The past two post titles might make you think I am starting a series on the seven deadly sins but I am not.
When one company looks at another’s business model with envy, they often get upset and start thinking about how to fix the situation.
Today’s Wall Street Journal had a cover story on the Telco’s desire to charge consumers extra to download video from Google or a song from iTunes.
Sure, the Telcos might be able to get more money from people who need super fast, six sigma reliability Internet connections. There has always been a business model around super high performance networks.
But this is really just marketing spin. What’s really going on is the CEOs of Verizon, AT&T, Bell South and the other Telcos are looking at their margins going down month after month while the service providers like Apple and Google, who deliver their services to consumers over the Telco’s networks, are watching their margins go up and up.
We are witnessing some serious jealousy. These Telco guys want to do something about it. They want to charge Google or the customers of Google (ie us) for the privilege of that delivery.
Fat chance guys. The consumer is already paying for the Internet connection. They aren’t going to stand for another monthly payment to the service provider because the service provider has to pay the Telco too. Double dipping doesn’t work as a business model generally speaking and certainly not in a commodity business where there are less barriers to entry every day.
The Telco’s had their chance back in the mid 90s to develop all these value added services to run on their networks. They didn’t do it. They bought back stock, built golf courses, defrauded their shareholders, took on enourmous debt, and generally did everything other than take advantage of the incredible opportunity that they had with the coming of the Internet. Bottom line – the screwed up.
Jarvis calls the Telcos "robber barons" and Om Malik calls this hairbrained scheme a "chimera". I had to look that up. Om’s either calling this money grubbing scheme a "fire breathing she monster" which sounds about right, or a "creation of the imagination" which it clearly is.
I have two words for it: