From: "john (j.) brothers" <johnbr@nortel.ca>
Date: Fri, 19 Jul 1996 14:50:04 +0800
To: cypherpunks@toad.com
Subject: Re: ABC News on internet telephony
Message-ID: <"23952 Thu Jul 18 21:34:10 1996"@bnr.ca>
MIME-Version: 1.0
Content-Type: text/plain


In message "ABC News on internet telephony", you write:
>  
>  General topic of internet telephony
 
> There's something fundamental going on here beneath the surface.
> Surprisingly, a recent item (maybe the one you reported) on this suggests
> that the big phone companies are trying to use this phenomenon rather than
> stop it. I think it was AT&T

Sprint has also come out in favor of the internet phone.  
 
> This is the rankest speculation on my part, but could some of the bigger,
> smarter phone company cum internet providers have done some serious
> analysis and concluded that we're moving away from distance-based rates for
> voice calls.

I will weigh in with my own stinky speculation:

Sprint, MCI and AT&T (and possibly LDDS) own pretty much the entire 
commercial network physically.  Every other long distance company leases
lines from the big 3 (or 4,etc) and resells them, except for certain very
specific points.  And the Internet phone has pretty much given them the
chance to drive their competitors out of business if it succeeds.  After
all, there is a constant demand for internet bandwidth.  Every T3 they
pull out of long distance services is a T3 they can throw into data services.
It gives them a real cost savings compared to installing another high
bandwidth backbone.  

They'll lose money from their customers who switch too, but those three
are the ones with the lion's share of business lines, which won't be switching
to Inet phone anytime soon.  and they gain all the business customers who
leave the dying small companies.

And yes, fixed rate will be the way to go, especially for small bandwidth
applications. Bandwidth is exploding - 1 Terabit optical networks have been
created.  A single phone line becomes miniscule.  Now, if you want a
much bigger pipe, they might charge you per hour for that.   

The thing I find second most interesting about this is how the large companies
are fighting regulation, while the small ones are demanding it.  That is
a big change from yesteryear.  And I know that AT&T has benefitted in a 
major way from gov't regulation in the past, but that doesn't make it right
for it to be applied now.