Telco Chief Explains That We Really Only Pay For Half Of Our Internet Connection

from the break-it-down dept

AT&T's CEO Ed Whitacre was the one who kicked off all the US telcos publicly talking about ending network neutrality when he complained that it was "nuts" that Google, Yahoo and Vonage got to use his network for "free." Of course, he was ignoring the fees they already paid in bandwidth, along with the fees consumers pay for bandwidth (which they're only paying because they get access to various web sites and services). So, now, he's trying to better explain how, despite the fact everyone has already paid, these service providers are really getting a free ride. He does so by trying to split up how internet access is really sold:
"I think the content providers should be paying for the use of the network - obviously not the piece for the customer to the network, which has already been paid for by the customer in internet access fees, but for accessing the so-called internet cloud."
He's actually suggesting that when we buy bandwidth, we're just buying the bandwidth from the end-point to the backbone... and everything else is just free. He's conveniently forgetting (again) that without the content and services provided at all the other endpoints, the value of connecting from the end to the middle is pretty much gone. No one is paying to connect from the end to the middle. They're paying to connect all the ends to each other. That's the value of network effects, and it's what makes it worthwhile to buy internet access. So, he's being both misleading and wrong when he says: "But that ought to be a cost of doing business for them. They shouldn't get on [the network] and expect a free ride." It's a very telco way of looking at things. These are companies that are used to providing centralized services with a government granted monopoly. To them, the only important thing is from the ends to the middle -- where traditionally the telco then provided all the services you needed. They'll conveniently ignore that the only value of connecting to the middle is if you have unencumbered connections to all the other ends as well. In the meantime, with all the big telcos so brazenly talking up how they're going to ditch network neutrality, how is it that FCC chair Kevin Martin can still claim with a straight face that there's no evidence that anyone is trying to break neutral network principles.
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  1. identicon
    readme, 7 Jun 2006 @ 10:33am

    What is net neutrality all about?
    At its core, it's about consumer protection. Consumers should have unencumbered access to the Internet and not be subject to blocked content. AT&T vigorously supports net neutrality as defined by the FCC last August when it laid out its "New Principles to Preserve and Promote the Open and Interconnected Nature of Public Internet:"

    Consumers are entitled to access the lawful Internet content of their choice;
    Consumers are entitled to run applications and services of their choice, subject to the needs of law enforcement;
    Consumers are entitled to connect their choice of legal devices that do not harm the network;
    Consumers are entitled to competition among network providers, application and service providers, and content providers.
    Sounds reasonable. Where's the disagreement?
    Some Internet content providers have hijacked the concept of net neutrality — away from consumers — and made it a rallying cry to protect their business interests.
    Here's the basic premise: We invest billions in our broadband network, which gives content providers — popular Web sites, VoIP providers and so forth — access into the homes of customers like you and me. That works fine, to a point. These content providers more and more are offering online services — especially video — that require more bandwidth. They want to ensure that these services get to consumers without any delay or latency, which happens sometimes with a typical Internet connection. They want us to give them premium bandwidth — not only more bandwidth, but some level of service guarantee — to deliver their services to Internet customers. Just as people are willing to pay more for next-day mail delivery instead of regular delivery, we think content providers should help pay for this premium delivery if that's what they want or expect. Put another way, our customers should not be expected to pay more for DSL because a content provider demands premium bandwidth treatment. Companies seeking increased bandwidth should bear the cost.

    Can you elaborate?
    As I said, we agree with the FCC and we side with consumers. A truly healthy Internet is one where all parties who use it share in the cost of ensuring the health of the networks. We invest billions to build and maintain networks. Content providers count on that investment to reach their customers. Prioritization of data over private networks is an essential part of managing traffic. We simply want to allow content providers the option of choosing different service levels when moving bits over our network. From that point, it's up to them whether they want the service we're offering.

    But no blocking or degrading?
    Absolutely not. Any broadband provider who blocked access to the Internet would be inviting its customers to find another provider. AT&T has made clear, as a matter of company policy, that we will not block or degrade anyone's content.

    Why do people sometimes equate net neutrality to highway construction?
    It's a good analogy. Double-load tractor trailers pay extra fees to travel our highways because they require more room and they cause more wear and tear on the roads. Companies that push bandwidth-consuming applications such as video are the equivalent of big rigs on the highway. If Internet content providers had their way with the highway system, two things would happen: Everyone would have sub-par roads and everyone would pay significantly higher gas taxes. There is a better way, which would continue to provide consumers what they have today as well as offer them more options.

    Everyone would pay more under the Internet content providers' plan?
    Yes. By denying companies a choice of selecting different levels of speed and security, net neutrality proponents are really advocating a "one-size-fits-all" Internet. That would add costs for all Internet users, regardless of usage. Higher-bandwidth applications, like gaming and video, require billions in investment for fatter pipes. Absent the ability to manage traffic and offer differentiated pricing, low-volume users would pay more for basic activities such as e-mailing and Web surfing just to subsidize gamers and others. Some Internet companies want all consumers to pay for the high-bandwidth services, regardless of whether or not they use them. Instead, we believe the cost of providing high-bandwidth, high-quality services should be paid for by those who actually use them.

    What are we proposing?
    It all boils down to this. We don't want to restrict anyone's use of the Internet. We just believe that high-volume, bandwidth-intensive content providers should be asked to contribute proportionally toward the huge costs they create-rather than demand premium network services with the costs being passed on to DSL customers who may never use or need their applications.

    And, more importantly, we think customers should continue to have control over their Internet experience, including their monthly bill, rather than have their services and costs dictated by the unreasonable demands of a few large content providers.

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