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High-Speed Greed
cprael writes "AT&T has decided that anyone using their broadband network is their customer, and any online merchant that sells them something owes AT&T a cut of the pie. They are apparently planning to charge for both delivery of the customer, and for the value of any goods/services bought by those customers. Article on Yahoo News." See also a CNN story on the same subject. Hey, it's just like the phone company takes a cut every time you phone in an order from a catalog... oh wait, they don't.
Sure they do -- someone's paying for that 800 number. The business you call pays for it. A lot. And the interexchange (i.e. backbone) carrier that takes the call gets a chunk of that money from the carrier who provides that 800 number to the business -- though that's a cut of the phone call, not a direct cut from the order.
However, I do not think we want to see the sort of rate system established in internet transactions that exists for telephone calls, nor do we want a set of elaborate contractual schemes where backbone providers require local providers to require contracts from merchants to cooperate with this sort of thing. I am curious to know how AT&T plans to enforce this sort of fee. It seems the plan must refer only to internet merchants who are themselves AT&T customers (as with the merchants and providers on the PocketNet service). They can't just walk up to a merchant who has no direct contractual relationship with them and start demanding money. But it seems to me that that is an awfully good way to send those merchants over to WorldCom, Sprint, or other broadband providers. Is AT&T planning to put pressure on every local network provider connected to its backbone so that the endusers pay settlement-rate-like fees for every transaction that passes over its backbone? Do they want their broadband services to tank like their long distance services are?
I don't like the idea of the charge. To accomplish what they want to, they'd probably have to get other backbone providers to do the same thing (which would be anticompetitive, and would start raising antitrust issues). If they want to get at every transaction, they'd have to get deals from those who connect to their backbone to get deals in turn from their subscribers. The whole thing smells a little odd.
Hm.
I think that reuters screwed the story up. I bet this is AT&T saying that they will offer placement and full hosting (ala akamai style) for internet etailers.
Anyone have an actual press release, and not this drivel from reuters?
-- dieman - Scott Dier
There was something early farmers used to organize against the oligarchy of rails, called a grange, basically giving a group bargaining power, like unions. While Freenet is a hedge against greedy ISP's, it may fall prey to something of the nature AT&T is up to.
--
Chief Frog Inspector
A feeling of having made the same mistake before: Deja Foobar
It sure sounds like it. The CNN article says:
I don't know how illegal it is; it's their network, they could argue they're just forming a "partnership". As to how practical it is, simple; if the merchant refuses to agree, just block them.
Then again, I still haven't been able to get onto Yahoo to check the other article, so maybe the CNN one is off.
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They are NOT planning on charging every web merchant for every web transaction that takes place - obviously that's technically (and legally) impossible.
What they're talking about is charging the merchants that pay for advertising on the AT&T Broadband customer home page - they plan to expand their charging scheme to make it based on purchases instead of just a CPM banner style.
This is very much the same as the relationship AOL has with retailers - AOL gets a cut of each sale in addition to a referral fee. AOL makes PHAT cash from this arrangement and AT&T just wants a similar system.
Most geeks will change their homepage off the AT&T broadband page in about 30 seconds after installation, so you won't see their ads and won't shop at "their" merchants, and this won't be an issue.
I hope the merchants just tell @Home to shove their bill up their arse. And let @home try to block them. Could you see the howls if people cant get to Amazon.com or Ebay.com because they these companies won't submit to this type of extortion. I would think that this a good way to get a lot of negative PR (and lose customers!)
Whether or not this will work is doubtful, but it's nice to see that the Robber Baron techniques don't change over the centuries.
---
Book(n): Utensil used to pass time while waiting for the TV repairman
I'm connected through a dialup account with my old ISP at the moment because the cable modem service in our area is down. It's been down since September 28. Their customer service line tells me they're "Working on it." but can't provide any sort of time frame.
For the first three months we had the @Home service every 2 hours we'd recieve a DOS ping attack, lasting over 30 minutes each time. Our logs showed our computers being pinged up to 3000 times/second. You know where it was coming from? AT&T's "security" server.
We logged over 500 calls to AT&T. I've got a spreadsheet with the names of every person I talked to. We went to the highest levels they would give us access to. We sent e-mails, we attached logs, we did everything they asked us to. They refused to fix the problem for 3 fucking months.
And now they expect to harass online retailers that I want to shop with, just because I use AT&T as an ISP. I don't think so. If they do that I'll bother ever DSL company on the east coast to bring service to my town so I can use surf in peace.
I hate AT&T. The second there's an option for another high speed service provider here, I'm jumping on board. I'd pay three or four times a month what I'm paying AT&T just for some sort of service. I've never had a worse experience with any company.
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Lets pattent this busness model before at&t does, and sue em if they try to use it..
who says the grannting of patents for dumb ideas cant be used to our advantage
It seems that all these Big Companies (ATT, Microsoft, Amazon, etc) have a new business philosophy:
1. Make dozens of wild and impractical user policies, patents, copyrights, and pricing schemes.
2. Sit back, and see which ones hit the fan the hardest.
3. Profusely apologize for the ones the general public complains about the most, restate your commitment to fair pricing/competition/whatever, and basically grovel and kiss ass until all is forgiven.
4. Make money hand-over-fist on the one's that get through.
Every time I see a Slashdot story about some company trying to get over with something ridiculous, I can't help but wonder how many others ridiculous things are out there slipping in under the radar.
The most significant part of the article was this:
The fees, however, may alienate some Web merchants who already struggle to break a profit on their online sales, analysts said.
Given the expense of attracting customers, many major Web retailers lose money every time they sell anything, a study by consultant McKinsey & Co. and brokerage Salomon Smith Barney said.
This will be the real kicker to the deal. 99% of internet-based companies do NOT make a profit. Amazon, probably the foremost of all e-tailers is constantly in the red. You cannot charge these companies because they do not have enough capital on their own. And this will have a very simple solution. When Amazon who is not making a profit gets the letter from AT&T saying that they need to pay on every transaction, they will move to UUNet because they simply will not be able to afford to stay with AT&T. This plan is doomed for that reason.
I'm an online merchant. ATT thinks I'M goint to pay THEM when someone buys something from my site. They can kiss my ass. I'm not paying them shit. I don't care if they're coming from ATT's network or not. For one, how are they going to prove it, magically decrypt the SSL transaction and read everything that goes on?
I don't possibly see how this could ever work. They bill me because someone else PAID THEM to access their network and use it to buy stuff from me? Whatever. I don't know what they've been smoking, but they've obviously smoked it all.
Need Free Juniper/NetScreen Support? JuniperForum
Here's what your invoice on a web buy would look like:
Subtotal: $100
Tax: $8.25
AT&T Surcharge: $2 (Click here to learn why AT&T charges YOU extra and what you can do about it)
Total: $110.25
In other words, merchants will pass it on, not subtly but blatantly, and their customers will rebel instantly. Welcome to the information age.
I don't understand. If I pay AT&T for my internet connection, am I not paying for the hardware, whatever software and service they provide, and the ability to use the service as I see fit? Sure, there are some limitations. I can't send out hundreds of gigs worth of bandwidth, that's abusing the system. But I pay for my 'net connection so I can go shopping. Now I've got to pay again? I don't understand, I really don't.
If AT&T can't afford to offer low flat-rates for high-speed internet connections, then they have to raise the price. If nobody buys their service because of the higher price, then a company which is more streamlined(read: a company that doesn't have a finger in every pie) will win out. That's the free market. At least, that's how it's supposed to work.
Dave
'Round the firewall,
Out the modem,
Through the router,
Down the wire,
Barclay family motto:
Aut agere aut mori.
(Either action or death.)
Using the phone as an analogy, is it legal for AT&T to charge merchants for customers delivered to them simply by using their phone lines? I simply can't imagine how this could fly. If it does work, many online retailers will close due to non-existent profits. As the article points out, online retailers are losing money on sales in hopes of creating a customer base. Amazon has been following this policy for years, and has yet to turn a profit. If Amazon has to pay AT&T a cut, and the States start passing Internet Tax laws, say good-bye to the e-commerce industry.
It simply kills me that AT&T has to resort to this type of behavior to turn a profit. You can almost see the board room at AT&T corporate:
CEO: We're losing our shirts in the long distance market! What can we do to create a new revenue engine?
SUIT: Well, making a real product could take time and money, and that would hurt our share price. Why don't we just charge people money for the hell of it? Let the lawyers work out the details.
CEO: What would you suggest? We can't just start charging people's credit cards. I don't think that's legal.
SUIT #2: Well, let's cash in on this e-thing. We'll charge merchants, since they have more money than customers. Besides, most companies just roll over when you sick a few lawyers on them. Take Rambus and 1-click shopping for example.
CEO: Beautiful. Why don't we just charge retailers for providing customer "leads". After all, we own most of the networks. That could be worth billions! We create a massing team of lawyers to handle the strongarming and politician-buying, the lawyers take half, and we still get billions. And we don't even have to produce anything! We just sit on our butts and let the pot 'o gold roll in! Excellent. Gentlemen, I think we all deserve a big bonus for such innovation.
SUITS: .
Corporate America makes me puke.
Opinions change daily as new information arrives. Stay tuned.
Hmm. Having read the CNN piece, I have to play a little devil's advocate here. AT&T has pretty well been killed in their once profitable Long Distance service, with rates as low as 5 cents per minute. Considering the infrastructure this ancient behemoth has in place, it's not suprising they are grasping at straws to turn a buck somehow.
The concept initially sounds stupid and difficult to manage, consider:
Counting hits over your broadband network to a merchant site
Determining a purchase was made
Handling refunds for returns
Running a meter on a proposition like this means the merchant has to buy into it, by cooperating with AT&T to notify them of any of the above taking place. Perhaps not such a big deal for an online merchant who does a highvolume of high margin goods, but how many of these are there? The bookkeeping would get pretty hairy were they logging every $5.00 sale at Amazon, not that Amazon can spare a cent, it might be what drives them under.
This is a risky gambit, obviously in desperation, for AT&T. Seems like they should have held onto Lucent.
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Chief Frog Inspector
A feeling of having made the same mistake before: Deja Foobar
IANAA, (I Am Not An American) but hail from thier neigbour to the North. Since much of what goes on below the 49th eventually happens up here, I'll comment anyway.
Isn't it amazing. Here we are, 224 years after the American Revolution, and we're back to square one. If this follows through, the Citizens of the Good Ol' US of A will be paying sales tax to a coproration. Heh. Something like that hasn't happened since, ohhhhh... the British Crown decided to tax tea. Read the link, kids - that was to save a faltering coporation, namely the East India Company, too.
So, we have taxes on audio capable blanks to make sure the RIAA and it's kin get thier fair share, absurd patents and copyrights whose sole purpose is to guarantee profits for already successful companies, and now this. Makes you sick, especially when this and this stare you in the face each night on the news
Welcome to the Free World, fellow serfs, look what the American Free Market eventually brings you - The Copristocracy. It works just like an Aristocracy, but instead of being appointed by a King, the people in it founded a successful company, are paying off our "elected" officials to pass laws so they keep thier fabulous wealth, so they can pass it on to thier progeny - just like a Duke, Prince or Barron. So much for the Revolution, eh?
"Depression is merely anger without enthusiasm." - Anonymous
First of all, i wonder what their quarterly reports look like.
14 Desk Thingies : $11,304,110
04 Original Cans of Spam: $145
87 Fooblargs : $2,492
01 Stuff : $6,000,000,000,000
Or maybe they are just spending a lot on Stuff on trips to Amsterdam.
In any case, wait one second while I remove The Shaft That is AT&T out of my backside.
Bluntly, these guys are in a market who's revenue isn't growing. There's too much competetion and too many price wars for the revenue from network services to make double-digit percentage growth targets.
The problem isn't that AT&T isn't growing, it's that it isn't growing fast enough. AT&T was used to it's de-facto monopoly for many years. Things were stable.. Then the long-distance wars started heating up. It started to lose profitability.
Then came the internet. Not only has it greatly increased competetion, but it will fundamentally destroy AT&T's fundamental revenue maker even more, long distance voice calls, but its setting up an expectation of double-digit profit and revenue growth. AT&T can't do that. No way.
So, AT&T is between a rock and a hard place. They're stuck selling a commodity whose price is decreasing exponentially, they have a circuit-switched network instead of a packet-switched.. And they need high growth targets.
In order to remain viable and prominent, they have to find some other big money-maker.And siphoning a share of every commerce transaction is a good technique.
This is the other big fight going on. Everyone is fighting to become the 'middleman' that people go through. The middleman role will give them a free cut of every transaction, and insane profit margins.
The whole AOL versus MSN consent decree in 95 was the fight to be the consumer network provider, and thus THE middleman. Fortunately the public and open internet won the first battle. But the fight still goes on. AT&T, Microsoft, AOL, EBay, Priceline.
In the internet, the way people will win big is to become the middleman, the de-facto monopoly that everyone goes through.. That way you get a cut of every transaction.
This is AT&T trying to join that club.
This is disgusting. AT&T is not "delivering customers", I can go buy something on my own volition, thank you very much, and I can come from any ISP I please. AT&T did absolutely nothing special to get me there, and neither I nor the person I'm buying from should have to be penalized for that.
Reading the article, I got the impression they were talking about changing from flat-rate hosting to commissions on retailers that connect through AT&T, not charging retailers a commission on sales by an AT&T subscriber (which would be unenforceable).
IOW, if Amazon.com has a link direct to AT&T's backbone, instead of paying a flat fee for the line, they'd pay based on traffic and sales through that line. They're not going to charge Amazon just because you bought a book and you're an @home subscriber.
It still sounds like a dumb idea though. I imagine this would require retailers to check which pipe an order came through, and AT&T to audit that information.
This
Uhm. According to these figures at the AT&T Investor relations site, AT&T had assets as of June of $204,356 million and liabilities of $125,215 million. This means(if I am reading this right), that they made a profit of around $75 billion dollars
Scroll down that PDF a little and you get to Owners Equity, which is is not profit. Profit is not a difference between Assets & Liabilities (unless you are Intel selling stock like they did earlier this year and throwing the capital gains in with revenue to manipulate your stock price, but I digress), Profit = Revenue - Expenses.
I direct your attention to AT&T's income statement, ended June 30, 2000. For the 3 months ended June, they had $16,221 billion in Revenue, $12.954 billion in expenses, for a gross income of $3.267 billion. After other expenses and taxes they net a measley $1.767 billion. Even the last 6 months is only $3.508 billion. Not exactly a promising investment, I'm better off putting my paycheck in a 5% savings account.
Now go invest some of your money in taking an accounting class so you can understand the difference.
--
Chief Frog Inspector
A feeling of having made the same mistake before: Deja Foobar
The scheme would involve retrofitting all 250 million Americans with thought-monitoring microchips that would detect whenever someone thought about using a telephone.
Carousel is a lie!
You've inadvertently stumbled upon one of the major philosophical differences between a circuit-switched network and a packet-switched one.
In the case of a catalog order placed through an 800 number, Ma Bell is being paid to complete a physical circuit for a given amount of time, not to facilitate any particular transaction.
This analogy can't be used to justify AT&T's idea of charging e-commerce vendors for hits to their web sites. Those vendors are already paying for their bandwidth! Think of an Internet connection as an 800 line that's off the hook 24/7. A fat 'Net pipe already costs many thousands of dollars a month to maintain... just as those toll-free lines do. It is not reasonable for a carrier to impose content-based surcharges on packet-switched networks. They add no intrinsic value whatsoever to e-commerce transactions, and they have no reason to know or care what's in our packets, as long as the pipe is paid for.
A more appropriate analogy would be AT&T charging more for 800 calls that actually result in a sale, as distinguished from calls placed to inquire about a product or speak with tech support. I don't think that would fly in the Real World of direct-sales merchandising, and neither will this harebrained scheme.
Dahlmann tightly grips the knife, which he may have no idea how to use, and steps out into the plain.
I signed up with MediaOne (Los Angeles) just about one month before the AT&T merger deal was announced. If I had known that was in the works, I would have passed.
(Background: I used to be a (fairly) happy AT&T long-distance phone customer. Then one month I noticed this "minimum usage fee" on my phone bill: suddenly, my long-distance costs went from about $0.89 (I don't call that many people out of my area, and those who do all have 800 numbers) to over $10.00! (Higher tax rates, etc.) Needless to say, I was pissed, namely becuase, I was never informed of this new charge. I bitched to the poor customer support lady until she rescinded the charge for the first three months. But that got me looking for a new long-distance provider, anyone other than AT&T. (I switched to MCI -- same lame-ass minimum monthly fee, but at least I get frequent-flier miles...))
Anyway, I am now an "AT&T Broadband" customer (in addition to AT&T Cable, and AT&T Telephone -- with MCI Long Distance, I just love the irony). For the first month -- the "money-back guarantee" period, and approximately the time span before the Mediaone-AT&T merger finalized -- my cable modem kicked ass. D/L speeds of 1.8 Mbps were the norm, and the slowest I ever measured it was just shy of 900 Kbps. (U/L speeds suck, of course, but I rarely need to upload anything other than website images and text documents... and telnet doesn't exactly require a lot of bandwidth...) Like I said, this lasted until about the end of the trial period. Then, over the span of about one week, the service totally went to shit. Dont' get me wrong, the speed was still there -- but the cable modem would randomly reset itself anywhere from every 30 seconds to every 30 minutes. Not a huge problem when you're browsing the web, but it was wreaking havoc on my ssh and ftp connections.
It took over a week for the tech to make it out, but I finally got it fixed. Works like a charm now (even better than originally, AFAICT). The solution? Swap out the 31337 Toshiba cable modem with this old clunky mutha (no manufacturer easily visible) that has cooling fins across the top -- and puts out enough heat that the design is justified!
So what's the moral of the story? Right now I am happy again, but I am also waiting for the next problem with my service. (Knocking on wood as I hope that I remain one of the only people in my area that has a cable modem...) But if AT&T does try some kind of shit like this -- and trust me, if they're considering it, they probably already have it approved by upper management -- I don't think I could in good conscience continue being their customer.
Locked into a contract? (I am in a nice 12-monther.) IANAL, but I seem to recall that a contract can be severed if one of the parties tries to impose "unconscionable" clauses on the other. Going to charge me a private tax on items I buy? I find that unconscionable.
Three final thoughts:
"I came here to kick ass and chew bubblegum. I'm all out of bubblegum." MSE USC APX AIA CSI CASp
So, of course AT&T will be paying the online vendors for providing the reason why AT&T's customers have signed up for internet access, yes?
Stupid people will be persecuted to the fullest extent allowed by law.
Hold on! They haven't decided yet. And if enough people bitch and moan, they won't do it. So don't start thinking that they are going to do it, but it's probably a good idea to let 'em know your thoughts on the idea!
Write to AT&T and tell em what you think!
Photos of bits of the past hiding in the present: afiler.com