Telephone Companies Behaving Badly — A Net Neutrality Warning
Telephone Companies Behaving Badly — A Net Neutrality Warning
Telephone Companies Behaving Badly — A Net Neutrality Warning

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    One of the most specious arguments in the debate over an open Internet is the one in which telephone companies say they have no intention of blocking or degrading service. Because they said it, one assumes their promises are true.

    It is certainly true the Bells are watching their manners when it comes to the potential for Web blocking, degrading or discriminating. On the other hand, there are times in which the companies can't help themselves from behaving badly. It's all part of the corporate culture that evolved from a company so bent on control it even opposed the notion of putting covers on telephone books.

    One case in point is Verizon's patent suit against Vonage. Much has been reported about the supposedly dire straits into which the VoIP company has been put by Verizon winning a court decision that Vonage infringed on Verizon patents. Little has been reported about what the patents actually say, and whether they have a chance to be upheld in a court that really knows something about patents. Many informed observers think Verizon's challenges will fall because the patents are far too general.

    Here are three claims upheld by the U.S. District Court, as quoted from the decision that could cost Vonage $58 million:

    “6. A method as in claim 1, wherein the public packet data communication network is a packet switched network.

    “7. A method as in claim 6, wherein the packet switched network comprises a system of interlinked data networks using TCP/IP protocol.

    “8. A method as in claim 7, wherein the system of interlinked data networks comprises the Internet.”

    Look closely at what those supposedly valid claims describe. A public packet data communications network? A network using TCP/IP? Interlinked data networks? Verizon has patented the Internet. (Now Al Gore can breathe a sigh of relief.) Heaven help us if those are upheld.

    According to Tier1 analyst Daniel Berninger, some of Verizon's claims are an attempt to patent an open standard, as in the occurrence of a computer receiving a request for a telephone call translates the request into a telephone number. In a post on GigaOM, Berninger called the patents “generic and ambiguous.”

    Some of these “patents” go back to the late 1997, predating the 2001 creation of Vonage. Why is Verizon suing now? Here's a clue fromVerizon's annual report to the Securities and Exchange Commission described the company's competitive position:

    “We face significant competition in our industry. The rapid development of new technologies, services and products has eliminated the traditional lines between local, long distance, wireless, cable and Internet communication services and brought new competitors to our markets, including other telephone companies, cable companies, wireless service providers, satellite providers, electric utilities, and providers of VoIP services. While these changes have enabled us to offer new types of services, they have also allowed other service providers to broaden the scope of their own competitive offerings.”

    As Gigi told the New York Times, “I think Verizon is pulling out all the stops to put Vonage out of business.”

    Earl Comstock, president of Comptel, which represents competitive telephone companies, expressed the same view in a Washington Post story: “This isn't about protecting their patents. It's about crushing their competitors.”

    The bad behavior is more than Verizon's patent suit. It's also AT&T shutting down a free conference-call service over an access-charge dispute. It's easy to get lost in the technical weeds, but James Granelli at the L.A. Times captured the essence: “A legal fight involving two Southern California companies and AT&T Inc. is exposing an ominous reality: Phone companies say they can decide whom their customers can't call.”

    The Federal Communications Commission has received more than 1,000 complaints about calls to services like being blocked, the Times reported. Instead of using these low-cost services, consumers are then steered to the higher priced services offered by AT&T and others. and others use phone numbers offered by rural telephone calls as the basis for their conferencing systems. AT&T has said that arrangement costs it money.

    Small competitive carriers that benefit from the arrangement, like Great Lakes Communications in Spencer, IA, take a different view. Non-profit groups depend on companies like Great Lakes, the company said, while AT&T, Qwest and Sprint are angry at the loss of business. responded with an antitrust suit against AT&T, and may pursue other actions as well.

    So, to recap, we have Verizon claiming a patent on the Internet, and AT&T and Qwest (and Sprint-Nextel) claiming the right to block calls instead of settling access charge disputes. They have since backed off, but there's no guarantee it won't happen again.

    For those of us who want a Net Neutrality policy, the old adage is true: You're not paranoid if they really are after you. Or, to put it in context of the 100-year history of anticompetitive behavior by the phone industry: Genetics wins.