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A dichotomy in regulatory treatment and corporate cultures exists betweenInternet Service Providers (ISPs) and telecommunication carriers. Telephonecompany executives (Bell Heads) may resent regulation, but they accept theirfate and work creatively to exploit anomalies and opportunities to secure aregulation-conferred competitive advantage. Most ISP executives (Net Heads)appear to embrace a libertarian attitude, strongly opposing any governmentinvolvement. Despite the clash of cultures, the telecommunications and Internetworlds have merged. Such convergence jeopardizes the ability of Net Heads toavoid some degree of regulation, particularly when they offer servicesfunctionally equivalent to what their Bell Head counterparts offer.  This paper will assess the regulatory consequences when telecommunication andInternet services converge in the marketplace and in terms of operatingtechnologies. The paper identifies commercial developments in the Internet tosupport the view that the Internet has become more hierarchical and more liketelecommunication networks. The paper concludes that telecommunication carrierswill display superior skill in working the regulatory process to theiradvantage. The paper suggests that Bell Heads will outmaneuver Net Headsparticularly when the revenue siphoning effect of Internet-mediated servicesoffsets the revenues generated from ISP leases of telecommunicationtransmission capacity.

Revenge of the Bellheads: How the Netheads Lost Control of the Internet