Google Fires Off Warning to US Telcos

mytrip writes "The US Senate Commerce Committee last week approved reforms in communications legislation that will make it easier for Internet providers to offer IP-based television. The resultant perceived threat of telecommunications companies muscling in on the Web has stirred search giant Google into firing off warnings. A spokesman said it would not hesitate to file anti-trust complaints if Internet-providing telcos abuse powers that could come from U.S. legislators in further reforms - some of which, Google argues, could threaten 'Net Neutrality'.

Comments

Not Surprising

[epp_b]

Google is a big, juicy target for greedy ISPs wanting to cash in by dipping into other ISPs' customers' pockets. It's genuinely beneficial to Google and their users that Net Neutrality is implemented and protected. I hope Google does everything they can to protect it, too.

Chicken and egg and chicken and egg and

[dada21]

Google's partially right to make these threats -- they're mad because companies that continue to receive monopoly powers, preferential treatment, restrictive licensing rules and even public subsidies should not be given even more power over the media distribution system. Yet the end result of Google's threats will only be MORE government control of the media, not less.

Net Neutrality is bunk -- it means ZERO. We don't need net neutrality, we don't want it, and we won't get it. What we need is a realistic free market playing field of open competition for anyone who wants to jump into the business. Let's stop all the regulations, taxes, tariffs, fees and restrictions on media companies and let them compete openly. IPTV is probably the future -- who cares about airwaves when everything is going digital and coming over a landline? Yet the phone companies still get preferential treatment from the national, state and local governments, and giving them both preferential treatment and the right to control their pipeline's access is tipping the system towards the cronies, not the consumers.

The consumers want one thing -- competition. Competition happens when government stays away from the market. The more we let government "regulate" net neutrality or attempt to create a level playing field, the more we'll see our prices go up, our service levels go down, and competition get wiped out of the market.

Google shouldn't be clamoring against the cronies, they should be threatening the government. Nothing would please me more than Google taking on a pro-independence role the day after an anniversary of the last time our citizens kicked the government in the teeth and sent them packing.

Re:Chicken and egg and chicken and egg and

[VP]

How exactly do you propose to create this "realistic free market playing field of open competition for anyone who wants to jump into the business"? The telcos own the wires - do you propose the government take the wires away and lease them to the lowest bidder?

Re:Chicken and egg and chicken and egg and

[Chosen Reject]

Wrong, the government, and by the transitive property, the people, own the wires. The telcos didn't pay for them to go up. In fact, even when they were paid, by the government, to put them up, they didn't.

Re:Chicken and egg and chicken and egg and

[Orne]

The telcos own the wires - do you propose the government take the wires away and lease them to the lowest bidder

Well, you could do what they did to the electric grid, create an "Open Access Transmission Tarriff" that declares that a utility company does not have the right to prevent transactions to occur across their systems. This was basically the first step in electricity de-regulation, the next being that the same company cannot provide the generation, transmission, and load service, because having all three can lead to price fixing, market power, undercutting, and makes it much too easy to be anti-competative. In the telco world, this would be like splitting into transmission (maintain the lines), service providers (maintain the switchers), and service users (like us).

This has the benefit that private companies retain ownership of their lines, and customers become "accounts" that exist in the financial transaction world only. You could have me, a customer, in territory X, purchasing service from Company Y. Y collects the bills, and pays X a standardized "service" fee for moving the data of my phone calls into and out of their system. The government would regulate and standardize this fee with the existing public utility construct.

The down side to this in the electric grid is that you end up with "loop flows"; power flows according to impedance, not because someone created a contract to flow a certain way, so company A's transmission carries some flow that was intended to go across their neighbor's system B. However, there is an "inadvertant accounting" process that meters all of this unscheduled MW-Hour flows, and companies occasionally pay each other back the $ that this flow represents. Telephone calls are discrete / digital, so a company can exactly meter how much a customer is using their service, and properly bill it back to the right service company.

Re:Chicken and egg and chicken and egg and

[Wah]

But I damn well expect if Verizon is charging the sites I go to, that they're not charging me.

Umm, an extra charge for any service you use is going to come back to you(period).

Re:Chicken and egg and chicken and egg and

[VP]

Well, you could do what they did to the electric grid, create an "Open Access Transmission Tarriff" that declares that a utility company does not have the right to prevent transactions to occur across their systems.

Isn't that the exact equivalent of "net neutrality"? That's the whole point I was responding to - you cannot manage ustilities without some sort of regulation, and talking about the "free market" is pointless when you have a natural monopoly (one set of wires).

Re:Chicken and egg and chicken and egg and

[VP]

Yes, the government paid for the wires, but let the telcos own them. So you have a natural monopoly, which has to be regulated, which is what net neutrality is about...

Re:Chicken and egg and chicken and egg and

[WhiteWolf666]

Mod parent up.

The telecos are an abomination of government subsidy and government sponsorship. Arguing that we should keep regulation away from them is nonsensical.

Even in an Ayn Randian world, the Telecos are a market failure, because they were created by the government. Unleashing the unregulated telecos on the cable market would be akin to release government engineered biological disease weapons on the world ecology to allow "natural selection" to run its course.

The telecos should be repossed by the government, stripped of their cash-assets to the states, and then "privatized" by having their physical assets sold on auction. Lines/Switching stations should become property of localities, with clauses that at minimum they must lease them to telecommunication companies, but with rights to do anything else including privization of these assets.

The teleco market is a heavily government subsided (and government created) market that needs economic shock therapy in order for the free market to even have a chance. Otherwise, the abomination should be kept strictly under regulation.

Let me remind you how AT&T was built. Let me remind you how AT&T was reassembled, much like Dr. Frankestein's Monster, for the portions of a dead monopoly.

Re:Chicken and egg and chicken and egg and

[crawling_chaos]

This was basically the first step in electricity de-regulation, the next being that the same company cannot provide the generation, transmission, and load service, because having all three can lead to price fixing, market power, undercutting, and makes it much too easy to be anti-competative.

And the one after that was Enron, proving that this free market gospel is so much bunk. It has as much value in the real world as the writings of Marx. Ideals don't work in reality. Just look at the libertarian small government situation in Somalia.

Re:Chicken and egg and chicken and egg and

[dominator]

The consumers don't want competition. We want reliable, fast, inexpensive internet access. If competition is the means to that ends, then great. If government intervention will deliver it, that's great too. Whatever it takes to get me what I want.

Re:Chicken and egg and chicken and egg and

[plague3106]

First, a company has no right to exist, where as a person does.

Second, the telcos have been 'stealing' from us already. They got some major regulations removed, on the promise that they would deliver fiber connections to everyone's home. I'll be getting fiber to my home sometime next year, but thanks for a government entity, NOT a private one.

Finally, yes, there are certain instances were its ok for the government to take your house. One example is for the building of roads. The difference is that you get paid fair market value, since you built the house (or bought it) with your own money, not because government tax money was given to you as a subsidy.

Any other stupid questions?

Re:Chicken and egg and chicken and egg and

[VP]

Your "anarcho-capitalist" views are bunk, plane and simple :-). Name me a place where there is competition and a choice over who provides your electricity, gas or water to your home, If there is no competition or choice, then it is a monopoly. So my water utility, the electric company, and the gas company, who provide these services to my home are monopolies.

Re:Chicken and egg and chicken and egg and

[Red Flayer]

Well, let's see:

Barriers to entry? Check.
Non-commodity good? Check.
Lack of perfectly informed decisions by the purchasers? Check.

Note that even if the federal government were to stop regulating telecom, there is still the whole issue of infrastructure for landline-based delivery, in terms of barriers to entry.

As to higher barriers to entry under regulation -- that's acceptable, as ANY barrier to entry on the scale we're talking about will prevent competition... adding a few bucketfuls of sand to a dune won't make a difference. The point is that what we'd see WITHOUT regulation would be almost zero innovation by the sole provider in each area -- unless there was a way to make more money off it. Your idea that innovation was stifled by regulation is off the mark -- innovation was stifled by monopoly suppliers, who would have existed with or without regulation.

You can refute it, but your refutations don't hold water. That's why I posted "chicken and egg and chicken and egg" because the common refutation is "Well, we have to regulate it because we spent tax dollars on building the infrastructure." Well, why did you do that? "Because we had to since no one would have sold land to provide the service in the first place." How do you know that? "Well, because."

Don't ascribe others' reasons to me. We don't need to regulate because we spent money on infrastructure... we need to regulate for the same reasons we spent money on infrastructure. That is, to provide good service to as many people as possible (ideally, all of them who want it) while preventing a monopoly from gouging people. There is a natural monopoly for anything with as big of an infrastructure as the telecomm industry, and companies will take advantage of that, to the detriment of consumers, unless regulated.

As to JJ Hill -- why do you think other business were unable to compete? Because of imperfect market conditions (as any real market has) that prevented newcomers from challenging him. Sure he could deliver cheaper goods... he had the infrastructure in hand already. But someone will equal access to the infrastructure could have easily driven prices even lower, and provided more services.

Also, -5 for credibility there. Your little opinion piece about JJ Hill (a self-authored citation? blech.) doesn't refute the fact that he was in fact a monopolist. Sure,some of the things he did help ameliorate the harm his monopolies caused, but it is disingenuous to say that his monopolies caused no harm. A lot of those things could have been done just as easily under a non-monopolist industry. Finally, note that a lot of his innovation was not due to competition from other firms -- it was to react to worldwide financial crisis.

I would applaud but.....

[Churla]

Just MHO.. but.. if this were them really fighting for the freedom and neutrality of the Internet then I would be all for it. But this looks more like they know they won't be able to be the big dog in on line media if other companies can restrict them because of controlling the transport.

They're threatening to do this to protect their profitability and potential market for on demand video and TV just as much, and maybe more-so , than trying to protect some pristine concept of a neutral Internet from what I see.

Re:I would applaud but.....

[garcia]

But this looks more like they know they won't be able to be the big dog in on line media if other companies can restrict them because of controlling the transport.

Based on what Google has offered *me* in the last five or so years as opposed to what the telcos and other bandwidth providers have offered *me*, I'd have to say that we're better off w/Google being the "big dog" in online media rather than the telcos.

Re:I would applaud but.....

[Spad]

The enemy of my enemy is my friend.

So Google's motives for this move may not be entirely altrusitic, but find me a company whose motives are. The important thing is that they're fighting on our corner.

Arguably, the right response

[jfengel]

I've always been leery of net neutrality legislation, not because I'm opposed to the concept but because I don't expect Congress to define it correctly. I'd actually rather see it as an RFP amending the IP standard. And there are perhaps things to be accomplished by violating neutrality that would make life better rather than worse.

But the nightmare scenario has always been there: since the number of ISPs available to most consumers are limited, that monopoly power could be used to force choices on consumers. The market could be used to reward innovative ideas that require breaking net neutrality, but monopolies break markets.

I've never really understood what the telcos expect to get from Google on this. When Google starts getting a thousand extortion bills from a thousand separate carriers, there's no way they can track which ones are valid. (Am I going to start Bob's ISP and send Google a bill for it?) I expect Google to toss them all into the trash.

And if they find that consumers are unable to reach them, I sure hope their lawyers can convince the courts that this is antitrust behavior. I trust the courts very slightly more than I trust Congress.

Re:Translation

[MrSquirrel]

At least Google built their monopoly by being the best and satisfying the customer -- I can't think of one thing Google's done to piss me off. No flashy banner ads, no sign-ups that fill my inbox with spam, nothing! Furthermore, they don't conduct unethical business practices to drive competitors out of business and then turn around to screw the customer. The telecoms are only a monopoly (okay, an oligopoly) because they were put in place as such by the government and were empowered with the taxpayers' hard-earned money. There is nothing wrong with monopolies -- only ill-gotten dastardly monopolies (such as the teleocoms). Power corrupts, absolute power corrupts absolutely. Google power corrupts... with googley eyes?

Re:Obligatory Ballmer joke

[arivanov]

That is not a joke unfortunately.

That is exemplary telco thinking

Re:Antitrust...novel approach

[Anonymous Coward]

Every other group, personal or entitty that usually pursues an anti-trust claim is usually too small to do anything about it.

The DOJ for example?

How about the EU? small fish you say?

Re:Translation

[Silver Sloth]

There is nothing wrong with monopolies -- only ill-gotten dastardly monopolies

All monopolies are inherently wrong. As long as there is only one supplier, whether it be private or government, then they, not the customer, control the market. As such the market is controlled by the wishes or share holders (private) or Government ministers (public) who do not have your best interests at heart.

If you really want to see what is wrong with monopolies look at the old Soviet Russia. Look how well they worked there.

The road to hell is paved with good intentions

[enjahova]

You may want Google to only have noble intentions, but really thats silly. Why is it bad if a company is doing the right thing because it is in its own self interest. Isn't that an ideal situation? The whole idea of our economy is that wealth is created, so here Google is just protecting the public's wealth because it is also protecting its own pockets.

I favor a system where the participants do the right thing because it is benificial to them. Big telco are definately not doing the right things, putting their profits in front of their customers and not pursuing the longterm. Well, I guess they figure their long term is just more government subsidies...

...I'll still applaud

[cloricus]

As far as I am concerned Google is hitting two birds with one stone here. Sure they are protecting their profits to some extent though look at it in a bigger picture...If they wanted they could be crushing every one in a race for profits (Microsoft style) yet they are holding back and asking for the minimum they need to continue working. I see it as calling in some respect which I for one think they have earnt. On top of it they are using it as a commercial charge against those who wish to destroy the neutrality of the net.

It's chicken and the egg in my opinion and Google is giving both at the same time to save a bit of stuffing around. And for this we should give them some space and kudos remembering of course that if legislation fails it really comes down to Google standing up and taking the beatings from telco's to show that the net wont stand for lack of neutrality. (I'm generalising, don't shoot me, and feel free to go into more detail in replies - just don't assume I don't understand the deeper issues.)

All this flap

[Grand Facade]

Over putting TV on the internet, THAT is what this is really about. The major players want to prioritize traffic so their streaming TV Crap gets through. The net is for the WEB not friggin TV! Gawd, I'm gonna be really pissed when my web connection is degraded to provide a clear path for TV.

Time for another revolution

[Anonymous Coward]

This is just another example of why we need more lobbying reform. This should have never made its way to the US Senate.

So, this affects who exactly?

[i_ate_god]

So America will teir/toll their internet service. What does that mean for the rest of the world? Will AT&T be knocking on the doors of canadian or european based media providers demanding fees?

If the BBC can't reach it's canadian audience because packets have to go through america first, they won't like that. If CBC can't reach its british audience because packets have to go through america first, they won't like that either. Both are crown corporations and thus negativity to them is negativity to government.

Government subsidized extortion isn't exactly playing by the WTO rules, and could be grounds for trade sanctions against the US.

So how does this play out over the international scale?

Re:I don't understand something..

[sugarmotor]

>> consumers [...] shy away from those companies and find another company that offers the same service with better terms, therefore creating competition

I don't see that. All of the Telecom industry looks like a big rip-off to me. Meaning if you're not rip-off you're not Telcom. In other words, where is the "other company" that you can turn to?

Re:Lunch Threatened

[99BottlesOfBeerInMyF]

Keep in mind that the telcos OWN the internet roads and byways. I guess telcos are 'mad' realizing how much goods and $ are passing through those roads on a daily basis. Now, the telcos want a cut.

The telcos already charge people a toll to go down the road. They already charge different tolls for different types of traffic. What they want to do now is extort money from people who aren't their customers, but who have a vested interest in others using it. Think, "hey East-coast tourism industry, pay us a billion dollars or we'll jack up toll fees on your half of the country so much that people will go to the west coast."

Common Carrier Status???

[markw365]

If telco's and isp's start examining every packet to apply QOS to it, doesn't that exempt them from being a Common Carrier? The Common Carrier exemption they get is from not examining the traffic and just routing it. If they start looking at packets to apply prefered treatment to traffic, then they are no longer just routing. I would think they would loose their common carrier status and be liable for traffic traversing their networks.

Here's How It Will Come Back to You

[weston]

But I damn well expect if Verizon is charging the sites I go to, that they're not charging me.

Oh, they probably won't list it directly in your bill. In fact, it probably won't get charged to you at all. So where will it show up?

Well, specifically, it's obvious Google could raise their ad rates a bit to pay for it, so the cost of acquisition gets passed on to advertisers, who in turn raise their product prices a bit, so you'd likely pay more there.

But that's not the really insidious part. The really crappy part is that it will result in a higher barrier to entry for businesses that provide products and services over the net. That is, the charges will show up for you in the resulting lowered competition, the resulting less efficient market. Everywhere the telcos touch with their new arbitrary fees.

And the best part about it is that most suckers won't even realize that it's connected with the new and improved non-neutral net.

Re: Deregulation

[Anonymous Coward]

Here in Houston (ex-home of Enron) electricity has been "de-regulated" (I like that word. government comes along and forces companies to share power lines, and it's now "de-regulated") for a while, and pretty much all the choices are the same. Oh, theres commercials about my "power to choose" (get it? power? hahah) that tell me I can choose a company who will let me "lock in" a rate, or a different company whose rates "go up and down with the market". Of course, the companies have all done the math themselves, so the total you pay is pretty much the same over a full year.

Meanwhile, some other large cities in Texas have public electricity utilities who buy into shares of private power plant output to power their grid, and their average kWh charge is roughly half that of the average Houstonian's charge. Even at peak it's less, even though the utility has to pay extra to pull the extra energy. As a bonus, in San Antonio's case, the utility profits go back into the city, to the point that losing it would mean having to double the property tax to make up for it. I wonder if a company could ever slough off the dead weight they always seem to collect (stockholders, CEOs, middle management, that guy in the corner who nobody knows what he does but he's always been there and the multimillion dollar stadium naming deals) to compete with that? (For that matter, I wonder how the utility operates without the dead weight of unfirable workers and pensioners that cling to government institutions)

http://www.chron.com/disp/story.mpl/metropolitan/c asey/3921787.html

I that why they bought black fiber?

[guruevi]

GOOG has been asked different times why they bought/need/want so much black fiber. First of all it's cheap now (and it might not always be) so buying in for later might be good. Another possibility is that they bought it for this very reason. Once they start suing telco's, some of them that are evil (like AT&T) might just disconnect them or pressure other telco's to stop giving them the connections they need/want. If they OWN the fiber, they just connect it and they are back in business.

Re:So that's what $425 a share buys

[enrevanche]

Unfortunatley this is at least somewhat true. The problem is that unless the public is sufficiently aware of an issue, legislators pay attention only to their paymasters. The public at large is for all intents and purposes aware of almost nothing that is going on unless it is presented by the major media. Even so, it better be sensationalized enough.

The EFF presents issues that most people either have no understanding of, just trust the government, don't care or they feel entirely powerless. They really don't want to look too deeply at the reality of their myths. This goes for whether they should be at war, how they view others through simple cliches as well as issues relating to their own freedom. America is "the land of the free", but if you look there are so many restraints to our freedom and there are more to come. (I am not talking about restraints to freedom which prevent one from encroaching on the freedom of others.) The average person, whether cynical or naieve, does not want to really know. It's usually not that hard to find out what's going on. (Being overworked is a good way to keep the hoi polloi from thinking too much!)

Re:Google Doesn't Come To My House After A Storm

[cyber-dragon.net]

What I am amazed you have not picked up on is that the telco's are a government protected monopoly which your tax dollars subsidize. You are paying them an enormous amount in order to keep those lines up, personally. Even if you do not see it on your bill look at your taxes next year and wonder how much of that goes to SBC pretending to be AT&T or Verizon.

I will also use your analogy to explain how they have shot themselves in the foot, not Google or Skype. They rented you a government subsidized apartment (your phone/DSL line) but did so based on the assumption you would only live there a few days a month. They then rented the SAME apartment to 5 other people, collected rent from all of them (as well as the government subsidies) and prayed no one would ever show up at the same time and find out, nor would the government notice they had 50 apartments and 250 people registered to live in them. They extracted HUGE profits from doing this and sat back with their fat bonuses and laughed.

Now people have actually started to show up at the same time... they have started to notice that more than one person lives in their apartment and are complaining (not enough bandwidth). The telcos are then going to the government and complaining saying they cannot afford to house people at affordable prices any more and will have to charge their employers for the "privilege" of housing their employees close to work. If the companies do not pay this the telcos do not promise there will be no traffic jams and these employees will get to work.

At the same time they are going to the people complaining and saying "you wanted to live close to work didn't you? you don't want traffic jams do you? We are not going to put any money into increasing the infrastructure (the highways) as that would cut into our bottom line. Instead we are just going to find a way to charge your companies for your housing so we can add a few stories to existing buildings. Isn't that better than you paying for it? What? You want to start your own building and make a co-op to avoid our fees and actually have an apartment to yourself? Too bad, we already made that illegal so pay up and shut up and tell your employer to do the same."

There... now your analogy is complete :)