SBC: We Own The Internet, So Google Should Pay Up

from the uh-oh.--trouble-coming. dept

It's become pretty clear that Kevin Martin's FCC has no problem considering "competition" in the broadband space to mean incumbent telcos vs. incumbent cable companies. So far, the FCC has done just about everything possible to make it much harder for any third parties to get into the game. So is it really any surprise to hear the CEO of SBC, Ed Whitacre, in an interview suggest that it's only a matter of time before they start going after any of the services that make the internet useful to try to make them pay up to remain reachable? When asked about companies like Google, Yahoo and Vonage, he says: "Now what they would like to do is use my pipes free, but I ain't going to let them do that because we have spent this capital and we have to have a return on it. So there's going to have to be some mechanism for these people who use these pipes to pay for the portion they're using. Why should they be allowed to use my pipes? The Internet can't be free in that sense, because we and the cable companies have made an investment and for a Google or Yahoo! or Vonage or anybody to expect to use these pipes [for] free is nuts!" In other words, he's talking about going well beyond blocking some ports like BellSouth, to actually blocking out websites and services unless they first pay SBC a fee. It certainly has the feel of extortion: pay up or no one on our network will be able to reach your website. If you thought that mess Level 3 and Cogent was problematic, just wait until you can't access Google from SBC, because Google fails to pay up SBC's "connection" fees. What Whitacre seems to be forgetting is that it's all of these services and the ability to connect that makes the internet access worthwhile. Now who was just saying that network neutrality wasn't needed? Notice that the only reason this is possible now is because there's less competition in the broadband space, not more. If there were real competition, SBC would never even dare to suggest that they might cut off a Google, Yahoo or Vonage.

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  1. identicon
    Seth Brundle, 31 Oct 2005 @ 8:39am

    Re: They do pay

    Its more complicated then that. Neither Yahoo! nor Google uses SBC as *THEIR* data provider.
    The lousy $14.95 home users pay for DSL is a price-warred marginless wasteland compared to the data center fees for Yahoo! and Google.
    As a home user, when you buy, say 5 Mbt of bandwidth from Comcast for $50, you are paying $10 Mbt (actually probably $5 with $5 going to customer support etc), but on average, you use virtually zero of it over the course of a month, which is why its only $50.
    In reality, a LOT Of home internet providers probably do not even have enough bandwidth for *every* DSL/cable user to do a full speed download simultaneously, and almost certainly not enough switched bandwidth.
    So, they actually charge you for what you use more or less, not for the full Mbts. They give you the benefit of the doubt.
    As a service provider, you will pay at LEAST 2x-3x as much per Megabit (well, Yahoo! and Google pay much less I'm sure because of volume, but they pay more overall because of volume also).
    The reason is that Y! and Google will be saturating their network.
    So, SBC is carrying all that Y! and Google traffic over both their home-run (DSL) and backbone networks, but they dont get more money as the usage goes up, only the Y! and Google's data service providers do.
    In one way, they have a valid argument, because as the internet grows, home-run internet provider's margins plummet and costs rise.
    However, home-run internet providers cannot offer home internet service and block Y! and Google, users will leave immediately.

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