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.
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.
Customer: I'm having trouble with my DSL connection. I paid for broadband access, but google.com took an hour to load and vonage.com took 3 days...
Verizon: I see that you don't have call waiting on your line. I'll go ahead and add that for you, ok? We're also running a promotion that adds no value to you but will extend your contract with us. Would you like to hear about it?
Karma: SELECT `karma` FROM `users` WHERE `userid`=138474;
Funny, I don't feel like a victim.
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!
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.
Gentlemen! Set your routing tables to stun.
Verizon doesn't want to carry traffic? FINE, we can arrange that.
Fascism trolls keeping me up every night. When I starts a preachin', he HITS ME WITH HIS REICH!
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.
Google should just stop serving Verizon.
Simple solution, Verizon thinks google is getting a service from THEM?
Google shuts them off and 24 hours later every verizon customer will think their internet connection is broken.
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?
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.
They can buy shares like anyone else.
-jcr
The only title of honor that a tyrant can grant is "Enemy of the State."
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.
that's not mud.
Eloi are stupid, throw morlocks at them!
Considering the area and the number of people ot serves, the USPS is a damn fine intituion.
Same thing for the roads. I've never had a problem with the dmv. In fact the service I hve always got has been courtious and prompt.
I am not saying telcos should be socialized or not, just pointing out that the perseption of government programs is very often an incorrect one.
The Kruger Dunning explains most post on
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.
Dear Verizon Customer,
We are sorry to inform you that you will no longer be able to access Google, Yahoo, eBay, Amazon, and other high-bandwidth commercial sites through your Verizon internet connection. Due to the loads that these services place on Verizon's network system, Verizon has instituted a new policy which states that high-bandwidth commercial web sites must compensate Verizon for their usage of our network. The companies listed above, and others, have elected not to do so. Therefore, we have no choice but to discontinue the availability of these and other web sites on your internet connection.
We are sorry for any inconvenience this may cause.
Sincerely,
Verizon Customer Service
------------------
Dear Verizon,
Pbbbbbtttthhhppp.
Sincerely,
A Valued Soon-To-Be Ex-Verizon Customer.
It's also SBC/AT&T pressing this issue. You don't hear the cable companies pressing this issue, because in most places (in the USA), they already provide the best internet connections available to the end consumer. They already have bandwidth, etc provisioned for VoIP, movies, games and the rest.
It was interesting to note, that it was mentioned during the Senate committee meeting that Verizon has spent exactly $250,000,000 since the 1996 Telecom Act to upgrade its infrastructure (it was also noted, that Verizon and the other Bells promised at that time to have us all 45 mbit MINIMUM symetrical DSL lines into the home by 2005, and were given tax-free government-funded taxpayer dollars to do it with).
Assuming Verizon has 1 million paying customers for DSL at an average price of $45 per month:
$450,000,000
Multiply that by 12 months (this is not taking into account any paychecks, taxes, fees, etc Verizon has to pay).
Now, tell me again how they aren't making hand-over-foot profits while still not keeping their promises NOR paying back the tax-free loans the government gave them (using OUR taxpayer money)?
Maybe they should try improving their infrastructure even more before they go traipsing about trying to provide VoIP and video on demand.
As it was said during the hearing, "There is plenty of bandwidth out there, if you turn on your dark fiber instead of letting it gather dust." - a reference to the telcos laying alot of fiber line willy-nilly about the countryside, but only lighting up a small fraction of it.
Senator Stevens wasn't very pleased to learn that we are 16th in the world for broadband. He was also not happy about the fact that other nations have 100 mbit access and in some cases gigabit symetrical access to the home, while we are piddling around with 45-100 mbit asymertrical tops for home users and small businesses (fiber lines, and 100 mbit is exorbitantly expensive, unless you are a small business who can pass the buck onto your paying customers). He made note of how a certain telco ISP had blocked their customers from signing up with 3rd party VoIP, by not allowing traffic to go to that company's site from their network. He was proud of the fact that under certain laws passed within the last few years, it is ILLEGAL for telcos to do that. He also implied that for telcos to drop competing VoIP services into a low QOS queue would also be to their detriment if Congress catches wind of it, due to 911 emergency issues, etc.
I will reserve judgement until I see what kind of law Congress passes in this situation, but from what I witnessed today, the telcos are not making a very strong argument in their favor, and Google and the rest of the bunch are.
@Mindless Drivel: 100% of Twitter posts ever Tweeted.
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