Some days it seems everything’s conspiring against the big telecommunications providers – even themselves.
Last week I mentioned the potentially illegal handover of confidential customer data to the National Security Agency of which BellSouth, AT&T and Verizon have been accused. All three carriers say they’ve done nothing wrong – but there’s a caveat: A presidential memorandum dated May 5 allows the director of national intelligence, John Negroponte, to authorize companies to conceal activities related to national security – giving the telcos full deniability.
This issue is likely to get messier before it’s resolved. Several folks have filed lawsuits against the telcos, including a couple of lawyers in New Jersey who’ve filed class-action suits worth as much as $200 billion against Verizon and AT&T. That’s in addition to the lawsuit filed by the Electronic Frontier Foundation against AT&T.
Customers and their lawyers aren’t the only folks who hate the telcos. Regulators aren’t fond of them, either. Consider the slew of regulations that target only providers that operate infrastructure. A couple of examples:
The Communications Assistance for Law Enforcement Act (CALEA), which asks “facilities-based” providers to install wiretapping gear at their own expense in their networks. Vonage and Skype are, of course, exempt from CALEA requirements, on the grounds that they don’t operate facilities.
The Universal Services Fraud/Fund (USF). Remember “Bailouts for Billionaires?” The Universal Services Fund, which provides needy mobsters and billionaires with broadband access, collects some $14 billion from facilities-based telcos – once again, the Vonages and the Skypes need not contribute.
The FCC seems bent on piling on the taxes, regulations and constraints on companies that purchase and operate switches – while protecting software-only VoIP providers, which, let’s not forget, require those same “facilities” to offer their services.
The message? For God’s sake, don’t own facilities if you can possibly help it. Don’t make money, or you’ll get sued. And never, ever cooperate with the government – at least if you’re a telco. (Yahoo and AOL say they comply with government requests to turn over data – no class-action lawsuits against them, so far.)
Am I defending the telcos? Hardly. As I’ve noted, if they’ve been breaking the law, they have only themselves to blame. And they do have a habit of acting like arrogant Big Brothers.
But there’s something bigger afoot here. Every generation or so, there’s a slew of new, hip, nice-guy players that are up against the entrenched, Big Brotherish companies. The new guys (in this case companies such as Vonage, Yahoo, AOL and Google) can do no evil, and the entrenched players can do no good.
Remember how the public felt about IBM in the ’70s and ’80s during the 14-year antitrust lawsuit? Ironically, by the time the suit concluded, IBM had started on its long, slow, decline in the face of disruptive technologies such as the PC and later, the Internet. (Telcos: Take heed!) Only Lou Gerstner’s visionary leadership reversed that slide, by transforming IBM into a fundamentally different company.
And here’s the ultimate irony: The new-age, nice-guy player that was boldly going toe-to-toe with IBM back then? Microsoft.
