Business/Finance

Shadow war: AT&T versus Verizon for control of American communications

By Martin Bosworth

Right now the Senate is embroiled in debate over whether or not to grant the major telecom companies (chiefly AT&T and Verizon) retroactive immunity for their participation in the NSA’s illegal surveillance program, in addition to legitimizing vast new surveillance powers over Americans with almost no oversight. You already know my feelings about that, so I won’t belabor the point.

On this issue, as with many others (such as their opposition to net neutrality), the two giants of the telecom industry have been largely buddy-buddy. Both of them stand to lose millions in damages from lawsuits brought against them for their actions, before even getting into the bad publicity the case has already caused. It’s easy to forget that these two companies are (at least in a technical sense) competitors, and don’t always pursue the same goals in the same way.

Case in point:

I’ve written recently about AT&T’s desire to filter Internet traffic for illegal or copyrighted content, and how this may dovetail with the Bush regime’s plans to spy on the Internet in greater detail. Yesterday, Verizon’s Tom Tauke told the New York Times‘ Saul Hansell that his company, essentially, would not be getting down like that:

He said the company’s view combines a concern for the privacy of its customers with self interest. It may be costly for it to get into the business of policing the traffic on its network. Indeed, phone companies have largely spent a century trying not to be liable for what people say over their lines. “We generally are reluctant to get into the business of examining content that flows across our networks and taking some action as a result of that content,” he said.

This is probably the closest any Verizon rep will ever get to admitting that discriminating in favor of or against Internet content is a bad idea, and that companies who build and host the “pipes” shouldn’t worry about what travels through them. Now, as Matt Browner-Hamlin astutely notes, Verizon didn’t start suddenly giving a damn about customer privacy, as much as they don’t want to be on the hook for enabling copyright violations, in addition to their potential liabilities from illegal spying lawsuits. That’s a lot of dough, even for a company with as much cash in the bank as Verizon.

Verizon also has less to worry about in terms of a bandwith crunch that might lead to content filtering and bandwith metering solutions toyed with by AT&T, Time Warner Cable, and Comcast. Verizon’s high-powered FiOS service is built on a direct fiber cable to the home (FTTH for short), whereas AT&T’s competing high-speed service, U-Verse, relies on traditional telephone copper wires for the “last mile” connection to subscribers. Verizon, so far, has been winning the all-important connection speed battle, as well as many more overall customers than U-Verse.

But a buildout of this magnitude costs money, and even with Verizon’s deliberate targeting of FiOS to wealthy suburban communities (redlining lower-income and multi-dwelling units) and massive phone rate increases, it’s still going to take a decent chunk out of Verizon’s stock price to make FiOS profitable. This is actually one reason for the corporation’s initial support of tiered pricing for Internet service and content favoring–they wanted to gouge money from content providers in order to subsidize their buildouts.

And having to play Internet traffic cop, with all the liabilities that may bring, could potentially cost Verizon more than it can handle. Better to continue playing the “dumb pipe” and let the money roll in. This, then, begs the question–why is AT&T pushing forward with its plans when Verizon is not? Is AT&T getting preferential treatment or subsidization from the government if it offers itself up as a content policeman for Hollywood and Washington both?

I don’t have an answer to that. But this is one of the many issues that consumers and activists need to keep an eye on relating to these two companies, both of whom are intimately intertwined with the activities of our government at the highest levels, even as they’re waging a quiet, unseen war for control over the hearts and minds–and wallets and bandwith–of America’s communications.

4 replies »

  1. Pingback: www.buzzflash.net
  2. Damn…. I had no idea that anyone was deploying FTTH yet, at least outside of major apartment buildings in downtown cores. The buildout costs have got to be huge. I’m impressed, and a little jealous too.

    You’re almost certainly right, Martin. The FiOS service hast to be a huge reason for the difference between AT&T’s and Verizon’s responses to this issue – they’ve got people lined up for their service precisely because it’s a big pipe – having to tell their customers that they’ll be monitoring the pipe for Torrent feeds, P2P networks, etc. would probably make FiOS stillborn.

  3. Verizon said they are looking into the issue of my $8,663 cell phone bill. I had unlimited internet but when I got a new phone I was being charged by the kilobyte. Should I be concerned with the idea that they maybe digging into my online history ?

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