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.
Comments on “Why Aren't The Telcos Paying Google For Making Their Network Valuable?”
hear hear
hear hear
more bs
I think these telecompanies need to just find other types of markets to enter. Find new technologies to invest in.
Perhaps because Google is just one company out of millions that makes the internet valuable, whereas there are only a couple telco companies that make the internet valuable to American’s by offering access to the internet. Do you really believe the Internet would be as popular as it is if we were all still using standard phone lines? Do you really believe that if Google wasn’t around the Internet would suffer that much?
I personally think the telco’s are just greedy for trying to charge the internet companies, but to say that they should pay Google is just plain stupidity.
Yeah… I’d have to say “well said.”
I myself lean the opposite way on a couple minor points, but if I had to vote today, I’d side with the content providers.
For the most part, this all seems like a gentlemen’s deal between infrastructure providers to agree not to upgrade networks unless people pay up. I believe this falls under “concerted action” in anti-trust law (or something similar… I’m rusty).
Yes, it costs Verizon money when Google releases a new high-bandwidth service, because they must upgrade infrastructure to provide for the new traffic without impacting existing traffic. Otherwise, their service slowly degrades.
The telco’s see this as different for them because it is out of their control. Google caused the need for more bandwidth, as opposed to the telco’s conciously deciding to better service to out-do their competitors. Because it was Google’s fault, they want to charge Google. But think about this… how is this any different than Microsoft needing to invest in a new OS every few years? Why doesn’t Microsoft try and charge Apple for requiring them to invest in upgrades to their product offering?
With respect to telcos, it’s the unfortunate nature of their business that demand for bandwidth will increase. To maintain their competitiveness, they must upgrade, or their competitors will upgrade and out-perform them.
Or…
Or they shake hands with their competitors, and they all collectively agree not to upgrade unless bandwidth producers pay them first. I can see hints of both concerted action and outright extortion.
There are other issues to consider, and it’s a huge mess, but there’s some thoughts for you.
Should have said “bandwidth consumers” in that last paragraph. “Content providers”…
Whatever. You get the point.
Perhaps google should give the big telco’s a big “F*CK OFF!” and block anyone connecting from that particualar ISP? If it only worked as well as in my head it could cause millions of people to switch to a compeitor, just to stick with their favorite search engine.
Bryan, that introduces a catch, though. One of the other issues in the debate is one of availability and it’s effect on the current competitive market.
Quite simply, we only have two choices where I live: cable or dial-up. I, for one, would gladly give up Google to maintain high-speed. It’s just too important, and even Google has competitors that I’m willing to use.
At some point you’ll have critical mass… maybe I wouldn’t give up 5 major services… maybe it’s 25… maybe it’s 100… I don’t know. At some point I’d prefer dial-up, but it might take a seriously large volume of content disappearing, and for every one that goes, some company who doesn’t care about taking a stance will decide to fill the hole.
We need a real solution, not a bunch of children giving each other the finger in defiance. But then again, we’re all just a bunch of brash, arrogant children…
“6. Perhaps google should give the big telco’s a big “F*CK OFF!” and block anyone connecting from that particualar ISP? If it only worked as well as in my head it could cause millions of people to switch to a compeitor, just to stick with their favorite search engine.”
My current options where I’m at are Comcast Cable (8mbps) and SBC DSL (4mbps, too far from station to get 6)
Both are priced roughly the same, and if Google decided to block access to Comcast I would not sacraficemy faster speed just so that I can use google search and gmail.
Re: Re:
So essentially Google cannot compete with Comcast because Comcast has a monopoly on high-speed access in that area. I always wondered how this was legal? Am I missing something? Is this not a monopoly? Do you have some other good option? The only thing I can think of is that you could go with satellite internet, but, let’s face it, satellite cannot compete with DSL.
Maybe I’m just thinking of this wrong…
Maybe there are competitors for Comcast. Maybe because the service you desire is access to the Internet. You can get Internet Access from different companies and you go with Comcast because they do it better.
But then I think some more…and it starts to seem like a monopoly again because the internet is so much different if you are on a high-speed connection. It shouldn’t be classified as the same product that’s offered by dial-up companies.
I think this is just too unclear because I’m trying to fit things into neat little catagories. Maybe we should define new catagories. Maybe we need to change the rules for ISP’s and Cable TV providers because this isn’t a free market in the current state.
Re: Re: Re:
It’s easy to start chasing your tail when trying to figure out who provides what to whom when you’re talking things Telco.
I’ll give it a try though.
Okay, in the Telco biz, you have incombent providers (aka LECS). These are the folks that “got there first” and actually installed all the switches and other really really expensive hardware (laying all the hardlines to all the little houses, etc) that make dialtone “go”. Now,you don’t have competitive companies coming in and installing new switches and laying new hardlines, instead, they make agreements with the companies that own the existing equipment to “resell” their service under their brand name. This makes these new competitive providers C-LECS (more telco lingo than you ever wanted to know).
Now, to get to the point (cuz I do have one!). The incombents make it their business to include inclusionary and exclusionary clauses that prevent (or make it really really difficult) for the C-LECS to compete in certain areas.
DSL is a huge exlusionary clause. Not because the incombent telco doesn’t want the competition but the logistics that go into making DSL happen, the regulatory crap that surrounds said, really, is an enormous undertaking. It’s hard to envision on the consumer end. For the average Joe, it feels like the Telcos are “calling dibbs” cuz they got there first.
Now, as far as cable goes, I’m not sure, I have little to no experience in that medium but I would have to say that it stands to reason that something similar exists.
So, there it is!
Ridiculous
This article hits the nail on the head. The only reason any of the ISPs can dare make this argument is because they hold virtual monopolies on broadband.
Bottome line: If there were true competitive offerings in every region, they would never dare attempt to charge content providers for access.
The ISPs want their cake and they want to eat it too. If infrastructure upgrades were SO cost prohibitive, why do they fight tooth and nail to not allow local municipalities to offer free Wifi? The fact is that Google is more than willing to offer free Wifi everywhere, and if allowed to, they would. The phone companies and cable companies want to keep out competition, so that they can charge non competitive rates. Simple as that.
I say let them try to charge content providers! Google has bought up billions of dollars worth of dark fiber, and they are simply waiting for an excuse to light it up. If one of the local monopolies dares to try such a stupid move as they are insinuating, you can bet your bottom dollar that will be all that Google needs to push through legislation that will allow them to offer competing services, and then suddenly you’ll see that it isn’t really that hard for the local ISPs to price competitively after all.
Who's screwing who here?
While no one seriously expects ISPs to pay Google (or other services) – that comment was presumably a simple reverse position to show how unreasonable the ISPs’ suggestion is – I think it is worth pointing out that everybody using the ‘Net is paying for the pleasure somewhere along the line.
Content providers and consumers alike have to pay (and they pay plenty) the ISPs. In fact, while my own phone and internet charges are, in my opinion, still too high, from what I understand (via conversations with US-based friends), the charges paid by US consumers are plain exorbitant.
With everyone and his/her granny now connected to the ‘Net, surely the days of dial-up are all but over, and the days when we should see high-speed broadband access at cheap commodity prices should be upon us. Volume of subscriptions not cost per subscription is where the ISPs should look for their profits.
Also there is much talk of ISPs attempting to block VOIP traffic in order to protect their conventional (poor-tech) telephone services. When I have already paid for the right to use my connection, I’ll be damned if I am prepared to be told how I can or cannot use that connection!
Not sure if the Veizon example works very well (though I wish it did). Presumably cable service providers pay CBS (or another content provider) and then charge their customers in proportion how much content (how many channels) they provide to the end user.
Come to think of it, isnt that what the telcos want to be. The model is just different from purely advertising paid (google, terrestrial channels) to user + advertiser paid channles (HBO type model).
I think the Verizon example works perfectly. I can forsee a future when most companies start delivering tv in IPTV form. The busineess model is no different than cable tv. Content providers sell to to access providers.
Obviously telcos have studied the ebay model and want to charge on both ends and rely on the fact that the is little or no competitiion.
I stick with Comcast through constant rate-hikes and service drop outs. And I am battling to get my non Comcast VoIP going.
But it is not a monopoly in the true sense. It is simply that the telcos don’t want to duke it out. SBC is content to provide slow broadband at a value price and comcast gives a fast expensive service. IF SBC ever lays fiber Iwill eat my hat.
Techie niavete
For 20 years now we have comforted ourselves with the idea of an open unregulated internet, but the wild,wild west is dead, people.
These are all publicly traded companies with boards, shareholders and lobbiest. Given their track record in Washington, I’m betting on the telcos to get a model of the internet established much more along the lines of the cable industry than anything we’ve seen so far.
Increased Bandwidth by Google Gives Us Better Conn
Agreed. We all should be THANKING Google for higher bandwidth usage! Google prevents our local Telco’s from becoming too idle and stagnant. If Google didn’t require more and more bandwidth, content providers would be perfectly satisfied to not upgrade our services past 5 Mbps. It is because of Google that these companies must keep on their toes and constantly be fighting to provide faster and faster services to the consumer.
Think about it people … when 5 years from now you are streaming HD video through the internet, your puny 5 Mbps connection will not be enough! If Google doesn’t force these companies to do it eventually, something tells me I wouldn’t be suprised to do it itself given all the Dark Fiber it seems to be buying across the US.
Need competition
The content and the networked pipe are both critically important to accomplishing the purpose of the end user. The end user will be willing to pay for both the pipe and the content if it is valuable.
To some degree, they have to work together. If I, the pipe-owner, invest big money to increase the bandwidth of my pipe, I have to be confident that the content is there so that the end user will want to pay for my bigger/faster pipe. If I, the content-distributor, invest big money to provide content that needs a big/fast pipe, I have to be confident that that pipe will be in place so that the end user will want to pay for my content.
If there is a single unregulated pipe-owner (or multiple pipe-owners colluding), he is the gatekeeper and can charge both the end user and the content-distributor for carriage. The system fails. If there is a single regulated pipe-owner (like the old AT&T monopoly), prices are regulated, but central planning will likely cause the system to not be as innovative or to grow in utility as quickly as a competitive system.
So we need multiple non-colluding pipe-owners. We do pay a cost in efficiency but it is usually worth it to gain innovation, leading to cost-reductions or greater utility.
Ditto with some variations on the content-distributor side as well.
Continued
The question is: are there enough end-users willing to pay some amount of money to support multiple pipe-owners investing big money in pipes?
Which leads to: is there enough utility (content) on the network to draw enough paying end-users? And are there others (content-owners, advertisers) trying to reach the end-users who are willing to pay to support the cost of investing in pipes?
Broadcast TV, cable TV, telephones, cell phones, and postal mail have all settled upon differing models. Do any of them fit the Internet?
My personal point of view is that (although this article is mostly pointing Google as an example) Google and most of the others should tell the telcos no and move on with business as usual. What are these internet providers going to do if Google should step on their toes and say offer internet access themselves.
Cities across the US are looking for way to get city-wide Wi-Fi into the hands of their citizens, why shouldn’t the telcos or service providers look into doing that instead of trying to bully the website providers?
Yes, the argument can go two ways. Google and the other internet sites make people want to get theinternet because they provide the information we need or are looking for. But if it wasn’t for the service providers, we wouldn’t be able to gain access to Google and some of the other sites.
But back to my ealier question, what will these service providers do if Google should decide to become one themselves? Google is already looking into using fiber optic lines currently not in use. What if Google goes service provider and goes to secure some of those city-wide Wi-Fi contracts booming on the horizon? What will they say then?
not really
What Google offers isn’t really unique, sure their algo’s are- but they could easily be replaced by msn, yahoo, ask, etc.
YEAH`
YEAH I AGREE! GOOGLE SUCKS!
This entitlement mentality is what is killing America and allowing other countries to take the US’s jobs and financial strength away. Consumers and businesses already pay for their dialup and high speed connections and Google and others already pay to interconnect to diverse carriers so they can route and carry their traffic via public and private peering. The whole concept is the Internet was built on—“sharing”. What is happening now is a huge consolidation in the Telco industry and the few remaining dinosaurs are clinging to the old Jedi ways. The old telco leased-line and metered bandwidth cost structure is long dead. Not 10 years ago a 1.5 mbps T-1 leased line cost $15k a month plus metering charges. Now people can get a 10 mbps connection at home for $29.99 a month from Comcast or whatever local DSL and Cable Modem provider is hooked to their apartment, home, or office. And do all of this for quite literally a fraction of the old cost structure. That type of price compression hurts somebody, and it ain’t hurting the consumer. Read up on comments from Jim Crowe on Silicon Economics. Jim Crowe is presently the CEO of Level 3 Communications (www.level3.com). Level 3 is one of the leaders in the telco industry consolidation and is a strong player for the telco end game. Level 3 already partners with Google, Vonage, and others as true partners, not friggin adversaries like the old Telco’s that are trying to milk the last few drops out of everyone before their business plan expires. Cough Cough!! Tick Tock!!
Blocking Content and fed regs would be the kiss of
Blocking isp access to content by the content provider would be the kiss of death for the content provider- users will immediately find a replacement for the content provider and will never look back. Google is good- but there ate hundreds of alternatives now and will be thousands in a matter of years. The ISP’s already have alternatives and would be more than happy for the traffic.
ISP’s have the right to block content providers when they can prove problems with the content provider. Look at whay happened when L3 got into it’s tiff with cogent – it was a topic on capitol hill in a matter of days.
The simple facts are these-
1- given the current growth rates of voip, music, education, and HD video every connection will require 10-25 meg both ways in 5 years.
2- all homes and businesses will require 2 loops to the location given the critical aspects that are developing with broadband- any network engineer will tell you this, especially now that almost all communications are going ip.
3. The content providers and the ISP’s Should do EVERYTHING in their ability to keep the consumer and business users happy because if the feds have to step in the internet as we know it will be done for- nothing is more dangerous to the internet than federal regulation.
Note- Using Google as the example of “content” provider is a little short sighted- google is indeed very powerful and useful but nowhere near irreplacable- in fact the next generations of desktop and specialized search engines will indeed have a place in the hearts of users.
Re: Blocking Content and fed regs would be the kis
Note- Using Google as the example of “content” provider is a little short sighted- google is indeed very powerful and useful but nowhere near irreplacable- in fact the next generations of desktop and specialized search engines will indeed have a place in the hearts of users.
Actually, it was done on purpose. Shows that when there’s real competition no one could get away with charging…
Going completely the opposite direction.
Asking the telcos to pay Google for making their networks valuable is like asking your local government to pay Walmart for making the roads valuable. After all, you can’t get to Walmart without driving on a government owned road. Maybe the road commission should pay the automakers as well, for giving the roads more value.
Re: Going completely the opposite direction.
That is the sillyiest comparrison I have heard in a while especially considering most local governements give tax breaks to businesses for bring jobs and consumers in.
A better analogy is Walmart having to pay it’s suppliers for the products that get put on the shelves. OH wait they do. That is business as I know it. People create something they sell it to middle men who repackage it and resell it to the consumer. The middle men make a fair chunck for their effort.
The real question is wether their is the customer base to support a certain range of products and the middle men that goes along with it.
Re: Re: Going completely the opposite direction.
not just tax breaks, some cities pay for the buildings and land some businesses sit on, just to bring those jobs and further the overall economy. so yeah, stick that in your anti-“telco should pay google” pipe and smoke it.
not saying I support telco’s paying google and others, I’m merely saying it’s done just like that in other equally competitive markets (on both sides of the who pays who fight,) and it’s equally as rediculous to expect google or any other company to pay twice for their bandwidth. If the company decides not to pass the increased costs on to us (which most will) then it will only stifle innovation all around and hurt us. Then again, they could pass the higher rates to us, which will hurt us, and they could also do a little (or a lot) of both. Either way, we the consumer, just like with anything else, will end up paying 2-4 times for the same content and or service. Just as companies claim to “pass their savings on to the consumer,” they have always passed the additional costs on to us as well.
So go with that government road tax for a minute. I pay at the pump, I pay yearly in the form of registration for my car, and again with taxes on my particurlar car, and yet again with a portion of my state taxes. I once paid a highway use tax of some sort amounting to around $120, so I could then be *allowed to pay for* my NC vehicle registration and tags in addition to that $120ish amount, when I moved back to NC from a neighboring state, and the rate I paid was dependent on how long I lived out of state, it increased the longer I had been away! Lucky for me (hah!) it was only about 9 months, but next time I move, I won’t return to NC that’s for sure.
Think about truck drivers. They pay a highway tax (usually calculated into their pay at the pump for diesel) in a particurlar state that they drive through, whether they stop for gas there or not they are expected to log and pay at least a certain amount. So the state is charging this for their highway use, which is completely understandable and I support it, but who is really paying? Not the companies that employ the drivers, not Walmart which is paying for the shipments, but the drivers themselves. Even if the driver isn’t an owner/operator and personally paying out of pocket, that driver is ultimately paying for it in reduced wages. That’s exactly what is happening to US if the telcos get their way. WE will be flipping the bill for their greed against companies like google. So it doesn’t matter who you think is right or wrong in the battle for bandwidth dollars, the consumer gets screwed.
The government can get away with making us pay 4x or more for the same thing because there is no reasonable competition that’s easily available or desirable to most people (i.e. other countries and their taxes, and the means to get there even if it is so much better.) No one is throwing any more Boston Tea Parties last time I heard, so we’re mostly stuck with having the tax collectors deeply embedded in our anal cavaties all our lives. Well, that’s how it is for many telcos in many regions, there simply isn’t any competition, and they can get away with so much. I don’t know who is paying $30 for 10Mb, but I pay $75 for Sprint 5Mb (620k up) DSL ($50 for the DSL, but either gotta pay $25 for the most basic phone service allowed, or they just raise the DSL rate $25.) Of course, the $17 dollars in taxes I paid last month on my $25 basic landline is worth just cancelling it, but don’t get me started on landlines! My mother’s city has one DSL choice, which is $30/mo. for a whopping 256k!!!!!!!!!! Rates go up to totally insane amounts for anything better.
What’s worse is, if/when they decide to charge US for using the services that they are already charging the companies extra for, with this priority packet nonsense. That means that for the same service used in the same manner on the same devices, we the consumer will be paying THREE times! I’m not saying three times as much, but three instances of billing for a free service instead of ONE (i.e. the initial ISP charges) This means for a paid internet service I use, I pay FOUR times for it. As if that isn’t enough, the number of paid internet services on my monthly living expense is growing by the year.
I can pay vonage and pay sprint for the dsl like I’m doing now. But in addition, I pay the vonage extra for what sprint would charge them, then pay (if they get their way) I pay sprint extra for using vonage on their network. Which actually in this case is a 5 instance payment, considering I already pay sprint for their landline costs already as part of my DSL bill whether I have the landline or not.
paying 5 times for the same service just isn’t right.
Charge AT&T
Dear Google,
What this blog introduces is a good point. I’ve seen you partner with AOL and how anyone searching from Google.com with an AOL browser is identified as an AOL customer.
Why not apply do the same with AT&T?
As an AT&T customer I would like to see this happen.
NATHAN
Pay ATT to Get To Google...No Thanks
Good points all. The thing with Level 3 and Cogent or any companies that were affected in this huge shift in how businesses are peering is a good example of how peering policies change between ISP’s based on how the market is driven. The Internet is now a market driven animal, and Wash DC has said that our government does not want to moderate or govern the WWW or our telecom companies because they feel it is what sets us apart from many countries, it aids our US economy, and Wash DC too realizes what governance would do to this beast – another network would began outside GOV control. Call it the Galactic Net if you like. Look at SATellite radio for an example of what happens when the FCC gets their claws into laissez faire business like radio and listens to special interest groups. The result would be more homogenization and dulled creativity for all of mankind. We all suffer when one player holds all the cards because there is no opportunity to build a better mouse-trap. And people will just walk away for something better.
At one time the old MAE’s were the place to be so you could publicly peer for FREE. Everyone wanted traffic to grow so everyone built to the MAE’s. Well traffic did grow…a whole lot. So much that after some time MAE’s became congested and companies avoided them altogether. Companies began offering free private peering to each other to avoid the public MAE’s entirely. Some companies began to pay for these private peering arrangements. Alas, revenue was born. Some companies continued for a very long time to offer free peering as well as have paid peering deals with select customers – depending on their markets. Level 3 and others kept doing the free and paid thing for years. Some companies took advantage of only free peering and never built themselves any diversity. Because the market was now beginning to be driven by consumer’s demand for greater bandwidth speeds most companies saw the wisdom in buying some or all private peering. A few never did. As demand increased more and more companies did larger paid private peering, and less and less mass public peering. For a long time Level 3 and others had both: a large growing private peering business model and a smaller and smaller public (FREE) peering business model. Some companies relied only on these free deals and had no alternatives (diversity) so when the market or business climate changed they had to adapt and spend money to keep that peering or die off. Most companies agreed and paid for dedicated peering, a few tossed their suckers in the dirt and made a stink. The idea is even though this is all very cool …to actually generate revenue with all this stuff now. The days of the internet being a cool project are gone. Money money money. With the consolidation happening companies need to make money every way they can.
ATT should restructure their peering policy with those that interconnect with them and not say stupid things that sound like threats to the American or Global consumer or companies like Google, Vonage, MSN, or whoever. For example: let’s say that Comcast has an OC-192c with ATT. Comcast is now paying ATT for that large IP circuit. OR ATT buy one from Comcast. Comcast benefits as well as ATT now. Each can sell revenue to that circuit and route traffic to it in either direction. Users of both Comcast cable modems at home and ATT high-speed at home can now pass their traffic requests to Google on port 80. People will use what they want. If ATT comes out with a search engine that is better than Google then ATT will have built a better mouse-trap and Google will suffer. Let the consumer decide. But I see that ATT still has this king of the hill mentality that is unhealthy and shows contempt for the consumer. If I am already paying for a high speed connection at home via Comcast, ATT at Home, or whoever, and ever ISP between my port 80 request and Google’s response is also paying each other for interconnection, why does ATT deserve any more money exactly? It’s that entitlement attitude. Now if ATT stops routing traffic to Google in a standoff, who loses? ATT loses is the answer. Anyone that is already paying ATT to route their traffic to Google will be pissed if it gets shut off. Those that ATT continues to route traffic to Google for will all of the sudden have much more business from those that ATT shut off. This is laissez faire business. Again ATT would lose. Business like life itself will find a way. Those that make unwise choices will lose and those that make wise ones will prosper. When a store does something I do not like, I vote with my dollars, I stop shopping there. They lose. When a store does something nice that I like, they get more of my business. Let ATT does what they want. We will all sit back and watch what happens. If nothing else, it will be entertaining.
Re: Pay ATT to Get To Google...No Thanks
My thoughts exactly, in the end ATT/SBC will just lose more business just how LEVEL3 and Cogent with the whole BGP Peering issue a few months ago. Where it makes both of there business look bad to the end customers.
The more ATT/SBC upset consumers the more they will lose internet customers, they are already losing thousands of land lines, to wireless carriers and voip providers why not damage the customer base more. And watch the stock price just tank.
Pay ATT to Get To Google...No Thanks
Good points all. The thing with Level 3 and Cogent or any companies that were affected in this huge shift in how businesses are peering is a good example of how peering policies change between ISP’s based on how the market is driven. The Internet is now a market driven animal, and Wash DC has said that our government does not want to moderate or govern the WWW or our telecom companies because they feel it is what sets us apart from many countries, it aids our US economy, and Wash DC too realizes what governance would do to this beast – another network would began outside GOV control. Call it the Galactic Net if you like. Look at SATellite radio for an example of what happens when the FCC gets their claws into laissez faire business like radio and listens to special interest groups. The result would be more homogenization and dulled creativity for all of mankind. We all suffer when one player holds all the cards because there is no opportunity to build a better mouse-trap. And people will just walk away for something better.
At one time the old MAE’s were the place to be so you could publicly peer for FREE. Everyone wanted traffic to grow so everyone built to the MAE’s. Well traffic did grow…a whole lot. So much that after some time MAE’s became congested and companies avoided them altogether. Companies began offering free private peering to each other to avoid the public MAE’s entirely. Some companies began to pay for these private peering arrangements. Alas, revenue was born. Some companies continued for a very long time to offer free peering as well as have paid peering deals with select customers – depending on their markets. Level 3 and others kept doing the free and paid thing for years. Some companies took advantage of only free peering and never built themselves any diversity. Because the market was now beginning to be driven by consumer’s demand for greater bandwidth speeds most companies saw the wisdom in buying some or all private peering. A few never did. As demand increased more and more companies did larger paid private peering, and less and less mass public peering. For a long time Level 3 and others had both: a large growing private peering business model and a smaller and smaller public (FREE) peering business model. Some companies relied only on these free deals and had no alternatives (diversity) so when the market or business climate changed they had to adapt and spend money to keep that peering or die off. Most companies agreed and paid for dedicated peering, a few tossed their suckers in the dirt and made a stink. The idea is even though this is all very cool …to actually generate revenue with all this stuff now. The days of the internet being a cool project are gone. Money money money. With the consolidation happening companies need to make money every way they can.
ATT should restructure their peering policy with those that interconnect with them and not say stupid things that sound like threats to the American or Global consumer or companies like Google, Vonage, MSN, or whoever. For example: let’s say that Comcast has an OC-192c with ATT. Comcast is now paying ATT for that large IP circuit. OR ATT buy one from Comcast. Comcast benefits as well as ATT now. Each can sell revenue to that circuit and route traffic to it in either direction. Users of both Comcast cable modems at home and ATT high-speed at home can now pass their traffic requests to Google on port 80. People will use what they want. If ATT comes out with a search engine that is better than Google then ATT will have built a better mouse-trap and Google will suffer. Let the consumer decide. But I see that ATT still has this king of the hill mentality that is unhealthy and shows contempt for the consumer. If I am already paying for a high speed connection at home via Comcast, ATT at Home, or whoever, and ever ISP between my port 80 request and Google’s response is also paying each other for interconnection, why does ATT deserve any more money exactly? It’s that entitlement attitude. Now if ATT stops routing traffic to Google in a standoff, who loses? ATT loses is the answer. Anyone that is already paying ATT to route their traffic to Google will be pissed if it gets shut off. Those that ATT continues to route traffic to Google for will all of the sudden have much more business from those that ATT shut off. This is laissez faire business. Again ATT would lose. Business like life itself will find a way. Those that make unwise choices will lose and those that make wise ones will prosper. When a store does something I do not like, I vote with my dollars, I stop shopping there. They lose. When a store does something nice that I like, they get more of my business. Let ATT does what they want. We will all sit back and watch what happens. If nothing else, it will be entertaining.
Without trying to tinfoil-hat things too much, it seems to me that microsoft, with piles of money to burn, might find this kind of telco-throttling in its interest. They can pay bandwidth charges and even encourage the telcos to up such charges with little problem (especially if they use some of their cash to invest in those telcos).
Certainly Google and Yahoo can do the same – but they may have a bit more trouble putting up enough cash to keep the telcos happy.
Toss in a few corrupt politicians (not hard to find in the US these days) and it seems to me that there are lots of opportunities to kill off competitors.
This is not to imply that there is any sort of real conspiracy – instead it may just look like common sense to enough people who share the same interest that it could happen – without any kind of collusion or evil intent :
“Never ascribe to conspiracy that which is adequately explained by common self-interest. “
Telco's Taking Advantage of Consumers... again!!!
In the past Ma Bell was seperated from AT&T due to a “monopoly”. Today – we are seeing what Judge Greene was attempting to rule over. The telco’s are posturing as though they are the only source for connectivity and that all services received through their lines are by their grace – or so it would seem. AT&T attempted squaush Internet phone service until they where successfully out of Long Distance as their ONLY source of income. Then the infamous SBC purchased AT&T and now wishes to use their former parent companys name for recognition. AT&T purchased a slew of cable companies making them the largest cable company in the world at one time. Now SBC has all these semi-related businesses and is trying to step in on Google, Vonage, Yahoo, and the like. SBC & Verizon should be taken over by the damned Government if they can’t play by the rules. They are unscrupulous businessmen who care nothing for the consumer nor for their responsibilities as a PUBLIC UTILITY. They seem to have forgotten what a “public utility” is in reality. A business that is here to serve the public and MUST meet the public’s best interests FIRST provided in it not going into receivership, which would be fine to my way of thinking – if they have a problem play nice in the sandbox with the other boys.
Google Wifi
I’ve heard rumors of a Google Wifi… wouldn’t such a play by the content providers make the telecoms’ services moot all together? As computing machinery contiues to become cheaper, I can’t see the service providers maintaining monopolistic competition for much longer.
If only our state representatives had the guts to stand up to the telecom industries, we in Texas would be able to have free publicly-funded wifi. But, unfortunately, SBC and Verizon sued the state claiming that the “competition” wasn’t fair.
The telecom industry, as it stands now, is dying. Moves such as this are examples of a failing business model thrashing for survival.
no one should pay anyone
everyone should develope their own:
1. contents
2. distribution
3. network
4. customers
instead of paying Pepsi for the soft drink, Costco/walmart should pay Pepsi, wihtout Pepsi, Costco/Walmart would never got any customer…
maybe consumer, instead of paying $20 a month for accessing the WWW, they should pay $100 to Teleco and Teleco can than turn around pay Google $80 for Google who organize the contents.. and Google should turn around pay contents providers/creaters $75 for their contents .. that sound reasonable to me.
While I don’t like telco’s approach, I found this kind of creative thinking funny..
I own a company which I privide “Free” service to my customers, I invite you guys come to work for me “Free”. Even a City WiFi has costs, taxpayers paid? who are those taxpayers? You?.. no.. not you… It is “Me”.
City can build their Wi-Fi, I don’t object to it. But Google pay every content creaters, I am for it.
CBS should pay Telco
CBS & Google should pay Telco. Without Telcos, there won’t be anyone watch their contents.
How about that for a change?
Internet is just in the beginning stage. The paying system is a mess, everyone is trying to find a balance to pay for eveyone involve.
At this moment; a lot of telcos is losing big monoy, Google is making big. So obvisouly, telcos is not happy. Google should complain when Google is losing money not right now.
Google should pay everyone
without people using it… people created… there is no need for Google’s search engine..
le’t urge google pay… it is a right thing to do… it will make google feel good.. everyone feel good…
Funny
Some people are just plain stupid!
Perhapes cities should pay Toyota to build auto plants in their cities…. ohhh wait the do, so if you can make me money it may be good to pay you to help me.
The answer is much more simple
I see the point in all the extensive explainations posted, you all have a point; but it need not be so complicated.
Telcos should start being considered Public Utilities, in all forms, no matter what. Te should be required to be treated the same as your local telephone service POTS line.
Problem solved. Why should telecommunication service be considered any different from electrical service in this day and age, when it is almost a requirement to have access to it?
If not, then why can’t the electric company blame the invention of light bulbs and microwaves for increased power consumption, and threaten them?
–Professor HighBrow
Cable TV agrees
My cable company PAYS money to ESPN, CNN, CTOON, etc. to carry those networks.
If the telecos want Google to pay to be on their network, then Google should charge them back an equal, if not greater, fee.
“I personally think the telco’s are just greedy for trying to charge the internet companies, but to say that they should pay Google is just plain stupidity.”
They weren’t completly serious about having the telcos paying google but they did point out some valid reasons why if the telcos can use such a lame excuse than google has a better lame reason to fight back against the telcos. Yes the telcos are greedy, they even get funded money by the US government that comes out of the US citizens tax money and they still want to get more!!! I hope Google starts laying their own pipes and says F$#% the telcos!
in the old days
Didn’t something similar happen back in the good old days when telcos didn’t want to peer with content providers?
IIRC, a big telco at the time refuse to peer with Yahoo! and and when a user from said telco tried to go to Yahoo! they got a page that said they couldn’t access Yahho! until a peering agreement was in place. Telco caved and a peering agreement was in place in 24h.
now you complain, huh?
Well, the telcos can do this because they are regional mono/duopolies and will be for a long time. Cable is much less regulated and like the telcos like to get most if not all value from its connections.
It is a bit late for the tech community to be complaining about this. Where were you all when the Republican FCC and the courts were killing all the competitive provisions of the 96 Telecom Act?
Instead of just whinning, it is time for the tech community to increase its lobbying of congress of the FCC. Here are a few ideas:
– Help pass the Bill preventing States from stopping muni wifi deployments
– Ensure a “Universal Broadband” fund is created, given low income and rural households a vouchure that they can give to any service provider willing to deliver brodband to them (instead of the crazy cross subsidies currently in place through access charges and USF)
– Press the FCC to guarantee (by creating the appropriate rules) that entrants will be able to buy in the AWS and 700MHz auctions
– Press for FCC and Congress to increase the allocation of unlicensed spectrum
– Get Congress to fund a national first responder network using next generation technologies (WiMax or some OFDM version, WiFi, satellites, etc) to guarantee that the communication issues of 9/11, which reappered during Katrina never occur again (nice side effect of seeding new tech)
These would be a good start.
Google and CBS are apples and oranges
There is a relatively simple answer to Rich’s question “why is Verizon paying CBS to carry their stations via IPTV and thinking of charging companies like Vonage?”.
The confusion was created by Mike at Techdirt when he compared…
Read the rest here
Re: Google and CBS are apples and oranges
Dave,
You took me *way* too literally. Seriously. Read the post again and look at it from the perspective of markets and competition.
The post is not seriously saying that Verizon should pay Google. It’s highlighting why it’s silly that Verizon thinks Google should pay it. You should be able to see the difference.
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sorry for joining the debate a year late..
Google provides content to a Tier 1 Telco. The Tier 1 telco then sells this content to Tier 2 / 3 telcos. Why shouldn’t Google get a cut of that revenue? very simple argument which seems to confuse lots of people.
say Google refused a connection with Level 3, and opted to connect only to a Tier 2. Level 3 would still have to carry lots of Google traffic, but they would now being doing it for free (via peering) rather than selling it via transit. Not good business for Level 3. Expect the large internet companies to reverse the current business model soon. (July 2007)
)))
I personally think the Telco’s are just greedy for trying to charge the internet companies, but to say that they should pay Google is just plain stupidity. Without people using it… people created… there is no need for Google’s search engine
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