Google Won't Pay Bell South

grandgator writes "Google has offered a clear response to Bell South's proposal to charge content providers an additional fee for access to their network: They won't pay. In an email, Google's Barry Schnitt told the folks at networkingpipeline: 'Google is not discussing sharing of the costs of broadband networks with any carrier. We believe consumers are already paying to support broadband access to the Internet through subscription fees and, as a result, consumers should have the freedom to use this connection without limitations'"

Comments

Way to Stand up for us all

[Grue_Food]

I commend Google for standing up to the Dark Lord for us.

Re:Way to Stand up for us all

[rtconner]

yay! Google is not evil, and they might even be good!

Re:Way to Stand up for us all

[hal2814]

In the words of the Wolf, "Let's not start sucking each other's [word removed by Google safe search] just yet."

It would be rather easy for Bell South to let massively popular sites like Google get away with not paying while throttling out less popular sites for not paying. It would also be somewhat easy for Bell South to not throttle bandwidth on what Google is typically used for (searches) while throttling Google's other features that Bell South might want to compete with.

Re:Way to Stand up for us all

[Kamots]

There's a second economic aspect to this other than the one you mentioned. They're getting free publicity because they're doing "right" by the consumer (it also just kinda happens to save them money)

Personally, I want companies to start thinking about the free publicity of doing what's good for the consumer. I want companies to start thinking about the value of all the publicity they can get from altruistic acts. I want the leadership of companies to see altruistic acts as having positive economic affects.

Sure google isn't handing thier money out to SBC, but they're also a company that recognizes that being altruistic has it's own value. Hence the way they made this statement.

And like the poster you replied to, I'll applaud them too. I want them to get as much value from being altruistic as I can. Maybe they'll do it again someday if we do.

Re:Way to Stand up for us all

[Anonymous Coward]

Let's not forget the other Google story today, that while all the *other* major search engines rolled over and gave the government their log files to protect us from porn, Google alone refused. To suggest this was just about the money is shortsigted. How would you like the web if every site required a subscription so the broadband monopolies could get their cut? This strikes at the very heart of how the model of how the internet works.

Re:Way to Stand up for us all

[grasshoppa]

I mean, I'm with Comcast myself...but I'm sure they'll be following in the same steps as Bellsouth pretty soon too

Actually, if they are smart, they'll do the opposite. This is a huge opportunity for the cable companies, who don't have a vested interest to hold the voip down.

Re:Way to Stand up for us all

[Zathrus]

All Google had to do was refuse to give their money to someone else. Let's think this situation through before applauding Google's altruistic nature.

Shrug. If Google wanted to screw everyone else they could -- by paying the extortion money.

After all, it's likely to be a fairly trivial amount of money to Google, and in return they'd be guaranteed that their VoIP and video data packets get highly prioritized.

And, more to the point, they'd ensure that anyone who wants to compete against them has to do the exact same thing. It's called creating a barrier to competition, and it's generally worth every penny in the long run because you end up with less competition, particularly from pesky startups who have nifty ideas but little or no capital. I'm sure Yahoo!, Alta Vista, etc. would've vastly preferred such a barrier, since it would mean that Google never would've managed to completely usurp all of them.

Re:Way to Stand up for us all

[Anonymous Coward]

They're getting free publicity because they're doing "right" by the consumer

You're right, I was about to use altavista until I read about this.

OMG I just checked to see if it was still there and altavista has moved from altavista.digital.com to altavista.com. And there aren't any ads! It's scary how you can get distracted for 5 to 10 years and then next time you look, eveything's changed.

Re:Way to Stand up for us all

[Andrzej Sawicki]

No, they just do not want to pay, and they feel they will get away with it (as they should). Fighting a company which is perceived as evil is just a side effect here, IMO.

Re:Way to Stand up for us all

[lastchance_000]

Given the details in this story: Feds seek Google records in porn probe, I'd say they are definitely not evil. At least not at the moment.

Re:Way to Stand up for us all

[drgonzo59]

People always forget and try to deal with large companies as if they are individuals with morals, feeling and so on. The companies are not like that, they exist only to make money and will only do whatever makes them more money (I am talking about for-profit organisations only here).

Here is when everyone will say, but isn't such and such company donating to such and such charity? -Yes, but only because they did a cost/marketing analysis and determined that it will generate good publicity to do just that. How come a lot charitable giving from companies is to museums, operas, local TV stations and not as much to soup kitchens for the homeless or rehabilitation of drug addicts and such? - Because that would not generate as much good publicity!

The same with Google. Everyone thinks - "Oh Google, the defender of the consumers, we love you!" - but Google needs that attitude too, that is in part why they are so profitable. It is (or it should) be every company's dream to be perceived like a noble, charitable, honest and good entity - existing solely to help and benefit everyone else, but in reality there is not such thing - there is just $$$. Microsoft can afford to be bully and be mean -- because it already secured most of the software market, I think they will loose out in the end but that's not because they are just a "mean bad bully" but because their strategy/marketing team did bad forecasting .

Re:Way to Stand up for us all

[swillden]

There is even a name for this. It's called "Good Will." Traditionally it has been considered one of a company's assests that even carries a cash value.

Not exactly. The "Good Will" that you see on an accounting balance sheet isn't the same thing at all. It's really more of a fiction invented by accountants as a placeholder for the fact that the value of a company isn't the same as the value of its tangible assets. If Google manages to generate a huge amount of the non-accounting, karmic Good Will through its actions, that doesn't mean it gets to increase the goodwill number in its quarterly report. The way goodwill is acquired is through mergers and acquisitions.

As an example of the meaning of the term as accountants use it, suppose that Google buys KFG Enterprises for $100M, but KFG only has physical assets of $20M. So when Google's accountants update the balance sheet, they subtract $100M from Google's cash balance, but add only $20M in assets. On paper, it appears that the purchase was a very bad deal which lowered Google's total value by $80M. This isn't true, because everyone knows that $100M was actually an excellent price for KFG, but that's how it looks on paper.

This presents the accountants with both a problem and an opportunity. The opportunity arises because they'd love to report that $80M "loss" to the IRS and take a big bite out of the year's taxes. On the other hand, they do *not* want that $80M loss showing up in the SEC filings and making the company look less profitable in front of the shareholders.

Goodwill addresses both problems. What the accountants do is to add a goodwill line item to the asset side of the balance sheet, in the amount of $80M. That way, the net effect of the transaction on the balance sheet is neutral, the company neither made nor lost anything by buying KFG. This is nice for the SEC filings.

For the purposes of dealing with the IRS, goodwill becomes a depreciable asset, which the accountants can write off over time (in spite of the fact that the company may actually be acquiring more karmic Good Will by playing nice, and may even be capitalizing on the intangible value of KFG that the fictional goodwill stood in for). Each time they write off a chunk of goodwill, they take the hit on their assets in their SEC filings, and they also get to claim the tax deduction. I'm sure there are some rules about how and when they can claim those "losses", but I think they do have some latitude which they can use to juggle the numbers.

I am not an accountant, but this is how a corporate accountant friend explained it to me (with lots of qualifiers that he was oversimplifying nearly to the point of inaccuracy).

Thank goodness

[Anonymous Coward]

I was wondering when someone was going to get a clue. Looks like Google is going to force the hands of providers' to keep billing for structure and not content. The Bells wished they could have done this with VoIP. Their loss; everyone else's gain.

The failed QoS modell

[chriss]

There has been talk about applying extra fees for "higher quality network" for a long time. In the beginning it sounded like a great idea: data that needs to be transported in realtime (phone calls, stock ticker) would be charged more then data where in time or even in order delivery would be unimportant (ftp transfers etc.)

But something else happened: transfer and bandwidth exploded. I think I remember predictions that by 2008 (????) the average internet user will transfer about 600MB per day. At the same time the bandwidth needed for voice transfer (and even video conferencing) is decreasing. So even if the carriers would charge ten times more for a high "Quality of Service", the data transfered for these services is neglectable and would not justify the extra cost for providing networks with different levels of QoS or even the extra cost for billing it.

So if you want to maintain the idea of "extra charges", you have to look for important data services with "high importance", maybe not being just in time, but being always accessible. There was an outcry a couple of days ago, when (I think) del.icio.us wasn't accessible for some time, the same would be true for ebay or amazon. So the idea is economically right, if you still believe in QoS.

But in reality bandwidth the amount of bandwidth made reserving part of it for special purposes less necessary, other problems can be solved by technology, like caching for video streaming. And since those all work on raw IP networks, there is no big challenge to make a better offer than the bells, once they increase their operating costs by adding technology to enable delivery of QoS network transfers and their billing. I'm sure the carriers know that, so this will never happen. I think it is more PR and demanding "protection" from the market. Usually followed by lobbying to change some law to protect the poor companies from the non existing harm they just created themself.

Re:The failed QoS modell

[MoxFulder]

Yeah, I think the explosion of transfer rates and bandwidth is key. At some point, it became cheaper for companies to simply provide more bandwidth than for them to go around metering the amount of bandwidth users are actually using.

This is what happened to the British Penny Post in the 19th century: originally you had to pay a different amount depending on how far your mail was traveling, within Britain. However, Rowland Hill showed that it would actually be cheaper for NEARLY EVERYONE to charge a flat rate, because the postal service wouldn't have to pay people to determine the postage rate for every darned letter.

More recently, I believe this explains why the Internet took off quicker in the US than in France: in 1997, when I lived in France, *no one* that I knew in my high school had Internet access, while practically everyone I knew had access in the USA. The reason was simple: in the US you pay a flat monthly fee for local calls. In France, you get a pamphlet that goes something like this (I'm not exaggerating):

Local calls are billed per unit. The cost of one unit is 0.13F on Monday through Saturday at noon, and 0.10F on Saturdays after noon, Sundays, and government holidays. The length of calling time per billing unit varies as follows:

• Between 9 am and 4 pm on weekdays (1 pm on Wednesday): 39 seconds
• Between 4 pm (1 pm on Wednesday) and 6 pm on weekdays: 62 seconds
• Between 6 pm and 10 pm on weekdays, as well as 9 am and noon on Saturdays: 70 seconds
• ...
• ...

So in France in 1997, not only did you pay per call, and not only did the rate vary depending on the time of day and day of the week, but ON TOP OF THAT the amount of time that each billing unit was good for was constantly shifting. It was a mess. No wonder no one wanted to use their phone line for Internet access.

"Get Loooooooooost"

[nacturation]

The summary: Give us more money, and we won't throttle traffic to your site. In response, Google tells them to [results filtered by safe search].

Do no evil

[dptalia]

Between this and resisting turning over search data, it looks like Google is really trying to "do no evil". I was beginning to wonder about them from some of the more recent stories, but this helps restore my confidence in Google.

Re:Do no evil

[interiot]

Moreover, they did it in a brilliant way. If I was a big guy, and somebody said something I strongly disagreed with, my initial reaction would be to tell them why I disagree with them. But that would have given Bell South an opportunity to argue back, and keep this concept in the headlines for a week or two. By resisting the urge to enumerate why it's such a stupid proposal, and making it clear that there should be no conversation between ISP's and website providers, Google has effectively killed this news story immediately, making it pretty clear that it doesn't matter what ISP's try to say about the issue in the press, because it's simply a non-isuse.

Biting the hand that feeds you

[Nerdposeur]

Why would Bellsouth charge Google? Without Google (and other useful sites), nobody would subscribe to their internet service. We're paying to get access to the internet, and they're complaining because our access is costing them money. Sounds like a problem with your business plan to me.

What might make more sense would be a pay-per-use plan, where you pay a flat rate for X amount of bandwidth or whatever and more if you use more. But of course if customers don't like the complication, they will choose another ISP.

Re:Biting the hand that feeds you

[gstoddart]

What might make more sense would be a pay-per-use plan, where you pay a flat rate for X amount of bandwidth or whatever and more if you use more.

What, like this??

BellSouth already sells connection packages, with varying degrees of bandwidth etc. I'm sure someplace in the fine print is a bandwidth cap and corresponding charges for overages.

What they think they can do now, is charge google on top of charging their customers -- in theory so Google can be guaranteed their stuff will reach a Bell South customer without any degradation -- you know, "nice kid, shame if he hurt himself on the way to school" type stuff.

This is exactly why Google has just basically shrugged off what they had to say and shut the door on any talks.

Bell South is trying to play a shell-game whereby they charge the customer for a certain bandwidht, and then charge the provider to ensure they will be delivered at speeds close to what they've promised/charged the customer.

The worst case scenario:

[Control Group]

What I fear more than anything else in this whole "tiering" push is the following:

BS eventually implements a tiered QOS policy. Google responds by saying, "fine. You charge us for the pipes, we'll charge you for the content that makes them useful." Cue the lawyers, who huddle up, then spit out a cross-licensing agreement such that BS pays Google exactly what they charge Google for the pipes. Google goes away happy; nothing has effectively changed. BS goes away not particularly happy with Google, but in a position where they absolutely can demand a net positive cash flow from content providers with less market clout than Google.

Consider VOIP: there are enough players in the VOIP game, and it's a small enough market, that no one company has the market leverage to demand much from BS. At the same time, a fairly small change in BS' service (a little bit of lag here, a little bit of jitter introduced over there) will result in completely destroying the VOIP company's ability to serve customers.

It'll end up being the same thing as the way large companies wield their patent portfolios. It means everything goes on just fine for the big players, but the little guys get screwed in the process.

I'm just keeping my fingers crossed that Google doesn't cave on this, even if BS offers up a cross-licensing agreement. Here's hoping "don't be evil" covers this.

Switching Matrix

[Tackhead]

> Bill Smith, chief technology officer at BellSouth justified content charging companies by saying they are using the telco's network without paying for it. "

Agent Smith: "If I go to the airport, I can buy a coach standby ticket or a first-class ticket," Smith said. "In the shipping business, I can get two-day air or six-day ground."

Neoogle: Wow, that sounds like a really good deal, Bill. But I think I've got a better one. How about I give you the finger, and you give me my phone call.

Costs of broadband?

[krbvroc1]

Didn't we (shareholders/taxpayers/markets) already pay/subsidize for the massive install of 'dark-fiber' (unused fiber optics cables) in the dot.com runup? There is so much unused fiber out there that ISP prices should be dropping, not increasing.

Re:Costs of broadband?

[Anonymous Coward]

Well yes there is a ton of dark fiber out there. But let me explain about how cheap it is. I work for a cable installation company. We plow in new phone/power/cable tv systems. If you have a fiber in the ground and we come along, then you have to mark it so that we can cross it without cutting it. Minnesota one call laws and others states as well define the liabilty on this pretty well. If it's not marked we aren't liable. So even if the fiber is dark(not in use) it causes expense, someone has to pay the locator. If it gets cut it's lost inventory unless fixed(a typical, say 4 fiber, cut is around 20 grand to splice now). so the cost is still there on dark fiber even though there is no revenue being generated. The fiber in question remains dark for a reason. Generally it's due to one of three things. The Company that owns the fiber has no current need for it. The fiber doesn't go to an area where it is needed. Or the usual scenario is that it is simply surplus. We often place 96 fiber through an area. Only 10 of those are needed, so the other 86 are dark. This is what MOST of the dark fiber out there is. Dark fiber then becomes somewhat of an urban myth. So yes broadband costs go up due to what seems like basic reasons, but which are actually far more complicated. If we only placed the 10 fibers that we needed now, and then found that 10 more were needed in say 2 years, we actually cause more expense. How? Well, now we need to locate the existing fiber($), buy new fiber to place($), pay someone to place it($$), and maintain it($). So in essence references to "dark fiber" are misleading at best. Just 2 cents from someone on the inside of the construction part of the scene.

Competition

[Dachannien]

Statements from large Internet presences such as this one from Google, combined with competition in the ISP arena, will ensure that stupidity such as the tiered bandwidth model will never materialize. If BellSouth starts clamping down on bandwidth for content providers who won't pay, then their competitors just have to start running ads saying that they offer service that's just as fast, just as cheap, and that gives you the full power of their service no matter what website you visit or what service you use.

In fact, the only uncertainty in this equation is whether there is sufficient broadband competition in all markets. Since the stakes for the consumer are increasing due to BellSouth's plan, one would hope that the federal legislature would take a closer look, but BellSouth also happens to be a massive political donor as well.

Re:Double charging != OK

[Kelson]

I never have understood this. I mean, content providers are already paying for the bandwidth to upload the content, and consumers are already paying for the bandwidth to download it.

Charging people for both the bandwidth and the content reminds me of this joke menu:

Soup: $0.99
With Bowl: $5.99

This fight has only just begun, unfortunately

[postbigbang]

SBC/AT&T, Bell South, and soon others will be at Congress's heels to get the concept changed.

The mentality of the telcos, now that their monopolies are being rapidly deregulated, is to get as much revenue as possible from their infrastructure. Now that voice is virtualized and becoming removed from their revenue models, they feel they have to make money some way to compete with cable, BPL, fiber, and other broadband providers to survive.

They won't be shaken easily, and a pooh-pooh from Google won't slow them down an inch. These are guys that go into Congressional offices armed with a dozen lawyers-- per visit-- every visit. Do not mistake their resolve.

This is just the first salvo, folks. Get you umbrellas.

Dark Lord?

[Spy der Mann]

"One rule to ring them all!" No, wait...
"One Bell to web them all!" Hmm...
"And in the darkness Bell them" No, something's not right...

"Ma' Bell to sue them all!"

THERE! :D

Re:Dark Lord?

[geobeck]

"Ma' Bell to sue them all!"

...and in the darkness bill them.

Google's counterproposal

[tgibbs]

We have given your proposal the attention that it deserves, and offer the following counterproposal:

We will allow you to continue to offer our service to your customers, at no additional charge to you, and you will save the immense amount of money that it would cost you to explain to all of your customers whey they can no longer get through to Google, and why they shouldn't switch to another internet provider that does offer Google access.

Re:Google is very ballsy these days

[Rude Turnip]

Chuck Norris doesn't use search engines. All the relevant results simply huddle together in fear.

Re:block all traffic from Bell South subnets

[bcattwoo]

But then I would have to switch to Road Runn^[NO CARRIER]

BellSouth should pay Google

[evan1l38]

I think google should charge BellSouth for the content. Bellsouth is getting a lot of money from customers for connections. Without web sites and content to deliver over that connection, customers wouldn't buy it - why get a connection if there's no internet to connect with? So Bellsouth is just getting all that for free. They're selling the content that WE provide as web authors, but not paying us a penny for getting all that content!

How does cable TV work? Isn't that the same thing? We pay the cable provider, and they pay the stations. No one says the stations should have to pay the cable providers for using their cable bandwidth. I say the internet should be the same thing. So if you have a web site, send BellSouth a bill.

Re:Common Carrier Status...

[A beautiful mind]

We've already established in the last article about Bell South that ISPs generally don't have common carrier status.

Given Google's Growth...

[Khyber]

I doubt that for very long those telcos will be able to compete in the political arena, when/if Google starts throwing their money around for political clout.

Considering how long it took the Telcos to get their current wealth, compared to how rapidly a small group of people (Google) became wealthy in a mere fraction of the time, I'll bet it won't be long before companies like Google team up with their insane amount of market and actual worth, and put a stop to this madness altogether.

Economics of the situation

[cfulmer]

Google can play the game. Let's say there there are two broadband internet providers in an area, and Google decides that it's only going to pay the fee to one of them. What is going to happen to the subscribers of the other? They will leave -- if I can't even get Google on my ISP, but I can on the competition, I'm going to switch.

The real problem isn't in current services -- it's in high-bandwidth (mainly video) applications. Not only will this will require rolling out new technology, but it will compete directly with services that the cable companies want to offer themselves. Why would you go to the cable company's pay-per-view service when you can get the same movie from the studio's internet video-on-demand service and pay less? From the ISP's point of view, increasing bandwidth is actually going to decrease revenue. And, that's why they want to charge content providers.

The other thing is that Quality-of-Service (QoS) becomes more important with video and that requires marking all packets at some point. If you don't have any way to distinguish between the traffic that gets better service and the traffic that doesn't, then you can't do QoS. To the ISPs, the best way to ration that is to charge those willing to pay for it.