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Sun Microsystems

McNealy Says Telcos Falling Behind in Net Race 168

Posted by CmdrTaco
from the also-low-on-gas dept.
BobB-nw writes "Telecommunication companies need to go beyond just providing bandwidth and look into acquiring Internet destination sites that are heavily trafficked, says Sun Microsystems Chairman Scott McNealy. "I have explained to every telco that either you become a destination site, or the destination site will become a telco," McNealy said at a news conference at Sun Microsystems' Worldwide Education and Research Conference in San Francisco on Wednesday."
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McNealy Says Telcos Falling Behind in Net Race

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  • No way! (Score:5, Insightful)

    by Jurily (900488) <jurily&gmail,com> on Thursday February 28, 2008 @09:28AM (#22587686)
    First they need to actually provide bandwidth, not just throttle their heaviest users back.
    • Re: (Score:3, Insightful)

      by MoonFog (586818)
      They throttle their heaviest PRIVATE users, which mean nothing to them compared to getting the corporate sector as customers.
  • by Anonymous Coward on Thursday February 28, 2008 @09:29AM (#22587702)

    "I think the telcos have to make sure they don't get marginalized to being just bit providers and bandwidth providers," he said. On the other hand, carriers may be able to head off Internet sites by limiting the bandwidth available to them, so destination sites may need to affiliate with the carriers, he added.
    Right. Can we all chip in on a bus rental, so we can all go over and slap this jerk?
    • by cshark (673578)
      I've got $30, if you're interested?
    • Re: (Score:3, Insightful)

      by sm62704 (957197)
      Amen to that.

      I have explained to every telco that either you become a destination site, or the destination site will become a telco

      I didn;t actually RTFA but I'm going to have to, just to see how in the hell a web site will become an ISP.

      I think the telcos have to make sure they don't get marginalized to being just bit providers and bandwidth providers

      That's exactly what an ISP is supposed to be!

      WTF is wrong with that guy, besides being a lying asshat who will say anything to sell his company's crap?
      • by AmaDaden (794446) on Thursday February 28, 2008 @09:57AM (#22588074)

        I have explained to every telco that either you become a destination site, or the destination site will become a telco
        Now from the artical.

        Internet destination sites are already gaining on telecommunication companies, McNealy said, giving as examples eBay integrating Skype's VoIP technology and Google trying to buy wireless spectrum and help build cables across the Pacific Ocean. Microsoft's attempted acquisition of Yahoo would create another behemoth that could compete with carriers, such as by combining Microsoft's technology with Yahoo's existing VoIP and messaging services.
        I think that he is referring to long term and big sites. Honestly it's not too unreasonable. If Comcast is fucking me up the ass and I can get my internet from Google why wouldn't I?
        • by hachete (473378) on Thursday February 28, 2008 @10:23AM (#22588384) Homepage Journal
          From Google's POV, owning the pipes make perfect sense. Politics - they don't get screwed if net neutrality goes away. It's an end-run around all those eyeing their profit enviously. You own the pipes, you get to see what goes through them. I'd be dieing for data like that.

          The only way to make a profit will be to own the pipes.
          • by Kadin2048 (468275) <slashdot.kadin@xox[ ]et ['y.n' in gap]> on Thursday February 28, 2008 @11:04AM (#22588882) Homepage Journal

            From Google's POV, owning the pipes make perfect sense. Politics - they don't get screwed if net neutrality goes away. It's an end-run around all those eyeing their profit enviously. You own the pipes, you get to see what goes through them. I'd be dieing for data like that.
            This is called a vertical monopoly. It's really no different than railroads in the 19th century owning a portion of a coal mine in order to ensure they had adequate fuel and weren't entirely dependent on an outside supplier. For reasons that I'm not sure of, but I think basically boil down to flexibility, vertical monopolies have fallen out of favor in most sectors (e.g. transportation) in recent years, in favor of security-through-diversity rather than security-through-ownership. For example, lately many businesses that ran their own delivery services (example I'm aware of, a large regional bread bakery) are outsourcing them in order to focus on their 'core competency' (baking bread) while leaving the delivery to a company that specializes in that.

            The difference is, I think, that security through diversification and outsourcing requires a fairly mature business environment with many players to choose from. If you're the bakery who's considering eliminating your delivery department and going with an outside vendor for that purpose, you'd want to make sure there were many choices of delivery services, so that you're not tied too closely to one. If lots of choices and diversity don't exist, it might make sense to keep it in-house. Since Internet services are a relatively immature business environment, and a large content-provider like Google has few backbone providers to choose from, it makes sense that they're looking to secure their position by bringing things in-house.

            What's ironic is that the one thing that the telcos absolutely oppose -- network neutrality enforced by legislation -- would probably remove much of Google's incentive to build out backbone capacity. If the telcos were forced to provide nondiscriminatory service, suddenly there's no risk for Google of being extorted. With the disappearance of that risk also goes the impetus to be their own backbone provider. (I think there are historical parallels in the early 20th century with the passage of the Interstate Commerce Act and its accompanying regulation of goods transport, although the waters are muddied by the power that the transportation and industry cartels held in the ICC and in government.)
            • by Dr. Spork (142693) on Thursday February 28, 2008 @11:48AM (#22589462)
              It's not that vertical monopolies "fell out of favor" - they were instead regulated out of existence. Net neutrality would have been a regulation that discourages vertical monopolies in data delivery. However, it seems to have failed.

              The result is that data providers are now at the mercy of pipe providers. Without net neutrality, it will pay to be a pipe provider. You can extort fees from data providers so that they have access to users at the end of the pipes.

              What I foresee is the return of free ISPs, and maybe Google will be one of them. They will pay for all that (probably wireless) infrastructure through deals with data providers who want access to all the people who connect to the internet through Google. The laws allow "pay to play" and that's how Google would be paid for providing their ISP service. I think this could work and I want it to happen, because US ISP's are dicks and they deserve to die.

              • This is incorrect. Horizontal monopolies -- dominating most of the business in a particular sector (e.g. Standard Oil, Microsoft) can run you afoul of the law if the monopoly position is used to restrain trade.[^1] Vertical monopolies -- owning a small piece of many different sectors in order to control the entire supply chain for a particular end product -- has never really been frowned upon except in very specific instances.[^2]

                It was considered a reasonably good business practice until fairly recently
            • Re: (Score:3, Insightful)

              by russ1337 (938915)

              The difference is, I think, that security through diversification and outsourcing requires a fairly mature business environment with many players to choose from. If you're the bakery who's considering eliminating your delivery department and going with an outside vendor for that purpose, you'd want to make sure there were many choices of delivery services, so that you're not tied too closely to one. If lots of choices and diversity don't exist, it might make sense to keep it in-house.

              Good insight and gr

        • by Mr. Underbridge (666784) on Thursday February 28, 2008 @11:28AM (#22589184)

          I think that he is referring to long term and big sites. Honestly it's not too unreasonable. If Comcast is fucking me up the ass and I can get my internet from Google why wouldn't I?

          The problem with that thinking is that his proposed *solution* is what's causing the problem in the first place, pretty much exactly as you lay it out. If the carriers stop screwing people, Google wouldn't have anything better to offer as a carrier. The message should be "if you don't stop being a bunch of dicks, someone will step in and kill you." McNealy's message, on the other hand, is basically "Since people want to get away from you because you're a bunch of dicks, you could become even bigger dicks, get a monopoly on all the media, and give people no recource but to do business with you."

          Which seems like better business - make people want to use your service, or try to get a monopoly so people have to use your service? Problem with the second choice is that 1) only one company can "win", and 2) people don't want canned content anymore, so you can't win at that anyway.

          • by AmaDaden (794446) on Thursday February 28, 2008 @12:08PM (#22589748)

            "Since people want to get away from you because you're a bunch of dicks, you could become even bigger dicks, get a monopoly on all the media, and give people no recource but to do business with you."
            I didn't get that from the article at all. I got more a "Since people want to get away from you because you're a bunch of dicks you need to do something valuable to justify you being a bunch of dicks or people will just push you out of the way because what you do is not all that special to someone like Google or MS. It's just a mater of time before your dickiness pisses them off so much they use there massive internal network, budget, and technical expertise to just cut you out of the picture."
            • by Mr. Underbridge (666784) on Thursday February 28, 2008 @12:58PM (#22590298)

              you need to do something valuable to justify you being a bunch of dicks

              Right, that's what it all hinges on. I'm betting - and I think the subtext of his message supports the notion - that their method of offering something valuable is to buy somebody else who's currently doing something valuable, locking it up, and probably crippling it. Like if Google didn't own YouTube, one of those clowns could buy it and try to make it an "exclusive". That's not value, that's still being dicks.

              Now if they want to actually offer something new that people would want, that would make me see things differently. But I'm betting their thinking is more along the lines of Verizon's craptastic V-cast junk.

              ..."dickiness pisses them off so much they use there massive internal network, budget, and technical expertise to just cut you out of the picture."

              But that still makes me wonder why it wouldn't just be easier to just stop being dicks in the first place. But that concept seems completely alien to these guys.

        • ...the Comcastic(TM) Shackles!

          Along with the Concastic(TM) Goggles (notice, only one letter off from Google), users will be trapped in the endless fascination that is meaningless content and "taking it!"

          Now that's lock-in.
      • Re: (Score:3, Interesting)

        by squiggleslash (241428)

        Perhaps he's referring to Google, which is on one level nothing more than a search engine and set of related Internet services, but whose problems with connectivity have lead it to increasingly take control over how its packets are delivered. It's buying dark fiber, it's bidding on spectrum, it's experimenting with Wifi networks.

        • Excellent--no, brilliant point... blurred by your use of the word for element number 82 as the past tense of the verb "to lead."

          You want "led." When pronounced with a short 'e', "lead" is heavy metal.

          Of course, I apologize if what you wanted to communicate was that Google's connectivity problems weigh as heavily on it as a fishing weight. Or perhaps you wanted to highlight the subtle poisoning that such a problem causes over time for a corporation, much as the element does for mammals.

          What I like about what
      • by mikael (484)
        I didn;t actually RTFA but I'm going to have to, just to see how in the hell a web site will become an ISP.

        Search engine portals - Their web spiders spend their lifetime crawling the web downloading and analyzing web pages. Buying high-speed internet access for this level of usage is usually charged according to how much data is transferred. It makes sense for such multinational companies to set up their own network and have a flat-rate maintainence overhead.

        If any other web site has high data transfer rate
    • Re: (Score:3, Insightful)

      by sowth (748135)

      Yes, this is stupid. Companies have their own internal telephone system, and some of the larger ones have their own connection between sites, but the telcos are still around.

      What kind of crack is this guy smoking? Crack: the super ultimate kan ban SCO edition. Become a member of AOL: get yours now!

      • Re: (Score:3, Insightful)

        by Albanach (527650)
        I don't think he's talking about POTS - he's talking about Google Talk, AIM, Yahoo Messenger, Skype etc.

        He's telling the telcos that if they don't adapt, they aren't going to be carrying calls. Folk will buy bandwidth and use one of the above as their telco.

        I know Embarq has received not a cent more than their minimum for DSL + a phone line from me in years, yet I make hours of calls each day, most of which are international. Every call is by VoIP and is routed on a lowest cost basis.

        Unless telcos adapt, it
  • by IainMH (176964) on Thursday February 28, 2008 @09:31AM (#22587732)
    Do you think he'd be willing to let telcos with their huge amounts of cash buy some hardware from him?

    How kind for pointing this out.
  • AOL (Score:4, Insightful)

    by Anonymous Coward on Thursday February 28, 2008 @09:31AM (#22587734)
    Wait, wasn't this AOL back in the day?
    • Oh please, anything but AOL. They were a designer's worst nightmare back then. Crazy non-standard browser that compressed the crap out of all of your finely tuned images until they looked like garbage. Your smooth gradient looks like a ribbon of crap on AOhelL. I always prayed that they would eventually go away... they never did... but at least people started using IE and Netscape/FireFox instead of the stupid AOL browser.
    • Yahoo (Score:3, Interesting)

      by sodul (833177)
      Yahoo is an ISP and a high traffic portal, it does not seem to do them that much good.
  • he is quite right (Score:5, Insightful)

    by downix (84795) on Thursday February 28, 2008 @09:32AM (#22587746) Homepage
    Companies such as Yahoo, Google and others are already moving into the pipeline, further making telcos more and more irrelevent to the core business of the internet. I easily imagine the telco's, cable co's, even RIAA/MPAA becoming fringe players in the future, as information truely takes on a new dimention. It is evolve or die time.
    • by snl2587 (1177409) on Thursday February 28, 2008 @09:37AM (#22587794)
      I, then, look forward to getting internet access from The Pirate Bay.
    • by dazedNconfuzed (154242) on Thursday February 28, 2008 @09:43AM (#22587880)
      Yahoo, Google, etc. are going into the telco business because the telcos are not doing their job. Instead of facilitating customers' needs and making usage easy, pleasant and efficient, they are trying to squeeze every penny out of customer pockets with screwy billing plans, bandwidth & destination throttling, etc. - practices which hinder the services which customers want and which Google, Yahoo et al want to provide.

      As long touted, the Internet is designed to work around breakdowns and bottlenecks. Current telcos ARE breaking links and implementing bottlenecks ... so the businesses that suffer are taking advantage of the Internet's core purpose: distribute data efficiently around problems.

      Funny thing is, if the telcos would just focus on getting packets from point X to Y quickly and cheaply, and pass that speed and savings on to the customer, they would make more money and not have to consider going into businesses they're not suited to.
      • by MrNemesis (587188)
        Funny thing is, if the telcos would just focus on getting packets from point X to Y quickly and cheaply, and pass that speed and savings on to the customer, they would make more money and not have to consider going into businesses they're not suited to.

        They might well make more money. But would they have as much power? I'd like to think that the ability to control a large section of a universal communication network is somewhat similar to the Catholic church buying out Gutenburg from the day he was (literal
      • by Bombula (670389)
        Yahoo, Google, etc. are going into the telco business because the telcos are not doing their job.

        Telecommunications, along with music, are probably the best current examples of industries whose decades-old business models are being mangled by digital technology. Just as it no longer matters by what means you get the 0s and 1s that comprise your music, it no longer matters by what means you get the 0s and 1s that comprise your telecommunications - that's not just phone, but internet, TV, messaging, etc.

        The

        • What consumers are increasingly going to want is a comprehensive telecom service: phone+TV+internet.

          No, what they want is a telco that's going to deliver what they want, NOW. What they want will largely come from the "long tail" that a single provider won't.

          Phone is just getting data from one specialized (audio i/o) device to another; if somebody can just map phone numbers to IP addresses and get an audio data stream from one to another, we don't need a "phone service".

          TV? 300 channels and only 3 I want to
          • by Bombula (670389)
            I think you are dazed and confused about my comment, as you repeated much of what I said and implied: all telecom is just 0s and 1s, and consumers increasingly want a single service that bundles everything into a single digital communication package. One bill, plenty of bandwidth, and all standard service forms - phone, internet, tv, etc is covered. Whether you actually use a telephone handset or not to make your calls is up to you. The point is that it will be a single company providing you with connect
        • Re: (Score:3, Interesting)

          by Skrynesaver (994435)
          I mostly agree with you, however I don't agree that they won't need a portal, whether it's a web portal, or a set-top box portal as the choices of where to get your connectivity increases the option of switching does also and some service level differentiation is going to be needed to avoid being drop-in replaceable.

          At the moment, as I understand it Comcast has a near monopoly in the US and so doesn't yet face that kind of competition, but it will happen

          • by rucs_hack (784150)
            Comcast have a monopoly under the current system, but systems evolve, and it's Google, not Comcast, who are making the right moves to be the big player when the net changes.

            Whether we like it or not, there will need to be serious changes to the internet that mean anonymity is a thing of the past. At least as its thought of now. I don't mean all your private information being broadcast (or sold), I mean that it won't be possible to hide where you're coming from, or who you are, even if that 'who' is just a l
        • Re: (Score:3, Insightful)

          by smooth wombat (796938)
          Just as it no longer matters by what means you get the 0s and 1s that comprise your music, it no longer matters by what means you get the 0s and 1s that comprise your telecommunications

          The older telcos are scrambling because owning twisted copper pair lines is no longer enough to ensure a profitable revenue stream - there are several other ways into people's homes now: co-axial, satellite, wireless, powerlines, and fiber.

          Yes, it does matter. The examples you provided have varying speeds of 0s and

          • by Bombula (670389)
            Your post is highly confused: you are mistaking what companies are currently providing with what consumers want.

            While there are differences in the bandwidth capacities of different lines, they are all grossly underutilized in the marketplace. Twisted copper pair lines can easily support 100MB/s when correctly implemented. So can powerlines. Japan just launched a satellite service that will provide 1GB/s. Local wi-fi can easily achieve 100MB/s as well.

            As I said, consumers - including yourself as you outl

        • Re: (Score:3, Insightful)

          by timeOday (582209)

          What consumers are increasingly going to want is a comprehensive telecom service: phone+TV+internet.
          All I want is the internet - super fast and super cheap. After that, services like usenet, telephone, WWW, and TV are just different ways to access it. In particular, there is no real reason we have to pay for telephone service these days. Heck, telephone doesn't even require special servers to store and forward data like email does.
    • Re: (Score:3, Interesting)

      Companies such as Yahoo, Google and others are already moving into the pipeline, further making telcos more and more irrelevent to the core business of the internet. I easily imagine the telco's, cable co's, even RIAA/MPAA becoming fringe players in the future, as information truely takes on a new dimention. It is evolve or die time.

      Part of the problem is also we don't have a great infrastructure in place to handle all the new services coming online. The bandwidth crunch is what companies are fighting agai
  • by elrous0 (869638) * on Thursday February 28, 2008 @09:33AM (#22587754)

    or the destination site will become a telco
    This is just not going to happen. Why? Because there is still a question of physical wiring involved. Unless and until some MAJOR advances are made in wireless technology (way beyond what the 700 Mhz auction [wikipedia.org] can provide), wired is always going to enjoy the advantage and there are only so many wires going into your house/apartment, with only one company controling each (normally). Most people (at least in the U.S.) basically have one or two choices for truly high-speed broadband, your phone company (DSL) and your cable company (cable modem)--AT&T and Time-Warner in my case.

    For all of Google's and other "destination sites'" talk about buying all this wireless spectrum, the fact is that wireless will just never be able to match wired for speed or quality (a 20-year-old corded phone still sounds better than even the best cordless or cell phone). You just can't get around the fact that a wire (fiberoptic or copper) still has to be laid out there for the best results. And no "destination site" is going to be laying that line anytime soon.

    • by pipatron (966506)

      You can change this, you know. Since the free market is apparently failing, you (the people, in the end: the government) can force the last-mile companies to split up, and force them to rent their last-mile connections to anyone for the same price. It's just a question of politics, as usual.

      • by plague3106 (71849)
        If you're going to do that, why not just have the local government own the lines outright?

        I'm really glad my city is rolling out its own fiber lines, because Verizon and Adelphia/Comcast have done nothing to provide better service.
        • by gnuman99 (746007)
          No, you force the companies to sell the access to lines *for the same price* to everyone. Does that make sense??? Has nothing to do with the actual price or anything else. It requires that,

          1. Telcos charge the same for the last-mile connection to company X as they do to themselves. This means, they can't charge $40 for DSL access line rental and then offer DSL for $35 themselves. They need to offer their own DSL *if* they paid that $40 to another company. Anything else is anti-competitive.
          • Re: (Score:3, Informative)

            by plague3106 (71849)
            Again, why not just have the government own the lines, and they determine a price? That would be better, because unlike the telcos, they wouldn't charge $400 per customer, just what they need. So we get your same result, but cheaper.
          • Re: (Score:3, Informative)

            by RalphSleigh (899929)
            This is exactly what happens in the UK. BT own most of the lines and do their own DSL, but there are loads of outfits that resell BT's DSL for about the same price. Most of them even outsource their tech support back to BT openreach. Some outfits do offer local loop unbunding, where they buy your line and install their own equipment in BT's exchanges, but in the end it comes out pretty much the same for the end user.
    • by Sosarian (39969)
      Of course a wireless phone can sound as good as a wired one, just some compromises were made in order to fit the number of phone calls into the same spectrum.
    • by pla (258480)
      This is just not going to happen. Why? Because there is still a question of physical wiring involved.

      Don't confuse "becoming their own ISP" with "becoming your ISP".

      The average user's home server does not count as a "destination", as used here. ISPs don't threaten to make you pay more if you want all that wonderful ad revenue to keep flowing your way.

      Instead, this deals with only the biggest of players (such as Google), where the telecos have basically done their best to make the cost of Google actin
    • Re: (Score:3, Informative)

      by X_Bones (93097)
      You just can't get around the fact that a wire (fiberoptic or copper) still has to be laid out there for the best results. And no "destination site" is going to be laying that line anytime soon.

      Maybe you should try telling that to Google. [slashdot.org] I bet they'd be pretty surprised.
      • Re: (Score:3, Informative)

        by elrous0 (869638) *
        Obviously, I wasn't referring to some transatlantic trunk line in my post (or even U.S. backbone line). I'm talking about the lines that run to your house or apartment (the ones that cable and phone companies control pretty much exclusively).
  • What if the destination site doesn't want to be owned by a telco? What if the telco doesn't want to provide the same type of content management access the site maintainers had before? What if the telco wants to charge the owners for what was previously free? What if there's a telco bidding war for who gets to own which site? And on, and on...
  • Stick to your core (Score:5, Interesting)

    by dazedNconfuzed (154242) on Thursday February 28, 2008 @09:34AM (#22587768)
    Every company has an essence that it must stick to. If it gets too far outside that core product/service, it almost invariably suffers and often dies.

    Retailers do not build major roads to facilitate reaching their stores.
    Road-building contractors do not go into the retail business.

    For a _few_ businesses, expanding into infrastructure construction may be required - but only to jump-start the market, at which point they need to get out of the infrastructure business ... and at which point they often get overrun. Compuserve, AOL, etc. needed to build infrastructure to serve their content business ... but when the infrastructure was there, customers went elsewhere and both are now largely also-rans.

    Electricity, natural gas, etc. providers have largely given up their infrastructure business.

    Internet backbone service providers simply do not have what it takes to go into the content/destination business. It's simply not what they do, and others do it far better so long as there is sufficient infrastructure to support them. Google may be getting into the infrastructure business, but only to boost infrastructure capacity to match where they want to go in their core business; when Google gets the infrastructure to where they need it, they will have to let go of the infrastructure business because, simply, it's not what they do.
    • by NineNine (235196) on Thursday February 28, 2008 @09:46AM (#22587910)
      You're exactly right. Case in point: Sun. Sun floundered every time McNealy got some stupid idea to vastly deviate from the core of what Sun is good at. Some would argue that all of these deviations from their core business is why Sun is in the trouble they're in now. McNealy is a shitty CEO, and should have been canned a long time ago.
      • Re: (Score:3, Informative)

        by LarsWestergren (9033)
        Some would argue that all of these deviations from their core business is why Sun is in the trouble they're in now.

        Lately they have been doing quite well I thought. They made a decent profit last four quarters in a row [theregister.co.uk].

        McNealy is a shitty CEO, and should have been canned a long time ago.

        Er, you know that Jonathan Schwarz [sun.com] has been the CEO of Sun for quite some time now?
    • Hmm....AEP does all of the power things here.....the plant, the wires....everything. Now I can see it with the gas company but with electric, the danged power is always going off.
    • by Mikkeles (698461)
      'Road-building contractors do not go into the retail business.'

      Hmmmm; "Fred's Fill Dirt & Croissants"?

    • by aredubya74 (266988) on Thursday February 28, 2008 @10:39AM (#22588592)
      Retailers do not build major roads to facilitate reaching their stores.

      True, but the bigger ones certainly have a hand in what gets build where and with what money. Wal-Mart frequently gets involved in legislation and appropriations to get government to pay for roads to/from their shipping centers and retail outlets. For example, the 2005 federal highway bill [progress.org] - "The federal highway bill contains $37 million for widening and extending the road in Bentonville, Arkansas that is the main access point to the headquarters of Wal-Mart Stores Inc." The key is that they don't build the roads themselves. They simply lobby their reps in Congress (and the state legislatures and local boards/councils) to get funds to build and widen highways that are important to their retail and shipping businesses.

      A similar story played out in my neck of the woods, when Wal-Mart offered to put forward some funds upfront to get a state/local project going to widen a portion of NH state Rt. 28. This would've improved access to their existing store in Salem, NH, as well as a planned SuperCenter in Derry. Eventually, the plans were put aside after Wal-Mart walked away from the new building plan, but millions in tax dollars and tax incentives to Wal-Mart were on the line due to this highway building project.
      • by geekoid (135745)
        Yes, but they don't do it, the get the people who do it to do it.

        Your anti-walmart rants do not belong in the topic.

        For the record Wal-Mart does have shitty practices, but it doesn't belong here.
    • by mpcooke3 (306161)
      It's not always a good idea to stick to your core.

      IBM used to sell hardware but as the hardware business turned into a commodity market (driven largely by cheaper IBM compatibles) they shifted into a services/consultancy business and sold off the original hardware side to Lenovo.

      Microsoft fears that the operating system market may eventually be turned into a commodity market (even with all the desperate lock-in attempts so it is looking to hedge it's bets by investing in web technologies.

      If margins get too
  • Other way around (Score:5, Interesting)

    by Telvin_3d (855514) on Thursday February 28, 2008 @09:35AM (#22587776)
    Personally, I think that a law explicitly preventing internet access providers from supplying any service except the pipe would be one of the healthiest things that could be done. It would prevent conflict of interest situations and promote real competition. Similar to how the movie studios are no longer allowed to own theater chains.

    Having the access and content sides of the internet separated means that things like VOIP providers get an equal playing field. The internet provider no longer has the incentive to sabotage them. In a couple years, it will keep them from messing with video download providers in the same way.
    • Re: (Score:2, Insightful)

      by Jynx77 (974092)
      An even better analogy, IMO, is the strict regulation of natural gas pipelines. If I own a natural gas pipeline, I have to pay the same rates as everyone else to move my gas. I can't give myself a price break or priority access. We need something like this for internet backbone providers. Vertical integration can and will be abused. It's just a matter of time.
  • Arg. (Score:3, Insightful)

    by Rob T Firefly (844560) on Thursday February 28, 2008 @09:35AM (#22587778) Homepage Journal

    "I think the telcos have to make sure they don't get marginalized to being just bit providers and bandwidth providers," he said. On the other hand, carriers may be able to head off Internet sites by limiting the bandwidth available to them, so destination sites may need to affiliate with the carriers, he added.
    Is it too much to ask that our Internet connection provider be focused on providing us a connection to the Internet, rather than trying to distract us from the rest of the Internet with their own stuff?

    This is rather like the phone company cutting off your calls to inform you of all the great 900 numbers you could be calling instead.
    • Belkin tried that. Backfired bigtime.

      For a while they sold a router that would, occasionally, take you to a Belkin ad page instead of the website you wanted.

      Years later I still won't buy any Belkin products. I'm not the only one. That stunt cost them far more than they made.
  • Here in Denmark, the former state owned telco just decided to outsource the complete network, both mobile and fixed. They want to concentrate on their core business: selling subscriptions. On the other hand, you see Google looking for dark fiber and wireless spectrum. The borders between client, content server and carrier are getting more diffuse. Hopefully, the increasing chaos is going to make it more difficult for the control freaks to build a non-free ^H^H^H^H^H , I mean, more secure internet.
  • by Anonymous Coward
    Not a good scenario. Imagine Verizon giving more bandwidth to their search engine than to Google's, more to their auction site than eBay's, more to their SuperPages site than to AutoTrader. Sad. And sadder, I can't imagine the telco-lapdog FCC caring about it.
  • The very idea of change is just horrifying. They don't want to change anything about their business model as it brings about uncertainty. If they keep everything exactly the way it is now, they won't have to pay anything extra for upgrades and their profits will continually grow as they raise rates and add bullshit fees for crap that isn't even an option.
  • I for one really don't want content providers owning the infrastructure to access content.

    Guess whose content they are going to throttle and whose they are not?
    • Re: (Score:3, Informative)

      by Chanc_Gorkon (94133)
      Yeah roadrunner, Verizon Wireless and others already do this. I use Mobile Web on my phone and I can't change the homepage on the phone to something else. It sucks.

  • by Gopal.V (532678) on Thursday February 28, 2008 @09:45AM (#22587904) Homepage Journal

    "Some" people are way ahead [google.com] of the curve [slashdot.org] on being an internet of its own [news.com], but not only the telco wired land [slashdot.org].

    After all, the network is the computer [sun.com] ... BHWAHAHA ! ;)

  • by Skrynesaver (994435) on Thursday February 28, 2008 @09:50AM (#22587984) Homepage
    Bandwidth is becoming a commodity in urban environments and as a result ISPs and Telcos have to offer something more.
    eg. mail is still a cost for, and from, most ISPs yet you can get a better a/c than they offer free from GMail.

    The solution of course is, not to have an auction for the latest, soon to be extinct, DotBomb 2.0 bauble (Facebook I'm looking at you), but rather to develop a useful portal for your users,

    Integrate Webmail and WAPmail, offer file hosting/backup facilities, offer file sharing facilities, offer community building facilities and generally cater your service to your user base so that they see you as providing their favourite car rather than just a road, (c'mon it's /. I had to stick in a car analogy)

    In short it isn't enough just to offer connectivity any more, though if you're selling 16.4Tbps you may have an advantage for a while.

    • by Compholio (770966)

      Integrate Webmail and WAPmail, offer file hosting/backup facilities, offer file sharing facilities, offer community building facilities and generally cater your service to your user base so that they see you as providing their favourite car rather than just a road, (c'mon it's /. I had to stick in a car analogy)

      In short it isn't enough just to offer connectivity any more, though if you're selling 16.4Tbps you may have an advantage for a while.

      You know what's funny? That's what I remember ISPs doing in "t

      • I think part of that was the transition in userbase from those with an understanding of the underlying technology to those who wanted to see the pictures of the kitteh.

        As the expanded userbase has started to get bored of looking at cute pussy cats they are developing an interest in the technology itself and what else they can use it for, hence a return to ~'96 style services/portals but that market has moved on in the meantime so IPSs will need to buy in frameworks/expertise to achieve credible modern ser

  • by blind biker (1066130) on Thursday February 28, 2008 @09:54AM (#22588030) Journal
    In 1999, when I started working for a big telecom equipment company, in Finland mobile phones had a market penetration of about 45-50% (most adults) but pretty much every household had a fixed line as well. In only 3 years almost everybody discontinued their phone subscription - everybody has at least one mobile phone, including kids aged 7 or older. Let me repeat: 3 years.

    Things change very fast in the world of telecommunications.

    So could it happen that companies like google, yahoo etc. become partly telecoms? Will, what google is trying to do, become a megatrend? I don't have a magic sphere, but from what I can see, I'd say it's more likely than not. And if/once this ball starts rolling, the telcos better have a good strategy or they'll be wiped out or "considerably diminished".
    • ...In only 3 years almost everybody discontinued their phone subscription - everybody has at least one mobile phone...

      I don't live in Finland, so I can't speak from personal experience, but your statement is at odds with news reports [cellular-news.com]. As I understand it, while cellphone penetration is very high in Europe, so is landline penetration. IIn both Europe and the US, about 80 percent have a cellphone. And a comparable percentage have landlines. In the US, many of my friends have tried dropping their landlines

      • by TobascoKid (82629)
        If you look at the graphic on that page, 47% of people in Finland have a mobile but no landline. While not really "almost everybody" it's still almost a majority. The EU average is 18%.
    • by laffer1 (701823)
      I feel that the change was forced by telephone companies. In my case, I am only using cell phones in my household. I can't understand why it's $50 for a damn landline. Sure they quote you $20, but add hidden fees, setup fees, monthly taxes and 911 portability charges, and you're near $50. Want caller id or long distance (heaven forbid)... that will cost you. And if you elect not to have all their damn services, they harass you with constant sales calls.

      Yeah I tried VOIP too. It was great at first. Th
  • If your ISP becomes a provider then we really need very strong net-neutrality laws, with means of testing and enforcement. If we don't then throttling back the opposition could become common practice. The internet could end up fragmented with reasonable VOIP, etc. only working between two people using the same provider.
    • Let me correct that for you:

      The internet could end up fragmented with reasonable VOIP, etc. only working (if ever) between two people using the same provider.
  • by billcopc (196330) <vrillco@yahoo.com> on Thursday February 28, 2008 @10:06AM (#22588168) Homepage
    First of all, they do need to concentrate on providing bandwidth, because right now they really suck at that primary role.

    Second, I don't want any of these skeevy telcos acquiring popular web sites, because it is inevitable that they will ruin them. Here's why:

    A hypothetical company XYZCom, who provides my residential broadband connection, buys out and operates Slashdot. They now control both ends of my internet experience. What's can stop them from automatically charging me a nickel every time I hit "Reply" ? Nothing, it's incredibly easy for them and they can trivially word something in their contract to that effect. Then XYZCom decides it is unprofitable to serve outside users, restricts Slashdot to telco members only. I get burned, everyone leaves Slashdot and go post mindless drivel on Kuro5hin, world collapses under the sheer weight of inflated art-school dropout egos. Then the best part is when the telcos whine to the guv't about being so poor since Slashdot died, and get some new bill passed to defraud the general population even harder. Lather, rinse, repeat.

    Besides, it just feels wrong to give the telcos even more power. That's like getting mugged by some wigger, and handing the little suburban faux-thug a bigger knife with which to threaten you. We already have few defenses against these corporate sellout behemoths, we don't need to be giving away our beloved internet.
  • Way to go McNealy, if we mix content and transport there won't be any network neutrality.

    If anything, there ought to be anti-trust legislation preventing the same company to own transport and content, and preferable not "enabling technology" (browsers, operating systems) either.

    • by MadAhab (40080)
      Exactly. He's a first-rate asshole most of the time he opens his mouth.

      Vertical monopolies are bad for the economy, generally speaking.

      Earth to Scott: we already tried bundling access and content. Remember online services like AOL and Compuserve? They got their asses handed to them by the openness of the Internet.

      What kind of cretinous, drooling idiot, outside of a CEO of a company offering broadband, wants to go back that way again?
  • by llZENll (545605)
    It is ridiculous for every major content providor to be a telco, it costs huge amounts of money to buy or build an infrastructure and support it. If every major content providor (100s of them) wanted to run their own network there is not enough physical space to run the cables to do so. If the 3 biggest powers in the tech world, MS, Yahoo, or Google can't even do it, what the hell makes you think anyone else is going to? And even if all of them build their own networks, the 99% of the rest of the interne
  • by Pope (17780)
    Hey, remember the late 90s? Portals!

    It's the convergeance answer for every business problem! Portals!
  • by alen (225700) on Thursday February 28, 2008 @10:21AM (#22588364)
    the cellphone companies are the same telco's that provide the backbone of the internet. for years now they tried this by selling cell phones and providing all kinds of media services for them and AT&T is now making more money being a dumb bandwidth provider to the IPhone users. there was a /. story on this last month. and the rest of the telco's seem to be following AT&T's lead.

    I think scott is just talking out of his anus and is afraid he is going to sell less servers to the telco's to provide all these media services.

    in business it's usually not a good idea to get into too many things that aren't related because you lose focus and start being bad at everything. very few companies are like GE that can compete in many fields successfuly
  • 2 weeks ago, the head of Softbank gave a speech at the big mobile industry show in Barcelona basically saying this same thing to mobile carriers. Not an original thought, Scott.
  • by SmallFurryCreature (593017) on Thursday February 28, 2008 @10:35AM (#22588534) Journal

    Goddamn, someone needs to kill this guy before any execs fresh to the job pick up on this idea. I say fresh to the job because any old hand will have seen this before. Portals. The days when the idea was that the web started at your ISP's home page. When every ISP had a newsfeed, poorly implemented, with no depth, but a ISP portal had to have the news, and so they bought the cheapest feed they could, implemented it badly and put it on the front page.

    Filled offcourse with all sorts of content you could buy from the ISP, but not the actuall content that actually is bought on the net, PORN. Hell, I worked for one ISP were they had special code for the frontpage that would only display the porn links during the late hours. Not that it really worked, because invariable the ISP content sucked compared to what was available on the real net. McNealy? The 1980's called, they want their AOL back.

    The problem is that it sounds so logical. If you do not provide food services on your train stations dear transport company, then someone else will. It forms quit a bit of income, all those stands, often at least partially owned by the train company itself. It used to be they even provided pretty decent service.

    Ever seen a gas station that just sold gas?

    So why doesn't the same go for ISP's selling content? Because the train station example has one simple advantage. LOCATION. When I travel by train it is easier to use the supplied services at the station then go outside and get food there.

    The same does NOT go for ISP's. I can switch between content sides at the press of a button, there is absolutly no reason for me to visit my ISP's newsfeed when I can go straight to the source. Why should I buy music from my ISP when iTunes is just a click away? Why should I use their branded search engine when google is just a click away?

    IF ISP's had a form of lockin it makes sense, say that visiting the BBC news site cost me money and my ISP's Reuters newsfeed was free then I could easily see that some people would choose the inferior but cheap option.

    Just a couple of minutes from Arnhem train station was a fast food shop with really good self-made snacks, cheaper as well, compared to the concesion stand at the station itself, but still, because it is hassle to walk the detour the crappy snacks at the station fetched a higher price.

    The idea itself works, it just doesn't work for the Internet.

    The older people among us know this, because it has been tried. In fact many a customer got so fed up with it, that entirely new companies jumped in the market ADVERTISING with the fact that they offered JUST internet access and nothing more.

    And lets face it, it is a lot easier for the ISP's. If they sell music then they got to haggle with record companies, invest in servers, deal with complaints. If they don't sell music, they collect for the transmission of the music their customers get from whatever company is wiling to risk it. You know, my ISP EVEN gets its money when I pirate music. Let iTunes worry about what the record labels will do next, my ISP just transmits the data and gets paid for it.

    No McNealy, you sometimes seem almost clever, but this article marks you as just another tie without a clue.

    You are trying to sell portals. No thanks.

    • Re: (Score:2, Insightful)

      by robot_love (1089921)
      In general I agree with you, but I think you're missing one thing:

      Telcos are trying to make themselves the train-station. Without net-neutrality, your ISP can limit your access to the places you'd prefer to go. They can sell a lot of sandwiches if you're locked in the train station!
  • I'm thinking perhaps our Congress can vote to give our telcos retroactive research & development to go along with that retroactive immunity for their law breaking, thereby allowing them to give us better stuff here in the present - stuff like usable phone interfaces, good customer service, and open standards to communicate with our other gadgets.
  • Telcos should be made regulated common carriers again. All they should be allowed to do is run data pipes. Everything else they do, they do badly anyway.

  • Since the approach to create portals and services have already been tried by a lot of telco:s and it has essentially been a failure.

    The services available has been crippled or limited in functionality or even requiring a specific version of a specific brand of web browser to work. And everything has been centered around the telco and not around what the users have been looking for.

    Of course - there are services that a telco can provide and some that actually are useful, but the portal era is a blind all

  • Historically, carriers were not content providers, and content providers were not carriers. In fact, this was a major principle enforced by the FCC (as far as I know, those regulations are still in place; I do not know why practice in this regard has changed.)

    Mixing the businesses of common carrier and content provider is a BAD IDEA! The ultimate effect would be to narrows your choices regarding that very content. (If all your sources of information -- signals AND content -- were all provided by a few bi
  • * Fast pipe.
    * Always on.
    * Get out of the way.

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