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Verizon Threatens Google's 'Free Lunch'
ILikeRed writes to tell us the Washington Post is reporting that Verizon is becoming much more vocal about internet firms using "their" lines to do business without paying extra. From the article: "The network builders are spending a fortune constructing and maintaining the networks that Google intends to ride on with nothing but cheap servers," Thorne told a conference marking the 10th anniversary of the Telecommunications Act of 1996. "It is enjoying a free lunch that should, by any rational account, be the lunch of the facilities providers." This, as lawmakers are approaching new legislation that could let telcos charge internet companies much more for the use of high speed connections.
Free lunch? It seems like it's neither free as in beer nor speech. As all /.ers know, there is no other kind of free. I'm sure Google's network bandwidth fees are neither free nor small and I know I pay for internet access. So who's getting what for free? Maybe the telecoms are using that little-knownrhetorical device called hyperbole. Or perhaps they are trying to say that companies like Google have found a moreprofitable use for bandwidth than they have and they would like apiece of the pie. A free piece of the pie.
Google isn't getting any more of a "free lunch" than anybody else; all that makes them special is that the service they provide with the bandwidth they use is insanely popular and valuable.
Imagine for a moment that Verizon provides natural gas utilities instead of communications utilities. Google pays 'em for the gas they use to bake the big, juicy pies that everybody loves. Google makes a fortune from their pies. Is Verizon somehow due something extra because their gas was used to fire the oven?
All that Verizon can see are the nice, fat pies Google has cooling on the windowsill. This isn't about free lunch; this is about grabbing a piece of Google's pie for themselves--by crook or hook.
Obliteracy: Words with explosions
- Do the Verizon customers who access Google's content pay for their network connections?
:)
- Does Google pay their network provider(s) for the access they're using?
- Does Verzion derive an economic benefit by having access to Google's services for it's paying customers?
Therefore:
- Does Verizon believe that they're not charging their customers enough for the services the customer uses?
It has not escaped my attention that I'm reading Slashdot on a free day pass paid sponsored by Verizon...
~
Ok, can someone explain to me what the problem is? Here's how I see it. You (whoever you are, oh smart /. reader) tell me where I got it wrong.
Google has a bunch of servers in a datacenter. That datacenter is hooked up to the Internet somehow, through some ISP, probably a big one (though clearly not Verizon or they wouldn't beaking off about it so much), because if it wasn't hooked up to _someone_ it'd just be a bunch of servers in isolation and Google would be worth nothing. So, Big ISP has run fiber to Google's datacenter(s), and charges Google a fee each month to carry their data. I mean, Google doesn't get free Internet access, do they? Big ISP collects their money, based either on a 95th percentile deal or a byte count deal, depending on the contract. Big ISP doesn't live in isolation either, or they'd be called AOL. So Big ISP probably has a peering agreement with other ISPs, like, say, Verizon. So Google's traffic goes out Big ISP and over to Verizon when a Verizon customer wants it, and some company hooked up to Verizon's backbone has their data go over to Big ISP when a customer at Big ISP wants it. I've just described peering in its most simple terms, haven't I? So, don't peering agreements work such that if more data goes from Big ISP to Verizon in a month, Big ISP gives Verizon money, and if more data goes the other way, Verizon gives Big ISP money. So if Google is such a massive bandwidth hog, they are not in fact getting a free lunch, because Big ISP has to give Verizon money to meet its commitments for the peering agreement, and Big ISP turns around and collects that money from Google in their monthly fee, and if Google is costing Big ISP more every month, then they (simple economics here) charge them more money. So, my question is, what the HELL is the problem? Isn't Verizon already getting paid for Google traffic?
The companies like Verizon are already paid for their pipes. This would be like me charging someone for hosting their server and then getting upset that they're making money off my bandwidth and wanting to charge them more.
I hope this doesn't become law, otherwise this is going to hurt the entire internet in more ways than one.
*I* as a subscriber am paying a fee to use the *network* to access anything that *I* want to! If that happens to be Google, then that's *my* choice!
If morons like Verizon keep this up, it will be more like "Call GoogleNet at xxx-xxx-xxxx. Service coming to your area very soon". It looks like another example of mentally retarded accountants trying to get short term profits at the expense of reason and long term viability. Hey shareholders, sell your Verizon stock now before it isn't worth toilet paper.
The world's burning. Moped Jesus spotted on I50. Details at 11.
Let's have some metaphorical fun. Suppose you're a mushroom farmer. You sell your mushrooms wholesale for $1 a bushel and life is good; you're not rich but you get by. One day you notice that Mario Batali is using your mushrooms in his restaurant and on his show and making a bundle. He's selling dishes which prominently feature--no rely on--your mushrooms for far more than you thought they were worth. Do you think you have a case to extract a fee from Chef Batali? Is he getting a free lunch from your hard work or does the mushroom farmer just have business-model-envy? I encourage equally metaphorical and perhaps dubious responses.
Since this arrangment works both on the Google end and the Customer end, Verizon ends up getting paid twice for the google traffic.
However Verizon would like to be paid three times for the Google traffic. You can bet if they win that, then they'll start charging customers extra for "faster" access to google. Their accountants would be thrilled if they could charge 4 times for the same product.
Disclaimer: I used to work for a telco. A small one but a telco nevertheless.
Working for a telco is a unique experience. I learned a lot, and believe me, most of it was good. I've learned a lot, both technically and from a management POV. I had some opportunities that a small company could not afford. Even with all problems, it was a good time.
The basic problem with telcos is that they still think in terms of their cash cow service, that is voice. They still think in terms of how much the user will pay per transaction, or minute. They have a huge structure, a huge legacy that can't simply be buried or thrown out the window. They have fear of cannibalizing their own products. But worse, they don't get it, and that's not because they're not intelligent, or bad at what they do. They don't get it because most of the time, people are busy running what pays their wages, and that's the legacy services. There's little incentive inside the company to do something else, specially when it means that it could make a lot of people lose their jobs. There's little incentive for people that talks about cannibalizing revenue.
In the end, telcos are like big animals who are threatened by the changing environment. They may have a lot of power, but in the end, guess what? Evolution is inescapable. Verizon (and other big telcos) may even win this battle, and a few other ones. But in the long term, they can't win the war. Bandwidth is doomed to become cheaper and cheaper. People just want to communicate with each other, and Verizon can't control what people do. It's market at work.
are through collusion or law.
Because the first company that tries to implement internet tolls alone is going to be at a huge competitive disadvantage. So they'd all have to do it at once. But this kind of collusion is illegal.
But law isn't. :(
Verizon are freeloading on Google's (and Yahoo's, etc) content to sell Internet connections to their subscribers.
Now wasn't that easy?
Google should do exactly that. Issue a public "so sorry for using your wires" to verizon and start blocking all verizon addresses. Chances are within 24 hours, verizon would be offering to PAY GOOGLE to start using their wires again. Verizon is the one leaching off of the internet content providers..they get $40 (or whatever) a month to sell google et al to their customers without having to pay anything to the content providers.
This isn't about a "free lunch" or "free ride" or anything like that.
... but the REAL money is in controlling the bottleneck.
This is about Verizon realizing that providing the pipeline is a good, solid revenue stream
So, they attempt to frame the debate as "free lunch", but the reality is that they're looking for a way to get some of Google's revenues by building a bottleneck.
Dear Verizon Communications,
It has come to my notice that you as a company are dissatisfied, and are complaining that content providers are unfairly stepping on the toes of bandwidth providers without sharing the profits. It has also come to my attention that you as a company are seeking ways of extircating fees from these content providers in order for them to use your network.
I would like to remind you that the bandwidth that these content providers use is being paid for. No, it's not being paid for by the likes of Google, Microsoft, or any other content provider, for that matter, but by your subscribers. That's right, subscribers. You know, those people who send you a check for $39.95 every month in exchange for their 256K downstream, 128K upstream that they use in order to get from their computer to the content provider's services. These hard working, paying customers are sending you their hard-earned money to ensure that that you give them access to the sites and the content that they want.
If you decide to cut back access for subscribers to reach the content on the public Internet that they want you will find yourself losing subscribers. Should you try to enforce disconnect fees on these subscribers, or try to enforce any other end-of-contract requirements, you will undoubtedly find yourself in court from a number of subscribers who would challenge such fees due to your failure to provide services. It could even reach the level of class-action status, which would make your position even worse.
Do consider what you're thinking about doing. Your services are already being paid for. If you don't like the profitability of the enterprise then you should get out of it, not look for ways to extort money out of others.
Sincerely,
TWX
Do not look into laser with remaining eye.
Verizon gets paid by both those hosting sites and those accessing sites.
But they want to get more money for no actual effort on their part.
Their justification is that Google is getting a 'free pass' on their pipes.
The RIAA member companies get paid when customers buy iTunes music.
But they want to get paid more for no actual effort on their part.
Their justification is that Apple are selling iPods on the back of the RIAA content.
Gary's New Laws of Business:
* If your customers are happy and you're making a solid profit, look for ways to screw them to the wall so that they can leave you in droves.
* If your products are selling well and you've got nothing in the pipeline, rework the pricing structure to screw your customers over so that they can leave you in droves.
* Make everything look as though you're hard done by, and call your customers 'freeloaders', 'scum', 'thieves', 'pirates' and any other names you can think of.
* Lobby your government to make everything you do nice and legal, where previously it was unethical, illegal, immoral, bad for business and just plain dumb.
I await my honorary economics degree.
This is exactly why the telcos are (to me) being seen as greedy f'n bastards. They're already getting payment from me (and their other customers) to utilize their bandwidth. Now they apparently want to double-dip and charge the party at the far end to send packets of data to the telco's paying customer. Essentially, in POTS terms, they want both the caller and the callee to pay for the same conversation.
Google pays for the bandwidth they use from their provider. I, as a broadband connected citizen, pay for the bandwidth I use to connect to Google. Essentially, the telcos are already getting paid twice - once to accept the packet and again to deliver it to it's destination.
There is *NO* reason why additional charges should be allowed. It's lunacy to think that this could be allowed to happen. Cost of access can do nothing but go up, which will further widen the gap between those that can afford to be online and those that cannot.
If the telcos aren't happy with how much they're paid to have data travel across their network, then they should re-address their pricing structure with their customers directly.
Knowing what a price increase would mean to the number of customers they'd retain, the safer alternative is clear - charge the companies that their users want data from.
Free lunch?! Ha! They've kept their lunch safe and now they're asking for the $50/plate buffet. Greedy f'n bastards...
My sources are unreliable, but their information is fascinating. -- Ashleigh Brilliant
Think so? If the Telcos played hardball and Google refused to pay, then struck a deal with the cable companies for exclusive access, who do you think would win? I could flip a coin over DSL or cable at this point, but if only one of them had Google services (and Google could blame the telcos and their extra network charges for that) then I (and everyone I know) would be on cable in a minute.
ISP service is now a commodity, their differentiation is so minimal. Content is the key.
Plus, if Google actually builds their own backbone as many have rumored, people will be paying THEM just to peer.
I dodged taxi fare by buying a car.
I dodged restaraunt bills by cooking my meals.
I dodged cleaning bills by doing laundry
No, sorry, not working for me.
I'll tell you folks roughly the same thing I told the CPUC at the public hearings about the SBC-AT&T merger:
Telecom and Internet is a part of our national infrastructure, just as surely as are our roads, the air we breathe, and the radio frequency spectrum. Do we let the construction companies that build and maintain the roads OWN the sections to which they've contributed their efforts? Do we let the corporations who lease segments of RF spectrum own them outright? Do we allow the contractors who build our NASA spacecraft and military equipment continue to own what they've built?
No, we don't; those roads, those radiowaves, those spacecraft and tanks and jets, being part of the common infrastructure and used for the common good, belong to all of us.
So why is it that we've allowed telecom companies, beginning with AT&T, to own the sections of common infrastructure which they've constructed? Shouldn't that infrastructure also be recognized as a commonly shared resource, one owned by all of us?
It's my contention that a grievous mistake was made more than thirty years ago, when AT&T was deemed a monopoly and partitioned. It was indeed a "monopoly", because the infrastructure which they helped create was a monolithic and commonly shared resource, exactly in the same fashion as is our system of roads.
The mistake that was made was allowing that resource to be privately owned in the first place. In partitioning AT&T, that shared resource was still privately owned but now by multiple corporations rather than one. What should have happened all those years ago is that AT&T should have been required to become some form of non-profit and truly public entity, perhaps a government agency or contractor - in the same vein as defense contractors - or a non-profit corporation with public oversight. It should not have been sectioned-up, along with our shared electronic resource.
I suspect the logic behind that mistake extends back even further in our history, to the time of the railroads. Rather than recognizing that the railroads would become part of the common infrastructure and funding their construction with that understanding and with public funds, we left it to greedy ambitious entrepreneurs to do it, and retain control of what they had built. We repeated that mistake again with the telegraph system, and yet again with the first telephones. As a nation, we should never have allowed this to happen.
Fast forward back to here and now, and this looming threat of these corporations - which still own the pieces of this national infrastructure - setting up the equivalent of toll booths at all the major intersections and deciding who has to pay and how much. The immediate problem isn't the root problem, it's a mere symptom of the much older problem.
We had the chance - multiple chances - decades ago to make the correct decision about the long-term ownership of our shared national telecom roadways. We made grievous errors then, in our capitalistic zeal; I see little likelihood those errors in judgement will be corrected now. They will be further compounded, unless we the true owners of that infrastructure finally revolt and take back the deed.
Mark
This phrase struck me as particularly poigniant (sp?). Up until now I had simply been infuriated by the assumption that Google and I got internet access for free. Hell, my fees are around $50/month, and I'm sure Google's fees are in the tens of thousands a month. Some free lunch.
But it hadn't really struck me yet that this was censorship wrapped in greed. A company wants more money for nothing, and therefor plans to limit my access to information as a way to basically extort money from other companies.
It really boils down to the one that suffers is the home user. Google can pony up, but may not out of protest. But when all this bullshit about free lunch and Verizon being wronged is taken away, I suffer. My access to information - already a very shaky balance - is threatened, and appears that such censorship will even be made law by our wonderful government.
I've got to stop reading Slashdot. These days, it just gets my blood-pressure up.
Excuse my speling.
Making The Bar Project