Slashdot Mirror
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.
Karma: SELECT `karma` FROM `users` WHERE `userid`=138474;
I know some organizations essentially dodge bandwidth charges by running their own connection to major peer points.
The bbc certainly use that approach in the UK to keep their costs affordable.
However in that case, then they are doing part of the ISPs job so it seems fair.
I'd be all for it, if Verizon wasn't charging me $45 per month for my DSL connection. You can't eat with two spoons, folks. Either you take money from me, or you take it from content providers. When you start doing both I'm terminating my subscription so you ain't getting a dime from me ever again.
More likely than not, Google and Verizon are peering with one another via a private line (which Verizon as a LEC would purchase for exactly $0). I seriously doubt either of them purchase transit via a third party. If anyone on Verizon could do a traceroute to google.com, that would shed some light.
Verizon's probably worried that Google's on-demand video is going to usurp their own offering to their customers and that all the hard-earned cash they're putting into HDSL and video delivery systems is going to go to waste. If I can watch such-and-such on Google for $5, then why would I buy it from Verizon for $10? Google will likely follow Microsoft's lead here and price gouge, being they already have a superior delivery infrastructure that can service customers on all networks while Verizon's market is just their own.
Perhaps it would be nice if Google started their own communications network to directly compete with the likes of Verizon. That is not a stretch since Google is expanding to all sorts of endevours. If "Google utopianism" actually works, and Verizon gets pounded by a 10^100 pound garilla, I wonder what other companies would do in response.
Telcos have always been prime candidates for socialization. They're really pressing their luck pursuing this ridiculous idea.
What commercial internet trend do they wish to start here? A free lunch?! Riiiiight. If that's the case, Verizon is the volunteer homeless beggard doling out hog slop to the rest of us beggards at the local Soup kitchen. Google is just the maitre d'...
I hope, when they die, cartoon characters have to answer for their sins.
All the content providers have to do is charge a "Bandwidth Recovery Fee" to any provider who charges them a "Bandwidth Usage Fee".
For example, BellSouth and Verizon (the two biggies on this one so far) start charging Google for the "right" to provide content to their customers. In return, Google begins charging BellSouth and Verizon for the "right" for their users to access Google's service over Google's upstream bandwidth.
The end result is that Google breaks even (because they can charge a small amount per customer for a massive total income) or pulls ahead on the deal, and Verizon either stays at the same spot they're in now, or they start losing money - either through losing access to one of the premier search engines on the internet, causing customers to start leaving in droves, or because they pass the "Bandwidth Recovery Fee" onto their consumers, causing everyone's bills to inflate noticeably, also causing customers to leave in droves for cheaper access to the same content.
And while the above article mentions cable and telephone network providers, I've yet to hear Comcast, Cox, Charter, or Time-Warner start making noises in this direction. Mayhap the telcos need to look into cheaper ways to bring all the dark fiber out there online?
You thought that this sig was what you think that I thought you wanted me to think. I think.
"Their accountants would be thrilled if they could charge 4 times for the same product."
I'm an accountant, you insensitive clod!
No way in hell the accountants will be happy when they have to track additional revenue streams with a less than adequate increase in resources (as happens with big companies constantly). It's the shareholders, and the executives with lucrative bonuses written into their contracts, who would be happy to see this. It's not gonna make one iota of a difference to their accountants.
Please don't associate accountants with corporate greed... we measure the wealth, we don't take it home with us.
"Trolls they were, but filled with the evil will of their master: a fell race..." -- J.R.R. Tolkien on Olog-hai
I find it interesting that SBC just lowered their 3Mbps/512Kbps price to $17.99 or some price like that. But that is pathetic compared to what others in the world can get today.
Instead, I pay about $60 a month for much better TOS (static IP, servers within reason, etc.), though Verizon still provides the pipe.
See, my DSL connection to Verizon's CO get's shunted onto the ATM fabric and shows up as a PVC to my ISP. They in-turn pay Verizon big $$$ for the fat pipes to whereever.
Now, Verizon charges for both the ATM PVC I use and the fat pipe my ISP uses. They get paid coming and going.
Verizon is free to charge my ISP (Blarg! in case anyone cares) whatever they want for the fat pipes and the DSL PVCs that get resold to me, at least whatever the market will bear. In fact, they price things so that, compared to their ISP service, they get more money from the likes of me. Used to be, I had to pay Verizon directly for the PVC -- "Advanced Data Services" they called it, but they found out that it was easier to sell those in bulk and let the ISP nickel and dime them out (which put more $$$ in my ISP's hands as well as reducing my overall bill).
So, what's the problem here? Verizon can price their pipes at whatever level the market will bear.
I suspect the real issue is that Verizon does not realize that it is competing against itself: their ISP division has to compete with all the other ISPs for bandwidth on it's own network. So what? They get paid either way. But, from the Verizon ISP perspective, they cry foul that so much more money is made by selling bandwidth to and through third-party ISPs and not them -- one division loses while the other division gains.
Note to Verizon: if it is more profitable to lease bandwidth to ISPs than it is to be one, get out of the ISP business!
You could've hired me.
I'm sick of verizon freeloading off of all that free content that they can resell through their ISP services. If there weren't an internet to connect to, all those pipes they own (and lease out for profit) would be dark fiber. Google is paying for more than "cheap servers", they are leasing the bandwidth that they are accused here of freeloading, and WE are also paying for that bandwidth, so that we can access google. Verizon just wants to be able to tax google more for their success.
Changing the nature of the internet (one of our most vibrant marketplaces) is not something we should do lightly. Verizon is a public utility provider to the internet, selling bandwidth in much the same way that our power company sells us electricity. They may be "spending a fortune" laying pipes, but that is their cost of doing business- and they pass it on to their customers for a fair profit. "Preferred Access" is just another word for artificial scarcity. Verizon is just trying to find a metaphor through which they can justify asking for free money. The consumers don't benefit from this, and it is harmful to an important marketplace.
The best lack all convictions, while the worst Are full of passionate intensity. -Yeats, The Second Coming
This is a term I coined (although I doubt I was the first) to describe the situation when firm A charges customer B a different price than customer C for exactly, or essentially, the same service or product. As computational power grows and tracking ability increases, we consumers will probably see more and more differential pricing. Early examples of DP are pharmaceuticals and movies. In both of these cases, generally there are very large upfront development costs followed by very low production and distribution costs. In this situation, DP is highly likely to occur. Drug costs in most other countries are lower than in the US because of a variety of reasons, but one of them is simply that drug companies can get away with it, and it is worth it for them to do so. You can even sell advanced medicines in some very poor countries so long as the distribution/production cost is low and the re-importation can be controlled through political channels.
...oh...wait...you want to regulate that?
Now, I would say that the current tussle over internet access costs is similar: With a huge upfront development cost, the large ISPs will attempt to figure out ways to change Google as much as they can, even compared to another company or several companies who might use the same amout of service. Of course, Google is a giant customer, so they have their own leverage, and the outcome will likely be a different one for them than it s for you (US consumer) buying your medication. Let freedom ring!
Hell yes I'd fuck off my telco in a split second to use GoogleNet/VoIP. I'm still pissed Verizon is getting a cut of my Speakeasy OneLink connection.
cat
Perhaps Verizon should look at their business practices first. First the basically laughed at the TCA of 1996 but not opening fully their network as they other ilecs squeezed the 1st generation DSL providers out of business, their $15 per month DSL service that they lose money on and no competitor can match because that's around what they pay for dry copper, and their FIOS service for which they are losing a fortune on to try and force their competition to price match and drive themselves out of business (cable and DSL).
So the appearance is that they are intentionally driving their revenue down in a blatant anti-competive move. Then they blame an entity that's got nothing to do with it, Google, for their poor performance. That's the old game called misdirection. In some circles it's call lying.
Verizon and the other Telco's don't seem to understand that the "lines" they speak of aren't theirs at all. Those lines were run using emminent domain and railroad right-of-way.
If this was a true free market, they could raise their rates and a new company would come along, lay some new wire, and sell service cheaper.
Unfortunately, its not a free market. The barrier to entry is impossibly high. No one could come along and rewire Manhattan. So we are stuck with the Telcos who seem to think they should be allowed to flex their Monopoly muscles without any oversight.
I have already quizzed my local congressman as to why I can't (a) separate landline phone service from DSL [guess who my provider is] and (b) get the local area code on a service such as Vonage. While I await the reply I sent him this. It serves as my comment on here too.
2 27257
Further to my recent letter about the Verizon/Vonage VoIP vacuum that is Muskegon, I am now presented with this:
Verizon wants to start charging Google and other major web sites for using their bandwidth!
http://yro.slashdot.org/article.pl?sid=06/02/07/2
FACT 1
------
A) Google's local service provider already gets a fat load of money from Google for their bandwidth.
B) I already pay $80 per month (see previous letter as to why it's 80 and not 30) for my internet service.
FACT 2
------
If this becomes law, what is to stop cable companies from turning around and charging HBO, Fox and ABC for the TV "bandwidth", rather than paying them for the content they provide! This in turn would put a massive hole in TV networks' accounting which would be made up with? More advertising, and less quality programming.
As the lines between internet, phone and TV
become more and more blurry, [snip/] this could set a precedent that would completely turn the TV industry upside down!
This is a ridiculous situation and needs some federal legislation to ensure it will never happen. If only to protect local [snip] service providers [/snip] and to protect the consumers.
What is Verizon doing with all their assets if they are ripping me off for $50 extra a month and also wanting to flip the directional switch on the entire information/entertainment industry?
I'll play along too. =) Let's say a major corporation owns major streets in a variety of shopping districts in a variety of cities. Then they send out advertising to various shops, telling them of the opportunity to pay a fee and in return the corporation will go dig up the sidewalk in front of competing shops. Hell, they'll dig up the entire sidewalk except in front of yours and even provide teleportation services to customers of your shop. Of course, your competition can avoid all this if they pay the same fees.
This bears striking similarities to a small enterprise I observed when I lived in an Italian neighborhood in New York during the late 70's/early 80's. There was a social club on the block, and the wise guys maintained an armed presence in the neighborhood 24x7. This made our neighborhood very very safe, which helped local businesses. No burglaries in over 20 years we used to brag. One time there was an attempted burglary. When the cops finally showed up 90 minutes later, the wise guys from the social club handed him over, bloody from head to toe. Poor skel apparently fell down the stairs while trying to escape. Anyway, this enterprise was financed by the shopkeepers in the neighborhood. To avoid having their windows broken every 3 weeks, they would pay a small stipend to the social club.
It's funny, what the social club was doing could have gotten them prosecuted under RICO statutes. Actually, I'm pretty sure even conspiring to do what they were doing is probably illegal under those laws, but IANAL.
cat
Pure genius! Think of all of the money being made by stock brokers, stock exchanges etc. - surely Verizon will want a slice of that pie, too. Then there's all of the on-line shopping sites, eBay, gambling etc. etc.
1. Extort money from customers for using your bandwidth.
2. ???
3. Profit!
It would seem that step 2 is "Lose your customers."
Google runs an OC-48 and an OC-12 pipe at each of its sites. Rumor has it there are four of them. Two in Virginia and two out west. I don't know what the price of an OC-12 let alone an OC-48 is but I can guarantee you that it sure as heck isn't free.
Have you ever calculated what we in the U.S. have actually paid for internet access in the last twenty years? I don't mean "per month". I mean, draw back, and think.
Let's go for this year. Lemme see. Guess 20 million, figure from nowhere, with broadband. Just at home. Costs 45 a month on average. 45 X 12. 540 a year, for 20 million homes. 10,800,000,000 a year. Just one year. And it's probably a lot higher; please bear with me here. I'm just making a point.
Ten billion, eleven billion. How much for the last twenty, in toto, business and residential, have we paid? Twenty? Thirty? Forty billion bucks? Keep the idea of the magnitude in mind as I add tens of billions in free money granted by federal and state and municipal governments, in tax breaks, in granted monopoly access to customers, in deregulation calulated to permit the telcos to bring fiber to the door.
HOW MUCH HAVE THEY SUCKED US FOR? A hundred billion? How about the lost opportunity costs because we've crap bandwidth for maximum profit?
And now we'll have two-three companies left after all the merging, in an easy-to-maintain price fixing circle.
Let's call it a hundred billion they've charged, with much more to come. And we've got what for connections? For how much each? How much will it take to pound home the point that the way we've gone about it has failed our people, our economy?
It would have been cheaper for the Federal government to have laid fiber to the home in an Apollo type project over the last 20 years. Private businesses are too fast, too well financed, for any sort of meaningful regulation. They pull simple stunts like placing their best lobbyist, Powell, at the head of the FCC under Bush, where he granted them their wettest wishes. He'll of course go back to work for them after he's done and become a squillionaire for his loyal efforts.
Sigh.
and then there's this: http://muniwireless.com/community/1023 Oy.
If Google offers fiber I'll switch. I've been waiting for fiber for a long LONG time now, I want at least 100mb, but I think we could do better than this, we should be able to do 500mb connection by now, just because we are Americans and to prove we can. Google, please bring us internet 2.0, we have been waiting.
Why let things get that far? Demand access to what we've already paid for. Build your own infrastructure regardless. The more you have the more robust the country is. Centralization is obsolete and dangerous.
Those Bell assholes and the cable companies are sitting on a public network built by monopoly protection grants. They are in that position again because they made a bunch of promisses they never kept. If they want to get cute, drop the monopoly protection and let companies like Google have access to the public servitude and bandwith needed to route around their damage. That would show them who's boss and make them compete for customers. The telco monopolies stopped working decades ago, if indeed they ever did work.
Friends don't help friends install M$ junk.
I'll play along as well. Imagine all those sidewalks were in fact paid for by the government, and installed by the government, and the people of the city were actually paying for those sidewalks to be in place. On top of the fact that the customers were paying the government fee's for those sidewalks, they were also in fact paying the company directly for the sidewalks... really you could say they were paying for them twice.
To top it all off, the shops are already paying a third party for that last inch of sidewalk between their shop and the main one's... getting confused yet? Now the first company decides they should get paid not only by the government, and the people, and quite possibly the company that the shops pay for sidewalk access, but also the sidewalks themselves. I mean, after all, it costs a lot of money for the government... er... to put up those sidewalks and maintain. It's only right they get paid 4 ways for the same thing right?
If you're at all confused by this post, perhaps you now realize why we should only have informed people deciding the future of the internet, and those "informed people" best not be part of the ones who stand to profit.
Doesn't common carrier status still exist?
The minute they start 'bitpooling' traffic to specific hosts, they should lose their common carrier status. End of story. It's already been said a hundred times in this particular discussion that it's like the telco's trying to charge for the same thing again...it's typical telco ideology.
Even when I was a phone guy (a few years ago), I remembered that we billed by the minute to our clients, but were charged by the second. We handled 1-800 traffic on the same page...even taking the campus that makes outgoing 1-800 numbers and putting them on a different T-1 where we were given a 'payphone' tarrif for handling the traffic a different way (that paid for the T-1 and associated linecard).
If they're saying that their current infastructure can't handle this and they need the money for 'capital improvement,' I find this very blurry. When we installed a digital phone (D-Term for you NEC phreaks), we billed that specific department *up front* the cost of: the D-Term phone ($100), 1/16th of a line card ($1200 for a line card), then charged them an additional n dollars a month because of the limited upgradability of a D-Term (you couldn't assign the LENS to a spot in a different cabinet if you wanted the ability to pick up that line or see that specific status, and since the cards take up analog line space, blah blah blah). If a small college can have the insight to do this in 2000, why couldn't a major telco do it in 2006?
Maybe they're seeing this from a different way:
What happens when all of our subscribers already are subscribing to a high-speed package and we're getting the maximum amount of market saturation that we can allow? We've already laid off enough of our workforce that we can't really afford that to take one too many hits, and we (middle management/execs) don't want to lose our jobs or take a pay cut, so, let's bill them for something again! Cha-Ching!
Freakin Greedy Bastards, anyway.
I disable sigs...do you?
Would you believe that the site on which Arthur Guinness chose to build his brewery came with the right to abstract water from Dublin's mains supply, at a low flat rate?
Presumably whoever made that agreement was expecting the construction of housing tenements or something like that. Whoops.
The city got very upset when they realised what was going on. Far too much of the city's water supply was getting turned into Guinness. The brewery was indeed getting a free lunch here. It took a long struggle, both legal and on one occasion violent, before the brewery were able to secure their water supply from the city's attempts to correct their earlier error.
It eventually became clear that the conversion of Dublin's water supply into Guinness wasn't actually upsetting anybody; quite the contrary :-)
Real Daleks don't climb stairs - they level the building.
It's rather different. To begin with, T-1s are essentially leased lines from a telco. They're pretty shitty and cost a lot more than they should.
OC-x connections are a bit different. When you get up to the level of OC-48 you're probably paying for your own fibre to be run. In google's case they're probably not paying so much for bandwidth since they have so many peering agreements. Why should they pay for bandwidth when they can just hook up a bunch of fibre to AOL's network? I hope you see where I'm going with this...
I'm not in the proper state of mind to really explain it, and I'm no expert on providers of OC-3+ connections. That's way above my damned level. But it's a whole different playing field from the shitty T-1s being offered by ISPs. A few meters of fibre and a router will dwarf the cost of something like T-1, but the price/bit ratio is much better.
All of that, and the fact that google probably pays a lot less for bandwidth than you'd think, aside, I think this's just more FUD from Verizon. I wish Google had some GHenchmen to go take care of those bastards...
SWM seeks new sig for a brief fling