IPcentral Weblog
  The DACA Blog

Monday, September 12, 2005

To Be or Not to Be: EBay as Phone Company?
(previous | next)

EBay's decision to acquire Skype highlights (again) the evaporation of market boundaries between historically distinct services, as well as the need for pioneering companies to exercise caution in crossing such boundaries.

By all accounts, EBay wants to complement its own auction-based e-commerce offerings with Skype's voice offerings, global presence, tech-savvy customers and revenue growth potential. In attempting to leverage its core competencies by adding voice capabilities, EBay follows similar moves by companies such as Google and Yahoo. And like those earlier announcements, EBay takes this bold strategic step without expressing any significant worry about "regulatory overhang," especially to the extent these voice offerings begin to resemble "plain old telephone service."

As demonstrated in the context of Internet voice and other broadband services, regulators' principles and platitudes about encouraging these services by freeing them from regulation extend only to rate-setting, physical unbundling and other forms of "economic regulation." Most policymakers assume that many voice services will be subjected to various "social obligations," such as those concerning "dial 911" emergency communications, wiretapping for law enforcement, access by persons with disabilities and support for universal service.

Who gets to honor these costly obligations remains murky but turns primarily on how much a voice capability begins to resemble a traditional phone call. The rationale (also a bit murky, or at least circular) is that consumers expect and thus depend on certain capabilities in phone service, such as the ability to dial 911. Thus, anything consumers might take to be phone service (because it looks like phone service) must be required to provide the phone service features -- often even if consumers would subscribe to services without those features, or if companies would provide those features voluntarily. Put another way, regulators insist that if a service looks like a duck (i.e., traditional phone service), it must quack like one, too.

Like its predecessors, EBay appears prepared to use Skype to provide voice capabilities that allow users to reach a vast number of EBay and Skype customers, or anyone else on the ubiquitous public phone network, for a fee. If the merged company takes that route, it may find it difficult to distinguish its offerings from services that have been regulated (and hard) for generations.

All of which raises the question: as EBay and others continue to pursue growth by adding voice features and other indicia of telephone service, do they really want to be phone companies and, if so, are they prepared to quack for regulators?

posted by Kyle Dixon @ 3:00 PM | Broadband , Cable , Communications , Innovation , Internet , The FCC , Universal Service , VoIP , Wireline

Share |

Link to this Entry | Printer-Friendly

Post a Comment:

Blog Main
RSS Feed  
Recent Posts
  EFF-PFF Amicus Brief in Schwarzenegger v. EMA Supreme Court Videogame Violence Case
New OECD Study Finds That Improved IPR Protections Benefit Developing Countries
Hubris, Cowardice, File-sharing, and TechDirt
iPhones, DRM, and Doom-Mongers
"Rogue Archivist" Carl Malamud On How to Fix Gov2.0
Coping with Information Overload: Thoughts on Hamlet's BlackBerry by William Powers
How Many Times Has Michael "Dr. Doom" Copps Forecast an Internet Apocalypse?
Google / Verizon Proposal May Be Important Compromise, But Regulatory Trajectory Concerns Many
Two Schools of Internet Pessimism
GAO: Wireless Prices Plummeting; Public Knowledge: We Must Regulate!
Archives by Month
  September 2010
August 2010
July 2010
June 2010
  - (see all)
Archives by Topic
  - A La Carte
- Add category
- Advertising & Marketing
- Antitrust & Competition Policy
- Appleplectics
- Books & Book Reviews
- Broadband
- Cable
- Campaign Finance Law
- Capitalism
- Capitol Hill
- China
- Commons
- Communications
- Copyright
- Cutting the Video Cord
- Cyber-Security
- Digital Americas
- Digital Europe
- Digital Europe 2006
- Digital TV
- E-commerce
- e-Government & Transparency
- Economics
- Education
- Electricity
- Energy
- Events
- Exaflood
- Free Speech
- Gambling
- General
- Generic Rant
- Global Innovation
- Googlephobia
- Googlephobia
- Human Capital
- Innovation
- Intermediary Deputization & Section 230
- Internet
- Internet Governance
- Internet TV
- Interoperability
- IP
- Local Franchising
- Mass Media
- Media Regulation
- Monetary Policy
- Municipal Ownership
- Net Neutrality
- Neutrality
- Non-PFF Podcasts
- Ongoing Series
- Online Safety & Parental Controls
- Open Source
- PFF Podcasts
- Philosophy / Cyber-Libertarianism
- Privacy
- Privacy Solutions
- Regulation
- Search
- Security
- Software
- Space
- Spectrum
- Sports
- State Policy
- Supreme Court
- Taxes
- The FCC
- The FTC
- The News Frontier
- Think Tanks
- Trade
- Trademark
- Universal Service
- Video Games & Virtual Worlds
- VoIP
- What We're Reading
- Wireless
- Wireline
Archives by Author
PFF Blogosphere Archives
We welcome comments by email - look for a link to the author's email address in the byline of each post. Please let us know if we may publish your remarks.

The Progress & Freedom Foundation