no longer be any doubt that congressmen and the President are full-time employees of large corporations like Time/Warner. Don't expect any break-ups of monopolies. The US government has already been acquired in a friendly takeover.
  • We delegated the task of building our modern internet infrastructure to the private sector. Their goal is to maximize profits. They're doing exactly what they're supposed to do. In fact, if they weren't doing this, they'd probably be legally liable for not doing it.

    They're dancing in the zone between the unlawfully monopolistic and the unlawfully unprofitable. Not a fun place.

    I don't sympathize much, particularly with people or institutions that have more money than me and my descendants will ever earn for the next 200 years, but at least I try to understand. Perhaps we can learn lessons of control and accountability from this and apply them to internet v2.0? We know what happens when you take a small, clubby academic internet and release it to the commercial world. We've learned that lesson. Let's take the good parts and try to mitigate the bad parts for the next revision.

    Any large institution, public or private, attempts to control mass perception for its own ends. History has proven this for thousands of years. Don't be surprised. Be vigilant and alert. We are the most media/propaganda-savvy generation yet. Still, researchers are working harder than ever to pull one over on you. On all sides of any issue.

    Your Working Boy,
  • The government may not see (or admit seeing) that campaign contributions and softmoney are nothing other than blatent, legalized bribery, but We The People have no trouble recognizing this for what it is.

    Really?

    Then why do we keep voting for them?

  • Thats a damn huge company. I seem to remember somebody posted a partial list of their assets in a /. thread before, and you'd have to do a lot of research and probably change a number of things you currently do in order to not to business with them.

    Some snippets from their website:

    Cable networks: TBS Entertainment, CNN, HBO. Warner music group, record labels: Warner Music International, Atlantic, Elektra, Rhino, London Sire Records, Warner Bros. Records and their affiliate labels; "Warner Music Group's publishing division, Warner/Chappell, is one of the world's leading music publishers, controlling more than one million copyrights". Also includes WEA inc: "produced 38% of the world's DVD's in 1999, making it the world's largest manufacturer of DVDs". Filmed entertainment: Warner brothers (5,700 feature films, 32,000 television titles, 13,500 animated titles); also owns New Line Cinema. Publishing, 36 magazines (total 130million readers) including Time magazine, sports illustrated etc. "Time Warner Trade Publishing placed 36 books on The New York Times best-seller lists in 1999 from its Warner Books and Little, Brown imprints". Time Warner cable: digital cable, video on demand, HDTV, Road Runner.

  • (come on, people have won Nobel Prices by showing that free markets make everybody richer)

    Yes, the deregulated electricity markets in California have at least made electricity sellers richer. The biggest problem with a lot of the "free market" ideology is that there are already a number of restrictions on how free the market can be. In the electrical power market, there was already a limited supply of power, it takes a long time to build new power stations, and many elctrical power companies are perfectly comfortable with an economy of scarcity.

    A number of noble laureates, who have studied option prices, succeeded in bankrupting their company and neccesitated a government bailout to the tune of billions of dollars. They had believed that they could make money by eliminating the risks inherent in options trading. Many explanations have been given for the demise of Long Term Capital Management, but perhaps the simplest explanation was that the market simply was not big enough to absorb the risks associated with a default on Russian Bank loans.

    The Nobel Laureate James Buchanan believes that society can be modeled and structured on the premise that every one is capable of perfectly rational choices (Homo Economicus). Many people, however, are beholden to economically irrational beliefs, or belief structures opaque to economic reasoning...

    Perhaps there should be a gradual drift towards a free market utopia. But such a drift should not begin by eliminating structure that prevent megacorporations such as Time-Warner-AOL from excercising their economic power to societies detriment.

    Most people weould probably agree with that statement that "slavery is morally wrong." It can probably be argued, that, in a free market, slavery is economically unfeasible. Yet in many societies, slavery remained a stable economic force.

    Absolutely Free society: slavery is not banned, slavery is economically unfeasible.

    Society A: slavery is banned, slavery would be economically feasible, were it not for the ban.

    Society B: slavery is not banned, slavery is economically feasible, and is practiced.

    Most people would see Society A as preferable to Society B, and perhaps even to the Absolutely Free Society.

  • The problem is that 75% is on revenues, not on profits. Any percentage of revenue is a bad thing to refer to, as it disincents competition. In order to make more profit, you have to increase your price without increasing your costs. Since you can't do that in this model, you can't value-add without increasing the proportion of your revenue that is cost.

    The ISPs might, in theory, do value-added services. For example, when using Bell Atlantic DSL resold through other companies, you can get static IP addresses, extra shell accounts, linux-friendly utilities for managing your DSL, and domain names registered - all things that BA won't do for you, and which cost money.

    Because BA resells DSL at a wholesale rate, their customers can choose to eat into their profit margins to offer these services at the same price as BA, or can choose to increase their cost and compete on things other than price.

  • by Anonymous Coward
    Think about it... TW is providing everything but the kitchen sink to the ISP; all they have to do is collect the fees and enjoy the ride. It's not like ISPs are gonna setup their own network on top of TW, they're gonna use the same lines, equipment, the works. Someone offering a business model where you setup customer service and get 25% of someone elses pie is not a bad deal. How did you expect TW to be compensated? Good will?
  • by Wntrmute (18056)
    The ISP I work for used to sell a product we called "ISP in a box". You'd get a T1, some USR Total Control terminal servers, a Cisco router to hook to the T1 and the LAN side, and a couple of cheap x86 boxes running Solaris for x86. (used for Apache, mail, DNS)

    Of course everything was pre-configured, and for another continuing cost, our admin staff would run everything for you.

    Most mid to large ISPs are pretty competant, but the smaller ones, particularly rural, midwestern ones, would amaze you with the utter lack of technical ability of even their admins. I've had to walk these so-called "admins" through useing su to becomes root and restarting BIND.
  • Well, if TW is denying it, at least there's some chance that they're considering the possibility of playing fair. Still...

    To demand "approval control over the ISP's home page" and free advertising flies in the face of everything ISPs are about. ISPs provide access to everything on the internet, and they also provide their own content if they so desire; I'm an ISP and would NEVER accept terms like these.

    If TW & AOL are committed to open access, they should publish their term sheet. That way we'd know for sure.

  • In Austin when an ISP rebrands DSL Southwestern Bell gets $30 of the $40 charged. Sounds like 75% to me... :)
  • That said, I've *never* lived in a place where I had a choice of more than one cable company.

    Then move. Simply because there is a free market on housing that means there is a free market in cable. It's as simple as moving.

    Umm, yeah. That's realistic. Move because one cable company has a government enforced monopoly. Umm, how about removing this government interference in the free market instead of making us move. You'd think someone so quick to jump on the liberal trashing bandwagon would be for removing government interference in the marketplace.

    Ah, Liberal Self-Importance Syndrome. Do you really believe yourself to be so important that companies want to "screw you"?

    Nope. I don't think companies want to screw me specifically. I think they want to screw everyone equally to get their stock price to go up a quarter point. Making money is their raison d'etre after all.

    In any case, corporations do not "want" anything. They are not persons, and only persons can want stuff.

    And who runs the corps? Oh yeah.. People.

    Communists like Ralph Nader...

    Umm, Ralph Nader brought accountability to the auto industry. He has indirectly saved thousands of lives. That's a man I can respect, whether you throw around ad hominems like "Communist" or not.

    -Wintermute
  • The original story is from the Washington Post, and it is available here [washingtonpost.com]. (The Reuters story, cited by Slashdot, is just a summary of this.) The Post article makes essentially two points.

    First, the terms proposed by AOL/TW are so harsh, that a large majority of ISPs will not access the high-speed network.

    Second, the terms probably are non-discriminatory. This means that the terms are the same as AOL/TW has in its current (exclusive) relationship with Road Runner LLC. Hence what AOL/TW is doing is very likely legal. The legality needs to be checked by the FTC, though, which has not yet made an announcement.

  • ...75% seems a bit much though, of course, they want it to be too much...


  • Communist USSR: no unemployment, no homelessness. Everybody provided for (albeit not grandly).

    Wow, I've not seen so much human misery swept aside in so few words since Lenin said "you have to break a few eggs to make an omelette". That "everyone provided for" (should you choose to believe it at all) came, let's try not to forget, at the expense of over 100 million murders. In the gulags, in secret police barracks, in the middle of the night, keeping the communist system going in the face of the natural human desire to get ahead required constant state terror against the population of poor schmucks just trying to make a living. And don't give me that BS about how 'real communism was never tried' etc. -The communist governments chose to be like that, thousands of people subjugated by them chose to risk death (and more often than not lose the bet) to escape it, and every single one of the communist countries around the world were like that. I'll take credit card debt and annoying monopolies over the Stasi, KGB, Red Guards etc. any day.

    And while we're on the subject, isn't the real problem with cable/phone companies the fact that they own and can control access to the actual lines? The government builds roads and this fits into capitalism just fine because it's a public good -something excessively expensive for the private market to provide but absolutely necessary for people to live and work. The telephone monopolies were created originally by a deal between the government and corporations that said if the corporations promised to wire every office building, farm house and outhouse in America (they did), they'd get a monopoly in return, and it would undoubtedly be done more cheaply and efficiently that way than if the government did the build-out itself. Why and how did cable companies get the same deal? Because the infrastructure is the same kind of thing -too expensive for private companies to build on speculation, and the government doesn't want to be in that business. So why not let the government build the wire network and companies compete on a level field to provide service over it? That way they could even compete to provide repair/tech support, with only a small standards-enforcing bureaucracy to make sure they weren't breaking it in the process. This is what we're moving towards in electric utilities, so why not cable and phone? Make sense to anyone else?

  • by Su||uSt (151462) on Monday October 09, 2000 @02:43AM (#721471) Homepage Journal
    If this is legal in the first place, then why didn't they go ahead and require 99.9999% of all revenue, and the first born children of all ISP employees? It's not like requiring 75/25% of revenue is subtle, so why not just go all out?
  • Am I right in thinking that Revenue is calculated before costs are considered. In that case if an ISP was chargin $10 for a service costing them $8 they would need to up the price to $32 to break even if TW were skimming 75%. I think in the face of a 320% price hike access to TW services is not going to seem attractive.

  • Since when has AOL ever been friendly to open access...

    Oh, wait a minute, were is that browser since 4.x...

  • Hell, physics is not an exact science; just because they use a lot of math doesn't make it so.

    Are you talking about NASA?

  • Aww, that's too bad. I have to add another company to the list of people who I won't do business with, and only a month before Road Runner hits my area.

    To those of you who are salesdroids or marketing weasels, listen up. When your corporate persona is exploitive and abusive, I won't do business with you. This is ESPECIALLY true when you sell toys (defined as anything I don't really need, cable service and cable net access are certainly included). This is a growing sentiment. Don't let the door hit you in the a$$ on the way out.

  • On the other side of that, you have our rich. I don't have the stats, but they are staggering.

    Bill Gates, at one time would have been the 23rd richest NATION in the world! And this means that he maybe could have bought Africa.

    And the poor? Yes, the poor here are much better off. But compared to what?

  • If this is legal in the first place, then why didn't they go ahead and require 99.9999% of all revenue, and the first born children of all ISP employees? It's not like requiring 75/25% of revenue is subtle, so why not just go all out?

    Satan doesn't want to be too obvious, right away. It attracts immediate attention from On High.

  • do you work for an underwear modeling agency?
  • Well, one just doesn't know much about the presidency. The other does, but I dunno...

    Hell, do we really have a choice. I keep seeing two guys running for president, don't we have more choices than that? Well, of course we do but with the way politics/corporations/media/money is today they don't show it.

  • They ask for 75% now, how much will they ask for in a few years? It looks to me that the ISP's should form a Union and fight back. There is not much tradition on this in the US but in europe diferent small companys sometimes get together to fight the Big Brother.
  • by deefer (82630)
    Time warner denied the charge

    So, is this a non-story, or are TW _really_ up to no good? Because if this is true, it smacks of strongarming ISPs into becoming part of the AOL/TW collective.
    Surely, if all the ISPs unite, and nobody caves in, this can garner suffient momentum to attract FTC attention?
    Kinda reminds me of the mess over here in the UK, where BT are twisting and turning like a twisty turny thingy, as they are forced to give up their monopoly on the local loop...
    I've had cable TV for 3 years, and _still_ won't get a cable modem until late November. And I wouldn't call Central London out in the sticks, either...

    Strong data typing is for those with weak minds.

  • Time Warner denied the charge, saying it and AOL are committed to open access

    Since when has AOL ever been friendly to open access, or committed to anything good for its subscribers?
  • This is not a new devil, this is the same one that destroyed the home satellite market back in 1985, when there was 70,000 satellite dishes going into homes nationwide. when cable declared war on the home satellite market, (who by the way was willing to pay for what they got) made them look like they were a bunch of thieves, and covered up the fact that that the true battle was over access to programming at a reasonable price. they'll do the same thing to the internet while stupid cable subscribers will finance the whole thing just as they did back in '85. just remember who you heard it from. i told the satellite industry in 1985 that the cable and phone companies would work together, and they all laughed. now the laugh is on you Internet Service Providers. just remember: its the cable subscriber who will finance your demise.
  • by Su||uSt (151462) on Monday October 09, 2000 @02:56AM (#721484) Homepage Journal
    What I'm curious about, is why they did this so baltantly. They could have been much more subtle, for example: A local ISP (Netdoor) where I live leases bandwidth from BellSouth for DSL access. BellSouth also offers DSL access via the BellSouth ISP. Well, because they don't rape Netdoor, it's less profitable to have Netdoor provide access the DSL. So what does BellSouth do? They simply make DSL through Netdoor horrible. Periodic outages and (relative to BellSouth DSL) slow connections. Therefore Netdoor's DSL subscriber base is slowly switching to the more expensive BellSouth.

    While it isn't extreemly subtle, most end users wouldn't notice, and its certainly not something that would get posted on Slashdot. So why would AOL/TimeWarner (who we assume have at least one or two smart people in their employment) opt for the heavy handed approach rather than the much more sneaky one.

    After all, being sneaky is what US businesses are all about!
  • by glh (14273) on Monday October 09, 2000 @03:01AM (#721485) Homepage Journal
    Corporate greed will never die. In a way this doesn't suprise me- it sounds like AOL/TW want to be Microsoft of cable (actually they may already be in truth).

    I forsee cable taking the same path as AOL has taken though(for more than one reason).. It's almost like we have a parallel here. In the days of 56K modems, AOL was getting customers like crazy, and everyone (except the geeks of course) looked at it as the next best thing to sliced bread. Pretty soon, everyone started getting busy signals... then a lot of people started switching (granted there are stilly plenty of suckers still using AOL).

    I think something similar could happen with cable. Once everyone starts "getting the internet" with cable modems, instead of getting busy signals they are going to get slow and crappy connection due to the technology. However, what is the alternative? I hope some form of DSL comes along soon that just about anyone can get, and get without problems... There really isn't much else right now.

  • Relax, Chachi. The poster does have a point that I think you're misunderstanding. Cable companies are protected monopolies within their territory. They are given exclusive franchises by state and local regulatory agencies, and it is illegal for anyone to compete with them. Go ahead, try to start a competing cable TV service in your area... the government will put you out of business so fast it will make your head spin.

    --
  • by Anonymous Coward
    Not that I'm a fan of AOL/Time Warner, but I wouldn't pass judgement until I got more information; what exactly is their contribution in providing this service? If they provide the actual connection, on both the backbone and the home ends, I can't really see what the ISPs are doing. Unless it's hardware/co-branding/tech support like the DSL companies do with the telcos, in which case 75% might be extremely high, but not totally out of touch with reality, considering Time Warner would be shouldering most of the cost. Personally AOL/Time Warner worries me a lot less than the other corporate behemoths because Time Warner has a history of poor financial performance, and AOL is definitely going to peak soon; as their revenues rely more and more on non-access fees I think people are going to come to the conclusion that there's just not that much there.
  • ... monopolies (and the equivalent, collusive behavior by competitors) invariably lead to unfair pricing. Make them all illegal and people ... will be better off.

    Wouldn't this mean you couldn't be the first in the market to offer a new service? Or if you want to, you need to help set up someone to compete with you before the FTC will allow you to start business? It seems like that would promote collusion.
    ___

  • So, is this a non-story, or are TW _really_ up to no good? Because if this is true, it smacks of strongarming ISPs into becoming part of the AOL/TW collective.

    It defies belief. If they were really doing this, they'd have the FTC and the DOJ on them like stink on shit. It sounds like a blatant abuse of monopoly power to me; surely they can't be that stupid?

  • Of course we can reasonably assume that you will be one of the intelligent survivors can't we?

    Suppose we take your idea one step farther: kill the stupidest person in any given setting - so that we can be assured that there will only be intelligent people left. Oh wait, once we kill the stupidest person that means that someone else is now the stupidest so we have to kill them... Do I have to continue? Or are you smart enough to see where that leads?

    You really need to be grateful for all the people in the world who are less intelligent than you are; if it wasn't for them you would be the dumbest sumbitch in the world. Come to think of it, based on your idiotically arrogant comments concerning the survival of only the intelligent - you may already have achieved that position.

  • Then you would be considered a Cartel by US Anti-Trust rules!
  • by Tappah (224124) on Monday October 09, 2000 @04:20AM (#721492)

    I'm no fan of cable companies in general, but this article doesn't exactly cast the facts of this issue in a fair light.

    The reality is, that under a reseller model, 75%/25% is a somewhat better deal than that being currently offered by the Telco's for DSL service, where the split is currently about 83%/17% in many states.

    Is this split unfair? Not really. Consider, that the value-added by the isp itself is pretty insignificant compared to the cost of building, maintaining, and operating the wire plant. Mail servers, DNS, docsis service, etc. are trivial costs, and the real value added by the isp is customer service - and a considerable portion of that must be provided by the hosting cable company, since a large percentage of customer problems are system based.

    A fairer way of presenting this issue, would have been "Cable company offers 25% discount at wholesale to ISP's wishing to use their system."

    More troubling, are the requirements about splitting advertising, and providing AOL/TW editorial control over content provided by the ISP. I doubt this will be a long-term issue, since the FCC has previously taken very negative stances towards attempts to exert too much control over reseller ISP's in the Telco arena.

    In fact, this may not be an issue long at all, since the 8th Circuit recently declared that cable modem service was, in fact, a telecom service. This is an important distinction, since currently, cable modems are regulated under the much more ambiguous "cable services" umbrella by the FCC and by state PUC's. At some point soon, cable modems are going to be moved under the far more restictive telecom data services regulatory umbrella, at which time the entire "Open Access/Forced Access" issue will go away. Telecom companies are required to provide non-discriminatory access to their systems, at rates set by state PUC's.

    Frankly, the whole issue doesn't turn me on at all. AOL/TW, TCI/AT&T, et al, currently are selling the service over systems based on a very old branching tree/coax design, that as never intended to provide two-way services. That it works at all is somewhat miraculous. Much more interesting, is the arrival of a new class of "Overbuilders" (or companies planning to build and deploy their own wire plant over the top of the old incumbant systems). Comapnies like Western integrated networks, Wide Open West, Rio, etc. are currently seeking franchises from cities, to construct ultra-high density fiber-optic systems, to deliver voice/video/data services on systems that are far far superior to the crapulent old coax systems.

    Take a look at the system specs for Western integrated network's system, for example (http://www.winfirst.com). Note, especially, the planned data speeds they plan to deliver into homes. Yeah - that's 100baseT service. And yup, they're bringing fiber inside the house . Frankly, the prospect of a fully bi-directional ethernet connection into my home makes me erect. It also has to have the incumbant telecoms shitting in their pants, as they watch the imminent death of their cash-cow DS1 and DS3 circuit business arriving on the scene. These new systems are designed with a series of descending fiber rings, and very low node densities. wow baby. No reason at all they can't offer businesses sonet (OC3-OC48) services at very low rates.

    Oddly, I've seen very little drooling about this from the geek press, who ought, rightly, to be having a feeding frenzy about it. Instead, we see silly gnashing of teeth over AOL/TW, and inappropriatly biased stories over a thing which, by comparison, is almost irrelevent.

  • The cable companies have sunk a helluva lot of cost into running and maintaining that wire that comes into your house. Having the government come in and force them to open it up to their competitors and then dictate the terms of that seems similar to the government nationalizing an industry for the "good of the citizens."

    On the other hand, it's horribly inefficient for every company to trench and run their own cable into homes. How many do you need anyway?

    I don't know, it just seems like certain things like telecom, power grids, natural gas lines, roads, rivers, and canals should be considered critical national infrastructure and provided by the government and then available to use to any company, organization, or individual through user fees.

  • Hah. You want "applied lobbying"?

    If OpenSecrets [opensecrets.org] has the facts, then Time-Warner is the one doing all the lobbying [opensecrets.org], right behind Seagrams which, if memory serves me correctly, is fairly active in the music business, is it not?

    It wouldn't take a competitor to leak such a story, just a really disgruntled ISP that Time-Warner is trying to strong-arm. How many of the 40 would you think are disgruntled enough to call the press on this?

    The "deal" isn't the only sad thing... I'm also bothered that Time-Warner could get this far, try to dismiss it in such contradictory terms and even hope to be believed, and that consumers could be so Internet-hungry that they motivate such behaviors on the part of big companies like Time-Warner.

    I'm also bothered by a government that either doesn't see campaign contributions as a way of currying favor for a significant merger, or who doesn't consider it significant.

    ---
  • It is well known that there is hardly any poverty in the US, despite what all those liberal "statistics" will tell you. If you take a look at so-called "poor" families, they majoritarily own cars, fair-sized TVs, refrigerators, etc.

    As a matter of fact, studies have shown that the standard of living for the US "poor" is higher than that of the European average citizen.

    Communist USSR: no unemployment, no homelessness. Everybody provided for (albeit not grandly).

    I wouldn't call communist infiltration or domestic espionage "employment". Nor stuffing three families in one appartement "housing". Your liberal double standards show here.

    companies want to maximise the revenue from everybody, so, in a way, they want to screw everyone - or at least make as much as they can, which isn't the same goal a person has.

    Arguments that hinge on "in a way" are bad. And don't persons, as economic actors, also have the goal of maximizing revenue from everybody?

    Money is not god.

    If you need to state this explicitly, you must be a person of little faith. Who would ever consider the idea that money is God?

  • Sorry to go off-topic a bit, but I felt I had to clear up a misconception.

    It is well known that there is hardly any poverty in the US, despite what all those liberal "statistics" will tell you. If you take a look at so-called "poor" families, they majoritarily own cars, fair-sized TVs, refrigerators, etc.

    It looks like we have another graduate of the Rush Limbaugh school of math, where we only account for a person's salary, but for nothing else. The thing that you seem to be forgetting is the debt to income ratio of the "poor" families. Sure they may have a car, tv, etc. but they are often paying for that, their credit card, their families, etc. By the time you factor all of that in, most of these people are in debt up to their ears.

    Now I know what you are going to say--people don't need to buy all of that stuff, and in the case of a television, etc. there are people in this world that have their priorities mixed up. Unfortunately, these people are a minority of the working poor in this country. The working poor need to have things like cars. Have you ever tried to go anywhere in this country and live without a car? The only places that have public transportation worth a damn are the major cities and in this country public transportation has always been developed in response to poor traffic conditions, and not as a foresight.

    The capitalist notion is always to use creative math to justify that free markets are good for everyone. But when you throw in the debt ratio (and statistics show that Americans are more in debt than they ever have been) the figures just don't add up.

    Basically, if telling Time-Warner that demanding 75% of local ISPs profits is obscene (and it is) then good. If Ralph Nader (an American hero in my book) cost the American auto industry the "lead" because he exposed them as caring more about the bottom line than auto safety, even better. I'd much rather be cosidered a "Red" than a self-serving capitalist stooge any day of the week.

    Brandt

  • HumpBackB wrote:
    It looks to me that the ISP's should form a Union and fight back.

    Form a union? Like, perhaps, the Texas ISP Association [tispa.org]? The same TISPA that David Robertson, the source quoted in the story, is president of?

    Nah, that'd never work.

  • For those of you that missed the article on the Reuters website you can find it on theYahoo! [yahoo.com] website here. [yahoo.com]

  • I think they not only should be forced to open their cable modem network but their whole cable infrastructure to other providers.

    ---



  • This may be limited to the Austin area. Time Warner cable refuses to provide cable modem access if the subscriber does not subscribe to cable tv service. This is contrary to the original description of the service (prior to its roll-out a few years back) and also the operating policies of time warner in other markets. I didn't have cable tv, so in order to get roadrunner service, I had to subscribe to cable tv, which added like $10 to the montly service fee. Since I have a satellite dish, this amounts to bundling. I suspect this is a violation of the Sherman Anti Trust Act.



    Seth
  • by Big Jojo (50231) on Monday October 09, 2000 @06:09AM (#721503)

    The reality is, that under a reseller model, 75%/25% is a somewhat better deal than that being currently offered by the Telco's for DSL service, where the split is currently about 83%/17% in many states.

    When I pay for my local DSL access, my fees break down as: $40 to the telco, $10 to the ISP. That's up front on the billing.

    Now, to hear that the telco (AOL/TW) wants to get the lion's share of that piddling $10, PLUS all over ISP revenue, AND basically take over the ISP operations AND ON TOP OF IT to get free advertising ... well, any reasonable person would conclude that the telco is trying to put the ISP out of business.

  • >> I want to know WHY don't they allow cometitive cable companies

    Which they? Originally the cable companies looked quite expensive to set up, and nobody had done it much of anywhere. It was only expanding slowly. The ??? (who?) wanted cable services to expand more quickly than the free market was willing to pay for (negotiating the right to place cables in the utility right of way was one of the hellacious hassels that they faced). So some big companies stepped up and said "if you give us exclusive rights to supply cable connections in your city, then we will supply them. By the way, WE have the right to distribute ... (name a tv show). Voters were offered a wider selection of channels. Usually, at least in this area, it was decided by the city council and the voters weren't consulted, but opinions that I heard were mixed between "Don't set up a new monopoly" and "I want to see more programs", so the council may have been going with the more popular voice.

    Now the cable companies had no interest in allowing other companies to horn in on their turf. After they had their cables in place, it would be quite expensive for any other company to intrude, even if there hadn't been a no-competitors clause in the contract. (The first company would already have their investment at least partially paid off, so they could usually drive prices lower if they had to.) The city council was bemused by the whole subject, and was only interested in it as a means of getting votes (or, possibly, for other reasons that they didn't see fit to publically disclose).

    If standard oil had been expanding fast enough, there never would have been a second oil company ... O, that's right, the government broke them up!

    Please consider that economies my sometimes naturally generate monopolies, and that the people in charge of the monopolies will, if not in the first generation, then in the next, take advantage of the monopoly to ["maximize profits"|"put the squeeze on their customers"].

    Motives for behavior are among the unobservables. They are an internal construct that we use to model our own behavior and that of others. To assume that our model of others motives has any strong degree of certainty is unwarranted. Unfortunately, since we use motives so frequently for understanding ourselves, we tend to think easily as if the motives of others flowed in our own patterns. This is not always true. As best as I have been able to estimate it is roughly true about 1/4 of the time, and even then there is a lot of fine tuning required.

    Caution: Now approaching the (technological) singularity.
  • FWIW... I didn't mean to imply that TimeWarner/AOL would be the sole backbone provider. I think TW/AOL will eventually end up melting down as they attract a dumber and dumber user base. Soon their best users won't be able to figure out how to use the service, which will collapse upon itself.
  • No reason at all they can't offer
    businesses sonet (OC3-OC48) services at very low rates.

    Not so. After all, they need to pay their upstream provider for those bits.
    ---

  • by sql*kitten (1359) on Monday October 09, 2000 @03:04AM (#721515)
    Articles on Reuters.com expire when new articles come in, so here's the text for when that happens:

    Paper: Time Warner Sets Terms for Access

    Last updated: 08 Oct 2000 12:35 GMT (Reuters)

    WASHINGTON (Reuters) - Time Warner Inc TWX.N is requiring some Internet service providers to pay up to 75 percent of their revenue and relinquish some control of content to gain access to its high-speed network, the Washington Post reported.

    The Post reported that unnamed sources said the Federal Trade Commission is examining the terms of many of the deals proposed to smaller Internet service providers to determine if they violate Time Warner's promise to open its high-speed cable TV lines to competitors in the wake of its $183 billion merger announcement with America Online Inc AOL.N .

    Time Warner is requiring nearly 40 Internet companies in Texas to give up 75 percent of their subscriber fees and 25 percent of revenues from other sources such as advertising in order to gain access to its cable TV network, according to term sheets obtained by the Post.

    In addition, the term sheets indicate Time Warner would get approval control over the Internet service providers' home pages and "prominent above-the-fold areas on the home page of the service for use."

    "Totally ridiculous," said Dave Robertson, vice president and general manager of Stic.net, an Internet service provider in San Antonio with more than 10,000 subscribers. "The bottom line is, they don't have a desire to open their network."

    Time Warner denied the charge, saying it and AOL are committed to open access, the Post reported Saturday.

    Cable networks are one way to deliver high-speed Internet access to residential customers. Time Warner's cable network reaches 18.8 percent of all cable customers nationwide.

  • This story would be a non-issue if Time Warner were not a monopoly in these areas. It makes issues so complicated if we always think of the specifics of an industry: let perfect market economics solve the problem automatically.

    If we made monopolies illegal (not abuse of monopoly, monopoly), no cable company or any other company could get away with onerous terms unless they made economic sense. If all competitors were forced by the economics of an industry to charge 75%, it would be ok. But if you allow monopoly, you have to go through a complicated process of figuring out what makes economic sense in order to form a judgement, and then decide whether it qualifies as abuse.

    From popcorn at a movie theater, to movie prices, to music CD prices, to Microsoft Windows: monopolies (and the equivalent, collusive behavior by competitors) invariably lead to unfair pricing. Make them all illegal and people (working, nonworking, rich and poor alike) will be better off.

  • This memo wasn't supposed to be released until the day after the FTC approved the TWT/AOL merger. Until the approval, they would never think of doing such an evil thing as this.

    But once they convince the FTC they don't need any special "force of law" provisions to keep them in line, then they can do whatever they want.

    The same types of deals are happening in Europe, or they will once the telco companies manage to corrupt the regulating agencies. Keep an eye on how BT is dealing dirty with colo space in their COs. Watch how FT has locked up the local loop, and charge similar fees to the ISPs who want access to DSL headends.

    the AC
  • I can't wait. They use Cable & Wireless here, and their service simply sucks in the evenings mos days. A particular C&W router (as shown by traceroute) always fails. My ping times go from 40msec to 4000+msec, and then I lose connectivity. What would be interesting is BGP between ISPs; I could choose a single ISP, or several, if I wanted better connectivity.

    ________________________________________
  • by SUWAIN (223234) on Monday October 09, 2000 @03:20AM (#721520)
    They don't mention a _minimum_ payment... Therefore, I can just upgrade my cable modem to a "business plan" (legally allowing me to resell it), and then I can become an "ISP" - making $0 a year, and spending $0 a year on advertising, etc. So then I have rights to the cable TV? Cool... Maybe I can start streaming it (free of charge) over my cable modem? 75+ channels won't use too much bandwidth... :-P

    As far as the "editorial control" of my homepage... Sure, I'll have http://[My IP] as the "homepage" for my "business." Then I'll register as many anti-TW domains as possible, and host them all. They're not a "homepage", and they're not for my "business."

    This is starting to sound good...

    ...............
    SUWAIN: Slashdot User Without An Interesting Name

  • It depends on where you live. If your town only alows one cable to your house, this sucks.

    Can anyone tell my why monopolies are granted for such trivial and ubobtrusive wires like this? It's not like you need much of the public right of way and massive hardware investments to make these networks. I'm told Chicago has granted six companies access to their right of ways. It looks like this is anything but a natural monopoly.

    We must not allow broadband to end up like broadcast TV and radio. There is no scarcity of public resources to consider, and no reason to keep anyone from pubishing in a pull media. As this is the future of publishing in general we need to be very careful about who controls it.

  • I'm also bothered by a government that either doesn't see campaign contributions as a way of currying favor for a significant merger, or who doesn't consider it significant.

    The government may not see (or admit seeing) that campaign contributions and softmoney are nothing other than blatent, legalized bribery, but We The People have no trouble recognizing this for what it is.

    It is common knowledge that our senators, representatives, and presidents routinely sell themselves to business and special interests like cheap whores on a Saturday night. Unfortunately people feel very powerless to do anything about it, since they correctly identify this behavior with both the Democratic and Republican branches of the Corporate Party and fail to realize that their vote, were it cast for a third party (such as the Greens or the Libertarians), would not only speak out loudly against this behavior, but quite probably have a much greater influence on the public agenda and public policy than the sheeplike votes cast for the two main parties.

    Until people realize how much power they do hold in their hands, and begin exercising it by voting non-Corporate, they will remain impotent, and our elected "leaders" will continue shamelessly turning sleazy tricks for cash in the full and confident knowledge that they, in truth, have nothing to fear from a disgruntled, but apathetic and thus powerless, constituency.
  • Well, once again a moderator without a clue. Would you be good enough to explain what sort of flames I would be trying to get with that post?

    The Anonymous Coward who made the post I was replying to was being arrogant and demeaning to people who lack his intellectual strength. I called him on his arrogance by extending his position to an absurdity.

    Intellectual strength is much like physical strength - if it is not used properly it can be destructive and damaging rather than constructive. Using intellectual strength to damage those who lack it is very similar to using physical strength to damage those who lack physical strength.

    The problems of the world are often blamed on the stupid - but the truth is most of those problems are the result of the actions of the intelligent. The stupid lack the intellectual strength to cause much damage - far more damage is done by intelligent people doing things without thinking about what they are doing. Sloppy thinking is far more destructive than being unable to think could ever be.

    The intellectually strong blame the weak because the weak are unable to stop the strong from doing so. Weakness of any kind often takes the blame for misapplied strength. This is such a problem that the intellectually strong really believe that the intellectually weak are responsible for the world's problems.

    If intellectual weakness is the cause of problems - why not blame chimps for all of our troubles? After all even the dullest of people are smarter than chimps. If stupidity causes troubles then chimps are far more to blame than dumb humans.

    In my opinion the time for the intellectually strong to realize and admit that most problems are their fault has arrived; quit blaming helpless people who can't defend themselves. Being demeaning to people with less intellectual ability than you have is just as wrong as physically bullying a cripple.

    The truth is that intelligent people tend to be intellectual bigots; the intellectually weak are the 'lackey slaves' of the intellectual world; people beneath our contempt - to be whipped and reviled for our amusement. Watching the behavior of the intelligent around the less gifted is a disgusting event for me: it makes me ashamed to admit that I have a brain. Perhaps now you can begin to understand why average people hate nerds - we couldn't be much worse than we are.

    When I see someone physically bullying a cripple I'll step into the situation; when I see someone being demeaning toward the less intelligent I'll stomp on him just as hard as I would any other bully.

  • See my addendum to my last post for my reply.

    You are about as amusing as someone mocking my legally blind brother for his lack of eyesight.

  • These cable companies are government-sanctioned monopolies. They are monopolies because the government allows only one of them to operate in an area. They run their cables over/under city land. As such, they should be subject to government regulation.

    It would be a whole different issue if these companies had done it off of their own accord and become monopolies independent of government sanction but that is not the case here.

  • That was a rhetorical question, I didn't expect an answer.
  • come on, people have won Nobel Prices by showing that free markets make everybody richer

    And 8 years of supply-side economics showed that it doesn't. Despite common misperceptions (mostly by economics it seems), economics is not an exact science; just because they use a lot of math doesn't make it so.
    --
  • Granted AOL/TW have denied 75%. But look at who does what, and is 75% unreasonable? It sure sounds usurious, but who provides what service?

    If TW supplies all the hardware and the upstream connection, what is there left for the ISP to do but run POP, SMTP servers and maybe host some user webpages plus maybe answer a helpless desk? Then IMHO, 75% might be high but reasonable.

    AFAIK, the biggest single cost for ISPs is their incoming lines and modem banks. Gone with cable. But if the ISPs still have to supply all the upstream bandwidth (routers in their shops), then 75% is ridiculous. Upstream bandwidth is the second biggest cost.

    TW had better tread carefully here, or they will get themselves re-regulated.

Power corrupts. And atomic power corrupts atomically.

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