Verizon Threatens Google's 'Free Lunch' 724
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.
Simple solution, in Google style (Score:5, Interesting)
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.
Re:Do google pay for bandwidth? (Score:2, Interesting)
I'd be all for it, if (Score:3, Interesting)
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.
Re:Free Lunch? (Score:3, Interesting)
Next: socialization (Score:3, Interesting)
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.
Re:Trying to ignore the obvious.... (Score:2, Interesting)
What commercial internet trend do they wish to start here? A free lunch?! Riiiiight. If that's the case, Verizon is the volunteer homeless beggard doling out hog slop to the rest of us beggards at the local Soup kitchen. Google is just the maitre d'...
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?
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.
They don't have enough money? (Score:3, Interesting)
I find it interesting that SBC just lowered their 3Mbps/512Kbps price to $17.99 or some price like that. But that is pathetic compared to what others in the world can get today.
Do what I do, Verizon is not my ISP, ... (Score:4, Interesting)
Instead, I pay about $60 a month for much better TOS (static IP, servers within reason, etc.), though Verizon still provides the pipe.
See, my DSL connection to Verizon's CO get's shunted onto the ATM fabric and shows up as a PVC to my ISP. They in-turn pay Verizon big $$$ for the fat pipes to whereever.
Now, Verizon charges for both the ATM PVC I use and the fat pipe my ISP uses. They get paid coming and going.
Verizon is free to charge my ISP (Blarg! in case anyone cares) whatever they want for the fat pipes and the DSL PVCs that get resold to me, at least whatever the market will bear. In fact, they price things so that, compared to their ISP service, they get more money from the likes of me. Used to be, I had to pay Verizon directly for the PVC -- "Advanced Data Services" they called it, but they found out that it was easier to sell those in bulk and let the ISP nickel and dime them out (which put more $$$ in my ISP's hands as well as reducing my overall bill).
So, what's the problem here? Verizon can price their pipes at whatever level the market will bear.
I suspect the real issue is that Verizon does not realize that it is competing against itself: their ISP division has to compete with all the other ISPs for bandwidth on it's own network. So what? They get paid either way. But, from the Verizon ISP perspective, they cry foul that so much more money is made by selling bandwidth to and through third-party ISPs and not them -- one division loses while the other division gains.
Note to Verizon: if it is more profitable to lease bandwidth to ISPs than it is to be one, get out of the ISP business!
Re:I'd be all for it, if (Score:3, Interesting)
I've got some bad news for you...
Content providers, including Google, pay for access to the internet through ISPs, who pay money to the telcos in order to hook up to the internet.
They are already getting paid for the same data twice. Now they want more?
What the telcos don't understand is that the consumers (you and me) don't care whose lines they use to access the content. All they care about is the content. All Google has to do is refuse to serve content to Verizon customers, and Verizon will be flooded with calls from irate customers demanding that they fix the internet. The content providers have the power here, especially if they are as ubiquitous as Google.
Re:Free Lunch? (Score:3, Interesting)
Changing the nature of the internet (one of our most vibrant marketplaces) is not something we should do lightly. Verizon is a public utility provider to the internet, selling bandwidth in much the same way that our power company sells us electricity. They may be "spending a fortune" laying pipes, but that is their cost of doing business- and they pass it on to their customers for a fair profit. "Preferred Access" is just another word for artificial scarcity. Verizon is just trying to find a metaphor through which they can justify asking for free money. The consumers don't benefit from this, and it is harmful to an important marketplace.
Differential Pricing (Score:2, Interesting)
Now, I would say that the current tussle over internet access costs is similar: With a huge upfront development cost, the large ISPs will attempt to figure out ways to change Google as much as they can, even compared to another company or several companies who might use the same amout of service. Of course, Google is a giant customer, so they have their own leverage, and the outcome will likely be a different one for them than it s for you (US consumer) buying your medication. Let freedom ring!
Re:Free Lunch? (Score:4, Interesting)
Not paying their fair share? (Score:3, Interesting)
Perhaps Verizon should look at their business practices first. First the basically laughed at the TCA of 1996 but not opening fully their network as they other ilecs squeezed the 1st generation DSL providers out of business, their $15 per month DSL service that they lose money on and no competitor can match because that's around what they pay for dry copper, and their FIOS service for which they are losing a fortune on to try and force their competition to price match and drive themselves out of business (cable and DSL).
So the appearance is that they are intentionally driving their revenue down in a blatant anti-competive move. Then they blame an entity that's got nothing to do with it, Google, for their poor performance. That's the old game called misdirection. In some circles it's call lying.
Let me run my own lines then! (Score:1, Interesting)
If this was a true free market, they could raise their rates and a new company would come along, lay some new wire, and sell service cheaper.
Unfortunately, its not a free market. The barrier to entry is impossibly high. No one could come along and rewire Manhattan. So we are stuck with the Telcos who seem to think they should be allowed to flex their Monopoly muscles without any oversight.
Congressman alerted (Score:3, Interesting)
Further to my recent letter about the Verizon/Vonage VoIP vacuum that is Muskegon, I am now presented with this:
Verizon wants to start charging Google and other major web sites for using their bandwidth!
http://yro.slashdot.org/article.pl?sid=06/02/07/2
FACT 1
------
A) Google's local service provider already gets a fat load of money from Google for their bandwidth.
B) I already pay $80 per month (see previous letter as to why it's 80 and not 30) for my internet service.
FACT 2
------
If this becomes law, what is to stop cable companies from turning around and charging HBO, Fox and ABC for the TV "bandwidth", rather than paying them for the content they provide! This in turn would put a massive hole in TV networks' accounting which would be made up with? More advertising, and less quality programming.
As the lines between internet, phone and TV
become more and more blurry, [snip/] this could set a precedent that would completely turn the TV industry upside down!
This is a ridiculous situation and needs some federal legislation to ensure it will never happen. If only to protect local [snip] service providers [/snip] and to protect the consumers.
What is Verizon doing with all their assets if they are ripping me off for $50 extra a month and also wanting to flip the directional switch on the entire information/entertainment industry?
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.
Re:Really Easy Way to stop this nonsense... (Score:1, Interesting)
I call BS on that. The end result of that solution is that Google becomes a monopoly since the barrier to entry to compete with them would be under their direct control.
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.
Stock Exchanges? Brokers? (Score:3, Interesting)
1. Extort money from customers for using your bandwidth.
2. ???
3. Profit!
It would seem that step 2 is "Lose your customers."
Re:Do google pay for bandwidth? (Score:5, Interesting)
Re:Free Lunch? (Score:3, Interesting)
This has been a twenty year con by telcos (Score:3, Interesting)
Let's go for this year. Lemme see. Guess 20 million, figure from nowhere, with broadband. Just at home. Costs 45 a month on average. 45 X 12. 540 a year, for 20 million homes. 10,800,000,000 a year. Just one year. And it's probably a lot higher; please bear with me here. I'm just making a point.
Ten billion, eleven billion. How much for the last twenty, in toto, business and residential, have we paid? Twenty? Thirty? Forty billion bucks? Keep the idea of the magnitude in mind as I add tens of billions in free money granted by federal and state and municipal governments, in tax breaks, in granted monopoly access to customers, in deregulation calulated to permit the telcos to bring fiber to the door.
HOW MUCH HAVE THEY SUCKED US FOR? A hundred billion? How about the lost opportunity costs because we've crap bandwidth for maximum profit?
And now we'll have two-three companies left after all the merging, in an easy-to-maintain price fixing circle.
Let's call it a hundred billion they've charged, with much more to come. And we've got what for connections? For how much each? How much will it take to pound home the point that the way we've gone about it has failed our people, our economy?
It would have been cheaper for the Federal government to have laid fiber to the home in an Apollo type project over the last 20 years. Private businesses are too fast, too well financed, for any sort of meaningful regulation. They pull simple stunts like placing their best lobbyist, Powell, at the head of the FCC under Bush, where he granted them their wettest wishes. He'll of course go back to work for them after he's done and become a squillionaire for his loyal efforts.
Sigh.
and then there's this: http://muniwireless.com/community/1023 [muniwireless.com] Oy.
Well let Google offer us fiber (Score:2, Interesting)
just develop the real internet already paid for (Score:3, Interesting)
Why let things get that far? Demand access to what we've already paid for. Build your own infrastructure regardless. The more you have the more robust the country is. Centralization is obsolete and dangerous.
Those Bell assholes and the cable companies are sitting on a public network built by monopoly protection grants. They are in that position again because they made a bunch of promisses they never kept [tcsdaily.com]. If they want to get cute, drop the monopoly protection and let companies like Google have access to the public servitude and bandwith needed to route around their damage. That would show them who's boss and make them compete for customers. The telco monopolies stopped working decades ago, if indeed they ever did work.
Re:Mushrooms (Score:4, Interesting)
To top it all off, the shops are already paying a third party for that last inch of sidewalk between their shop and the main one's... getting confused yet? Now the first company decides they should get paid not only by the government, and the people, and quite possibly the company that the shops pay for sidewalk access, but also the sidewalks themselves. I mean, after all, it costs a lot of money for the government... er... to put up those sidewalks and maintain. It's only right they get paid 4 ways for the same thing right?
If you're at all confused by this post, perhaps you now realize why we should only have informed people deciding the future of the internet, and those "informed people" best not be part of the ones who stand to profit.
Re:Do google pay for bandwidth? (Score:5, Interesting)
It could go both ways...
Re:Do google pay for bandwidth? (Score:4, Interesting)
You're getting paid already, fuckers. Don't get too greedy. There's a lot of really smart people out there that you REALLY don't want to piss off. Remember the Unibomber?
Think of a guy like the Unibomber that DOESN'T hate technology. I guarantee there'se someone out there like that who will be looking for Executives of companies that try to fuck the net for their own personal gain.
Just something that worries me based on my studies of those types when I was in college.
Smart people with a beef scare the shit out of me.
What about Common Carrier? (Score:4, Interesting)
The minute they start 'bitpooling' traffic to specific hosts, they should lose their common carrier status. End of story. It's already been said a hundred times in this particular discussion that it's like the telco's trying to charge for the same thing again...it's typical telco ideology.
Even when I was a phone guy (a few years ago), I remembered that we billed by the minute to our clients, but were charged by the second. We handled 1-800 traffic on the same page...even taking the campus that makes outgoing 1-800 numbers and putting them on a different T-1 where we were given a 'payphone' tarrif for handling the traffic a different way (that paid for the T-1 and associated linecard).
If they're saying that their current infastructure can't handle this and they need the money for 'capital improvement,' I find this very blurry. When we installed a digital phone (D-Term for you NEC phreaks), we billed that specific department *up front* the cost of: the D-Term phone ($100), 1/16th of a line card ($1200 for a line card), then charged them an additional n dollars a month because of the limited upgradability of a D-Term (you couldn't assign the LENS to a spot in a different cabinet if you wanted the ability to pick up that line or see that specific status, and since the cards take up analog line space, blah blah blah). If a small college can have the insight to do this in 2000, why couldn't a major telco do it in 2006?
Maybe they're seeing this from a different way:
What happens when all of our subscribers already are subscribing to a high-speed package and we're getting the maximum amount of market saturation that we can allow? We've already laid off enough of our workforce that we can't really afford that to take one too many hits, and we (middle management/execs) don't want to lose our jobs or take a pay cut, so, let's bill them for something again! Cha-Ching!
Freakin Greedy Bastards, anyway.
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".
Surprisingly poor analogy... (Score:3, Interesting)
Would you believe that the site on which Arthur Guinness chose to build his brewery came with the right to abstract water from Dublin's mains supply, at a low flat rate?
Presumably whoever made that agreement was expecting the construction of housing tenements or something like that. Whoops.
The city got very upset when they realised what was going on. Far too much of the city's water supply was getting turned into Guinness. The brewery was indeed getting a free lunch here. It took a long struggle, both legal and on one occasion violent, before the brewery were able to secure their water supply from the city's attempts to correct their earlier error.
It eventually became clear that the conversion of Dublin's water supply into Guinness wasn't actually upsetting anybody; quite the contrary :-)
Re:Free Lunch? (Score:4, Interesting)
It's rather different. To begin with, T-1s are essentially leased lines from a telco. They're pretty shitty and cost a lot more than they should.
OC-x connections are a bit different. When you get up to the level of OC-48 you're probably paying for your own fibre to be run. In google's case they're probably not paying so much for bandwidth since they have so many peering agreements. Why should they pay for bandwidth when they can just hook up a bunch of fibre to AOL's network? I hope you see where I'm going with this...
I'm not in the proper state of mind to really explain it, and I'm no expert on providers of OC-3+ connections. That's way above my damned level. But it's a whole different playing field from the shitty T-1s being offered by ISPs. A few meters of fibre and a router will dwarf the cost of something like T-1, but the price/bit ratio is much better.
All of that, and the fact that google probably pays a lot less for bandwidth than you'd think, aside, I think this's just more FUD from Verizon. I wish Google had some GHenchmen to go take care of those bastards...
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).