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Verizon Threatens Google's 'Free Lunch'
Posted by
ScuttleMonkey
on Tue Feb 07, 2006 06:37 PM
from the no-such-thing-as-a-free-lunch dept.
from the no-such-thing-as-a-free-lunch dept.
ILikeRed writes to tell us the Washington Post is reporting that Verizon is becoming much more vocal about internet firms using "their" lines to do business without paying extra. From the article: "The network builders are spending a fortune constructing and maintaining the networks that Google intends to ride on with nothing but cheap servers," Thorne told a conference marking the 10th anniversary of the Telecommunications Act of 1996. "It is enjoying a free lunch that should, by any rational account, be the lunch of the facilities providers." This, as lawmakers are approaching new legislation that could let telcos charge internet companies much more for the use of high speed connections.
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Free Lunch? (Score:5, Insightful)
Do google pay for bandwidth? (Score:5, Interesting)
The bbc [bbc.co.uk] certainly use that approach in the UK to keep their costs affordable.
However in that case, then they are doing part of the ISPs job so it seems fair.
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Re:Do google pay for bandwidth? (Score:5, Interesting)
As you said they are sort of being their own ISP and also they are providing a value to their peer network.
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Re:Do google pay for bandwidth? (Score:5, Insightful)
Google pays for the bandwidth they use from their provider. I, as a broadband connected citizen, pay for the bandwidth I use to connect to Google. Essentially, the telcos are already getting paid twice - once to accept the packet and again to deliver it to it's destination.
There is *NO* reason why additional charges should be allowed. It's lunacy to think that this could be allowed to happen. Cost of access can do nothing but go up, which will further widen the gap between those that can afford to be online and those that cannot.
If the telcos aren't happy with how much they're paid to have data travel across their network, then they should re-address their pricing structure with their customers directly.
Knowing what a price increase would mean to the number of customers they'd retain, the safer alternative is clear - charge the companies that their users want data from.
Free lunch?! Ha! They've kept their lunch safe and now they're asking for the $50/plate buffet. Greedy f'n bastards...
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Re:Do google pay for bandwidth? (Score:5, Interesting)
It could go both ways...
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Re:Do google pay for bandwidth? (Score:5, Insightful)
ISP service is now a commodity, their differentiation is so minimal. Content is the key.
Plus, if Google actually builds their own backbone as many have rumored, people will be paying THEM just to peer.
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Re:Do google pay for bandwidth? (Score:5, Funny)
The commentators all say that Google has been buying shedloads of dark fibre. If this is so, does Google have anything to lose in this fight? By this time next year, could we see Google as the main backbone supplier in the US, and the Bells all whimpering a corner, saying 'please, sir, we didn't mean it'?
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Re:Do google pay for bandwidth? (Score:5, Interesting)
Could this be a new cash cow? Imagine making even 1% on a company like IBM, HP or GE for each multi-million dollar deal made through means of telecomunication(pots, IP, cell,...).
This could either create new accepted business methods or bring each company into the telecom game by buying a part of, or the whole "wire".
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Re:Do google pay for bandwidth? (Score:5, Insightful)
I dodged taxi fare by buying a car.
I dodged restaraunt bills by cooking my meals.
I dodged cleaning bills by doing laundry
No, sorry, not working for me.
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Re:Do google pay for bandwidth? (Score:5, Interesting)
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Re:Do google pay for bandwidth? (Score:5, Interesting)
But this is a contractural problem, not a legal problem. If Google peers with Verizon don't charge Google then that's their own fault for writing the contract in that way. They could write a contract requiring Google to pay for the peering (and Google has every right to refuse to sign the contract and thus the traffic will be transited through another network instead of peered directly).
However, the ISPs are pushing for _legislation_ rather than just changing their peering contracts. The implication is that they want to be able to charge content providers who they aren't peering with (and thus have no contract with). I.e. if Google is connected to an ISP called "foo" and Verizon is connected to "foo" then "foo" can route the traffic between Google and Verizon - there is no contract between Google and Verizon and each of them is paying "foo" for a transit agreement to route the traffic. In this case, Verizon's _customers_ are paying for Verizon's transit agreement with "foo", but Verizon wants to be able to charge Google too. This seems wholley unfair since Google is having to pay for it's transit agreement with "foo" too.
This is just another example of bad laws being pushed so that greedy corporations can charge parties they don't have contracts with without losing their common carrier status. (At the moment Verizon could block Google's traffic and require Google to sign a contract in order for them to carry it, but that would prevent Verizon from being considered a common carrier since they would be censoring content).
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Re:Do google pay for bandwidth? (Score:5, Insightful)
This phrase struck me as particularly poigniant (sp?). Up until now I had simply been infuriated by the assumption that Google and I got internet access for free. Hell, my fees are around $50/month, and I'm sure Google's fees are in the tens of thousands a month. Some free lunch.
But it hadn't really struck me yet that this was censorship wrapped in greed. A company wants more money for nothing, and therefor plans to limit my access to information as a way to basically extort money from other companies.
It really boils down to the one that suffers is the home user. Google can pony up, but may not out of protest. But when all this bullshit about free lunch and Verizon being wronged is taken away, I suffer. My access to information - already a very shaky balance - is threatened, and appears that such censorship will even be made law by our wonderful government.
I've got to stop reading Slashdot. These days, it just gets my blood-pressure up.
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Re:Free Lunch? (Score:5, Insightful)
And I certainly am paying for Internet access. For home, office, and mobile access I spend a couple hundred dollars a month. All so I can use ssh and a web browser and expect to get shitty service. When they offer me gigabit DSL to my home and office (not to mention servers) then we'll talk about raising the prices.
With the shitty connections we get here in the US they should be glad we're willing to pay at all. Some third world countries have better net access. Pitiful.
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Re:Free Lunch? (Score:5, Insightful)
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Re:Free Lunch? (Score:5, Insightful)
As far as I'm concerned, when companies try to disrupt the Internet with veiled threats and extortion tactics, they should receive an instant Internet death sentence, i.e. blackholing their traffic until they stop acting like whiny little crybabies. The Internet works solely because each ISP pays their fair share of the bandwidth for their customers. If Verizon doesn't want their customers to have access to Google, all they have to do to cut those costs is stop paying the bill, and I can guarantee their upstream providers will stop providing the pipe.
The problem is that Verizon is among the most greedy telcos on the planet Earth. They overcharge their customers for pretty much everything, but that isn't enough, so they want to charge other ISPs' customers, too. Screw Verizon. Life is too short to put up with companies that screw over their customers to make a cheap buck.
If Google has any sense whatsoever, they'll nip this problem in the bud sooner rather than later---they'll turn Verizon's customers against them NOW while this BS can be contained, rather than waiting until other greedy ISPs decide to jump on the bandwagon and utterly destroy the Internet as we know it....
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Re:Free Lunch? (Score:5, Informative)
Actually, the taxpayers have already footed a large part of the bill for them to do just that.
Sadly, no one is making them follow through on it.
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Re:Free Lunch? (Score:5, Funny)
Really? The last time I checked, India was supposed to be "the placed your programming career just got outsourced to"...
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Mushrooms (Score:5, Insightful)
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Re:Mushrooms (Score:5, Insightful)
Suppose you are an electric utility, and you have many millions of paying customers. Life is good; you're a super rich mega corporation, but you would like to make more profits (after all you owe it the shareholders) and have your sites on once again taking the throne back and becoming an honest to goodness monopoly. One day you notice that Sony is selling products that require your electricity to work, and that Sony is making a bundle. Their products absolutely rely on your electricity, and you realize that your electricity is worth more than you thought! After all Sony is getting a free lunch; forget the fact that Sonys customers are already paying for the electricity. You decide that in order for Sonys products (and by extension their customers) will have to pay another fee for the access to electricity that up until now they thought was already paid for. After all, the infrastructure needed to grow the electricity business is not cheap, and you are not interested in giving out a free lunch to anyone.
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Re:Mushrooms (Score:5, Interesting)
This bears striking similarities to a small enterprise I observed when I lived in an Italian neighborhood in New York during the late 70's/early 80's. There was a social club on the block, and the wise guys maintained an armed presence in the neighborhood 24x7. This made our neighborhood very very safe, which helped local businesses. No burglaries in over 20 years we used to brag. One time there was an attempted burglary. When the cops finally showed up 90 minutes later, the wise guys from the social club handed him over, bloody from head to toe. Poor skel apparently fell down the stairs while trying to escape. Anyway, this enterprise was financed by the shopkeepers in the neighborhood. To avoid having their windows broken every 3 weeks, they would pay a small stipend to the social club.
It's funny, what the social club was doing could have gotten them prosecuted under RICO statutes. Actually, I'm pretty sure even conspiring to do what they were doing is probably illegal under those laws, but IANAL.
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Re:Mushrooms (Score:5, Insightful)
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To win the debate, frame the debate. (Score:5, Insightful)
This is about Verizon realizing that providing the pipeline is a good, solid revenue stream
So, they attempt to frame the debate as "free lunch", but the reality is that they're looking for a way to get some of Google's revenues by building a bottleneck.
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Re:Free Lunch? (Score:5, Funny)
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After 20 minutes of being on hold... (Score:5, Funny)
Verizon: I see that you don't have call waiting on your line. I'll go ahead and add that for you, ok? We're also running a promotion that adds no value to you but will extend your contract with us. Would you like to hear about it?
Simple solution, in Google style (Score:5, Interesting)
Re:Simple solution, in Google style (Score:5, Insightful)
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Re:Simple solution, in Google style (Score:5, Funny)
Telcos have alot of dark fibre in the States.
Most people assume that's optical fibre...but it's actually moral fibre.
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I beg your pardon.. (Score:5, Funny)
This Ain't No Free Lunch (Score:5, Insightful)
Google isn't getting any more of a "free lunch" than anybody else; all that makes them special is that the service they provide with the bandwidth they use is insanely popular and valuable.
Imagine for a moment that Verizon provides natural gas utilities instead of communications utilities. Google pays 'em for the gas they use to bake the big, juicy pies that everybody loves. Google makes a fortune from their pies. Is Verizon somehow due something extra because their gas was used to fire the oven?
All that Verizon can see are the nice, fat pies Google has cooling on the windowsill. This isn't about free lunch; this is about grabbing a piece of Google's pie for themselves--by crook or hook.
Re:This Ain't No Free Lunch (Score:5, Interesting)
More likely than not, Google and Verizon are peering with one another via a private line (which Verizon as a LEC would purchase for exactly $0). I seriously doubt either of them purchase transit via a third party. If anyone on Verizon could do a traceroute to google.com, that would shed some light.
Verizon's probably worried that Google's on-demand video is going to usurp their own offering to their customers and that all the hard-earned cash they're putting into HDSL and video delivery systems is going to go to waste. If I can watch such-and-such on Google for $5, then why would I buy it from Verizon for $10? Google will likely follow Microsoft's lead here and price gouge, being they already have a superior delivery infrastructure that can service customers on all networks while Verizon's market is just their own.
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Re:This Ain't No Free Lunch (Score:5, Informative)
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Re:This Ain't No Free Lunch (Score:5, Insightful)
They could jack up the rates for everyone, but then nobody would use their system, because most people couldn't afford it. They could leave the rates as-is, but then they have to watch the line be leveraged by successful businesses to make tons of money.
To suggest that Google, for instance, gets a "free lunch" with "cheap servers" is ignorant, and completely ignores the expense of employees, infrastructure, code, and other costs of doing business. You might just as well say that the telcos get a "free lunch" with "cheap copper wire", ignoring every other aspect of their business. It suggests that this telco representative at least is confusing companies like Google with a retro image of backyard programmers in a suburban garage -- probably intentionally.
This is not unlike the pricing model that record companies adopt; when an artist is hugely successful, they jack up the price of their CDs. The difference here is that the telcos are providing a service similar to the CD pressing companies, not the record labels -- and can you imagine how long a CD pressing company would stay in business if they tried to charge BMG Music twice as much for pressing Britney Spears CDs as they did other artists? (disclaimer: I have no idea if Britney Spears is distributed by BMG Music)
It's all about greed, pure and simple. Either the telcos will get away with it, or they won't, but don't look for "reasonable" or "appropriate" here -- it's a grab for cash, always has been, always will be.
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Trying to ignore the obvious.... (Score:5, Insightful)
- Does Google pay their network provider(s) for the access they're using?
- Does Verzion derive an economic benefit by having access to Google's services for it's paying customers?
Therefore:
- Does Verizon believe that they're not charging their customers enough for the services the customer uses?
It has not escaped my attention that I'm reading Slashdot on a free day pass paid sponsored by Verizon...
~
Dear Verizon Communications (Score:5, Insightful)
It has come to my notice that you as a company are dissatisfied, and are complaining that content providers are unfairly stepping on the toes of bandwidth providers without sharing the profits. It has also come to my attention that you as a company are seeking ways of extircating fees from these content providers in order for them to use your network.
I would like to remind you that the bandwidth that these content providers use is being paid for. No, it's not being paid for by the likes of Google, Microsoft, or any other content provider, for that matter, but by your subscribers. That's right, subscribers. You know, those people who send you a check for $39.95 every month in exchange for their 256K downstream, 128K upstream that they use in order to get from their computer to the content provider's services. These hard working, paying customers are sending you their hard-earned money to ensure that that you give them access to the sites and the content that they want.
If you decide to cut back access for subscribers to reach the content on the public Internet that they want you will find yourself losing subscribers. Should you try to enforce disconnect fees on these subscribers, or try to enforce any other end-of-contract requirements, you will undoubtedly find yourself in court from a number of subscribers who would challenge such fees due to your failure to provide services. It could even reach the level of class-action status, which would make your position even worse.
Do consider what you're thinking about doing. Your services are already being paid for. If you don't like the profitability of the enterprise then you should get out of it, not look for ways to extort money out of others.
Sincerely,
TWX
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Don't peering agreements already cover this? (Score:5, Insightful)
Google has a bunch of servers in a datacenter. That datacenter is hooked up to the Internet somehow, through some ISP, probably a big one (though clearly not Verizon or they wouldn't beaking off about it so much), because if it wasn't hooked up to _someone_ it'd just be a bunch of servers in isolation and Google would be worth nothing. So, Big ISP has run fiber to Google's datacenter(s), and charges Google a fee each month to carry their data. I mean, Google doesn't get free Internet access, do they? Big ISP collects their money, based either on a 95th percentile deal or a byte count deal, depending on the contract. Big ISP doesn't live in isolation either, or they'd be called AOL. So Big ISP probably has a peering agreement with other ISPs, like, say, Verizon. So Google's traffic goes out Big ISP and over to Verizon when a Verizon customer wants it, and some company hooked up to Verizon's backbone has their data go over to Big ISP when a customer at Big ISP wants it. I've just described peering in its most simple terms, haven't I? So, don't peering agreements work such that if more data goes from Big ISP to Verizon in a month, Big ISP gives Verizon money, and if more data goes the other way, Verizon gives Big ISP money. So if Google is such a massive bandwidth hog, they are not in fact getting a free lunch, because Big ISP has to give Verizon money to meet its commitments for the peering agreement, and Big ISP turns around and collects that money from Google in their monthly fee, and if Google is costing Big ISP more every month, then they (simple economics here) charge them more money. So, my question is, what the HELL is the problem? Isn't Verizon already getting paid for Google traffic?
No no no (Score:5, Insightful)
However Verizon would like to be paid three times for the Google traffic. You can bet if they win that, then they'll start charging customers extra for "faster" access to google. Their accountants would be thrilled if they could charge 4 times for the same product.
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Re:No no no (Score:5, Interesting)
I'm an accountant, you insensitive clod!
No way in hell the accountants will be happy when they have to track additional revenue streams with a less than adequate increase in resources (as happens with big companies constantly). It's the shareholders, and the executives with lucrative bonuses written into their contracts, who would be happy to see this. It's not gonna make one iota of a difference to their accountants.
Please don't associate accountants with corporate greed... we measure the wealth, we don't take it home with us.
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This is ridiculous (Score:4, Insightful)
I hope this doesn't become law, otherwise this is going to hurt the entire internet in more ways than one.
What do I pay my DSL provider for, then? (Score:5, Insightful)
Internet Damage (Score:5, Funny)
Verizon doesn't want to carry traffic? FINE, we can arrange that.
It's difficult to adapt to a new environment (Score:5, Insightful)
Working for a telco is a unique experience. I learned a lot, and believe me, most of it was good. I've learned a lot, both technically and from a management POV. I had some opportunities that a small company could not afford. Even with all problems, it was a good time.
The basic problem with telcos is that they still think in terms of their cash cow service, that is voice. They still think in terms of how much the user will pay per transaction, or minute. They have a huge structure, a huge legacy that can't simply be buried or thrown out the window. They have fear of cannibalizing their own products. But worse, they don't get it, and that's not because they're not intelligent, or bad at what they do. They don't get it because most of the time, people are busy running what pays their wages, and that's the legacy services. There's little incentive inside the company to do something else, specially when it means that it could make a lot of people lose their jobs. There's little incentive for people that talks about cannibalizing revenue.
In the end, telcos are like big animals who are threatened by the changing environment. They may have a lot of power, but in the end, guess what? Evolution is inescapable. Verizon (and other big telcos) may even win this battle, and a few other ones. But in the long term, they can't win the war. Bandwidth is doomed to become cheaper and cheaper. People just want to communicate with each other, and Verizon can't control what people do. It's market at work.
Google should just stop serving Verizon (Score:5, Funny)
Simple solution, Verizon thinks google is getting a service from THEM?
Google shuts them off and 24 hours later every verizon customer will think their internet connection is broken.
Re:Google should just stop serving Verizon (Score:5, Insightful)
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The only way to successfully implement tolls (Score:5, Insightful)
are through collusion or law.
Because the first company that tries to implement internet tolls alone is going to be at a huge competitive disadvantage. So they'd all have to do it at once. But this kind of collusion is illegal.
But law isn't. :(
Freeloading (Score:5, Insightful)
Now wasn't that easy?
Really Easy Way to stop this nonsense... (Score:5, Interesting)
For example, BellSouth and Verizon (the two biggies on this one so far) start charging Google for the "right" to provide content to their customers. In return, Google begins charging BellSouth and Verizon for the "right" for their users to access Google's service over Google's upstream bandwidth.
The end result is that Google breaks even (because they can charge a small amount per customer for a massive total income) or pulls ahead on the deal, and Verizon either stays at the same spot they're in now, or they start losing money - either through losing access to one of the premier search engines on the internet, causing customers to start leaving in droves, or because they pass the "Bandwidth Recovery Fee" onto their consumers, causing everyone's bills to inflate noticeably, also causing customers to leave in droves for cheaper access to the same content.
And while the above article mentions cable and telephone network providers, I've yet to hear Comcast, Cox, Charter, or Time-Warner start making noises in this direction. Mayhap the telcos need to look into cheaper ways to bring all the dark fiber out there online?
If Verizon wants more money from Google... (Score:5, Funny)
-jcr
Big Business' Big Grab? (Score:5, Insightful)
But they want to get more money for no actual effort on their part.
Their justification is that Google is getting a 'free pass' on their pipes.
The RIAA member companies get paid when customers buy iTunes music.
But they want to get paid more for no actual effort on their part.
Their justification is that Apple are selling iPods on the back of the RIAA content.
Gary's New Laws of Business:
* If your customers are happy and you're making a solid profit, look for ways to screw them to the wall so that they can leave you in droves.
* If your products are selling well and you've got nothing in the pipeline, rework the pricing structure to screw your customers over so that they can leave you in droves.
* Make everything look as though you're hard done by, and call your customers 'freeloaders', 'scum', 'thieves', 'pirates' and any other names you can think of.
* Lobby your government to make everything you do nice and legal, where previously it was unethical, illegal, immoral, bad for business and just plain dumb.
I await my honorary economics degree.
Here it comes... (Score:5, Funny)
We are sorry to inform you that you will no longer be able to access Google, Yahoo, eBay, Amazon, and other high-bandwidth commercial sites through your Verizon internet connection. Due to the loads that these services place on Verizon's network system, Verizon has instituted a new policy which states that high-bandwidth commercial web sites must compensate Verizon for their usage of our network. The companies listed above, and others, have elected not to do so. Therefore, we have no choice but to discontinue the availability of these and other web sites on your internet connection.
We are sorry for any inconvenience this may cause.
Sincerely,
Verizon Customer Service
------------------
Dear Verizon,
Pbbbbbtttthhhppp.
Sincerely,
A Valued Soon-To-Be Ex-Verizon Customer.
Re:Next: socialization (Score:5, Interesting)
Same thing for the roads. I've never had a problem with the dmv. In fact the service I hve always got has been courtious and prompt.
I am not saying telcos should be socialized or not, just pointing out that the perseption of government programs is very often an incorrect one.
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