Wednesday, October 31, 2007

Eavesdropping as a Telecom Profit Center

Andrew Appel writes on Freedom to Tinker:

In 1980 AT&T was a powerful institution with a lucrative monopoly on transporting long-distance voice communications, but forbidden by law from permitting the government to eavesdrop without a warrant. Then in 1981 Judge Greene took its voice monopoly away, and in the 1980s and 90s the Internet ate the rest of its lunch.

By 1996, Nicholas Negroponte wrote what many others also foresaw: “Shipping bits will be a crummy business. Transporting voice will be even worse. By 2020 … competition will render bandwidth a commodity of the worst kind, with no margins and no real basis for charging anything.”

During the 1980s and 90s, AT&T cleverly got out of any business except shipping commodity bits: in 1981 it (was forced to) split off its regional phone companies; in 1996 it (voluntarily) split off its equipment-making arm as Lucent Technologies; in 2000-2001 it sold off its Wireless division to raise cash. Now AT&T long-distance bit-shipping is just a division of the former SBC, renamed AT&T.

More here.


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