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February 26, 2006

Deutsche Telekon CEO Derides Internet Free Lunch

Deutsche Telekom AG CEO Kai-Uwe Ricke has joined the ranks of telecommunication executives calling for content providers such as Google and Yahoo to pay for using the Internet pipes DT provides.  He joins John Thorne, senior vice president and deputy general counsel at Verizon Communications, Inc. and Ed Whitacre, CEO and Chairman of the old SBC and new AT&T in calling for a payment structure based on tiered service.  They complain that major companies who do business on the Internet get a free ride on the high speed networks they provide. 

Many of these companies have contemplated upgrading their networks to provide high speed video and other media to their customers.  On on hand, they see the move as essential to open up another revenue stream from their customers.  On the other, they would not like to share the benefits of their networks with competition who, in their view, piggy-back with "cheap servers" on their investments.  On the mutant third hand is the tradition that the Internet is not owned by anyone.

There is intense lobbying going on in Washington over this issue as congress considers revisiting the Telecommunications Act of 1996.  Certainly life has changed in 10 years as the net has become more advanced and services more sophisticated.  Everyone is trying to make a buck from the web, to put it mildly.  The telcos would love to go to the cell phone model where calls are paid for by the sender and receiver.  The question is whether there is political will to resist these changes.  Or if not, whether consumers will buy into this plan.

Where there's money to be made, though, you can bet that a lot of Internet money is going to wind up in the pockets of congress, all for legitimate campaign purposes without a doubt!

Mac World has details.

February 26, 2006 | Permalink


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Are the cable companies in this game as well? If they are not seeking to charge content providers then the telco's don't really have a chance, right? It's all about access to the last 100 yards or not?

Posted by: Brian | Feb 26, 2006 6:28:03 PM

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