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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.
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;
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?
*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.
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.
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
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 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.