Why Aren't The Telcos Paying Google For Making Their Network Valuable?
from the just-wondering dept
Over the last few months, we’ve seen the heads of the remaining telcos talk about how Google and other big internet companies should be paying them extra and how they were getting getting a free lunch. As plenty of people have pointed out (repeatedly), all of these companies pay their bandwidth bills, so if there are complaints, they should be directed there. More importantly, the telcos need to realize that people aren’t just paying to connect to the middle of the network, but to connect the ends to each other. In other words, the internet connection is valuable because Google, Vonage and the others make it valuable for them. Breaking that up and getting rid of network neutrality hurts the value of the connection the telcos are trying to sell. This is why it makes sense for any of these companies to call the telcos’ bluff and refuse to pay. Tom Evslin, who’s an ex-telco exec himself, points out today that you can extend this argument much further. Since these sites and services make the telcos’ network that much more valuable, shouldn’t the telcos pay Google, Vonage, Apple and others for adding that value that makes customers want to buy an internet connection? In fact, as he points out, that’s exactly how it works in the video business. Verizon just worked out a deal whereby they’re paying CBS to be able to carry CBS on their new IPTV offering. It’s hard to see how Verizon can argue that it makes sense for them to pay CBS, but that Google should pay them. In both cases, it’s about adding content or services to the same network to make it valuable enough for consumers to sign up. Evslin points out (as we have in the past as well) that none of this is an issue if there’s real competition. The fact that we’re seeing these threats (even if the telcos are trying to backtrack a little) suggests that the telcos don’t see themselves in a competitive market when it comes to internet connectivity.