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Broadband Providers Taxing VOIP & Content Delivery

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Broadband Providers Taxing VOIP & Content Delivery

Broadband Providers Taxing VOIP & Content Delivery

This WSJ article (sub. req’d) details plans (and negotiations) to charge fees of content providers for priority high-speed delivery of broadband content: Large phone companies, setting the stage for a big battle ahead, hope to start charging Google Inc., Vonage Holdings Corp. and other Internet content providers for high-quality delivery of music, movies and the like over their telecommunications networks.

One view of this is that the content providers/producers will want to ensure high-speed content delivery to consumers and so are motivated to cooperate. Another view is that this is partly about fairness but partly about sour grapes as BellSouth, Verizon and AT&T (formerly SBC) see Google, Yahoo!, MSN, AOL, Skype and Vonage (among others) starting to encroach on their various businesses. They don’t want to be the “dumb pipes” that fuel the rise of their rivals.

More from the WSJ article: The phone companies are motivated by a need to find new ways to make money from their networks as more and more customers turn to cable or Internet-based companies for less-expensive phone service. Further, the telecom companies argue that they have spent billions of dollars through the years to upgrade their networks so that users can effortlessly download content from Web sites such as Google and Yahoo—with little benefit to the phone companies themselves.

“During the hurricanes, Google didn’t pay to have the DSL restored,” said BellSouth spokesman Jeff Battcher. “We’re paying all that money.”

There may be regulatory scrutiny of such efforts, but the more significant long-term unintended consequence of any such efforts by ISPs (if they’re implemented) is the development of alternative access paradigms (including free Wi-Fi). Any efforts of telcos to “tax” their rivals who rely on consumer access to bandwidth—and you can track the rise of search engines with the rise of broadband access—could spur development of those alternative access paradigms.

Google, Yahoo!, MSN et al. very self-consciously know that their growth is tied to unfettered, high-speed access (as well as new platforms). As the Journal suggests, a battle and intensifying competition is coming.

As I argued before, the traditional media businesses such as print Yellow Pages may have greater staying power and profitability (quite ironically) than the “21st century” business models such as Internet access and wireless. I can hear the skepticism now – we’ll see.

Greg Sterling is managing editor of The Kelsey Group. He also leads The Kelsey Group’s the Interactive Local Media program, focusing on local search. Greg came to The Kelsey Group from TechTV’s “Working the Web,” the first national television show dedicated to e-business and the Internet.

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