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Verizon Threatens Google's 'Free Lunch'

Posted by ScuttleMonkey on Tue Feb 07, 2006 07:37 PM
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)

    by Mrs. Grundy (680212) on Tuesday February 07 2006, @07:38PM (#14664713) Homepage
    Free lunch? It seems like it's neither free as in beer nor speech. As all /.ers know, there is no other kind of free. I'm sure Google's network bandwidth fees are neither free nor small and I know I pay for internet access. So who's getting what for free? Maybe the telecoms are using that little-knownrhetorical device called hyperbole. Or perhaps they are trying to say that companies like Google have found a moreprofitable use for bandwidth than they have and they would like apiece of the pie. A free piece of the pie.
    • by grahamsz (150076) on Tuesday February 07 2006, @07:40PM (#14664752) Homepage Journal
      I know some organizations essentially dodge bandwidth charges by running their own connection to major peer points.

      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.
      • by MikeFM (12491) on Tuesday February 07 2006, @07:54PM (#14664899) Homepage Journal
        That doesn't mean it's free really. That means that both networks charge to connect to them and so when they connect to each other they cancel out the charges. If the tele companies are giving Google free peer status and they don't think it's a benefit to them then it's just stupid of them. Will they lose business if the network down the street has better access to Google than them? Very likely so if it's a noticable difference. Is it enough of a loss if that happens to justify not giving Google a break on the peering? Probably not. Bandwidth should be pretty cheap for the people that own the network - it costs almost as much to have the lines going unused as to have them in use. I'd imagine that most of the traffic between Google and others, through their network, is to somebody that is in some way their customer so they are making money by having Google there.

        As you said they are sort of being their own ISP and also they are providing a value to their peer network.
    • Re:Free Lunch? (Score:5, Insightful)

      by MikeFM (12491) on Tuesday February 07 2006, @07:46PM (#14664813) Homepage Journal
      I hate to imagine what their bandwidth expenses are. I can chug through $100 of bandwidth a day sometimes (at $.50/GB) and i just run a few small websites. I'd be shocked if Google isn't moving hundreds of TB's of bandwidth a day at least. Their bandwidth and electrical fees must be unbelivable.

      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.
    • Mushrooms (Score:5, Insightful)

      by Anonymous Coward on Tuesday February 07 2006, @07:49PM (#14664847)
      Let's have some metaphorical fun. Suppose you're a mushroom farmer. You sell your mushrooms wholesale for $1 a bushel and life is good; you're not rich but you get by. One day you notice that Mario Batali is using your mushrooms in his restaurant and on his show and making a bundle. He's selling dishes which prominently feature--no rely on--your mushrooms for far more than you thought they were worth. Do you think you have a case to extract a fee from Chef Batali? Is he getting a free lunch from your hard work or does the mushroom farmer just have business-model-envy? I encourage equally metaphorical and perhaps dubious responses.
  • by Kittyflipping (840166) * on Tuesday February 07 2006, @07:38PM (#14664720) Homepage
    Customer: I'm having trouble with my DSL connection. I paid for broadband access, but google.com took an hour to load and vonage.com took 3 days...
    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?
  • by SeanTobin (138474) <{byrdhuntr} {at} {hotmail.com}> on Tuesday February 07 2006, @07:38PM (#14664723)
    Just like DMCA-takedown notices that Google uses to highlight the fact that you are missing content (and additionally direct you to the content you are missing), simply put a banner on the search results for any Verizon customer that says something similar to:
    Your Internet Service Provider has intentionally degraded the speed at which this page loads. If you would like your search results at full speed, please contact Verizon at 800-483-4000.

  • by freelunch (258011) on Tuesday February 07 2006, @07:39PM (#14664730)
    Funny, I don't feel like a victim.
  • by American AC in Paris (230456) * on Tuesday February 07 2006, @07:39PM (#14664736) Homepage
    ...and here I thought Google paid for their bandwidth like everybody else.

    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.

    • by TallMatthew (919136) on Tuesday February 07 2006, @07:50PM (#14664857)
      ...and here I thought Google paid for their bandwidth like everybody else.

      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.

  • by 8282now (583198) on Tuesday February 07 2006, @07:39PM (#14664737) Journal
    - Do the Verizon customers who access Google's content pay for their network connections?
      - 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... :)
    ~
  • by Anonymous Coward on Tuesday February 07 2006, @07:39PM (#14664741)
    Ok, can someone explain to me what the problem is? Here's how I see it. You (whoever you are, oh smart /. reader) tell me where I got it wrong.

    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)

      by grahamsz (150076) on Tuesday February 07 2006, @07:50PM (#14664850) Homepage Journal
      Since this arrangment works both on the Google end and the Customer end, Verizon ends up getting paid twice for the google traffic.

      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.
      • Re:No no no (Score:5, Interesting)

        by Red Flayer (890720) on Tuesday February 07 2006, @08:04PM (#14665009) Journal
        "Their accountants would be thrilled if they could charge 4 times for the same product."

        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.
  • by sych (526355) on Tuesday February 07 2006, @07:40PM (#14664750)
    *I* as a subscriber am paying a fee to use the *network* to access anything that *I* want to! If that happens to be Google, then that's *my* choice!
  • Gentlemen! Set your routing tables to stun.

    Verizon doesn't want to carry traffic? FINE, we can arrange that.
  • by carribeiro (952204) on Tuesday February 07 2006, @07:51PM (#14664865)
    Disclaimer: I used to work for a telco. A small one but a telco nevertheless.

    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.
  • by sommere (105088) on Tuesday February 07 2006, @07:53PM (#14664886) Homepage
    Google should just stop serving Verizon.

    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.
    • by aachrisg (899192) on Tuesday February 07 2006, @08:09PM (#14665059)
      Google should do exactly that. Issue a public "so sorry for using your wires" to verizon and start blocking all verizon addresses. Chances are within 24 hours, verizon would be offering to PAY GOOGLE to start using their wires again. Verizon is the one leaching off of the internet content providers..they get $40 (or whatever) a month to sell google et al to their customers without having to pay anything to the content providers.
  • by defile (1059) on Tuesday February 07 2006, @07:53PM (#14664890) Homepage Journal

    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)

    by Varitek (210013) on Tuesday February 07 2006, @08:00PM (#14664970)
    Verizon are freeloading on Google's (and Yahoo's, etc) content to sell Internet connections to their subscribers.

    Now wasn't that easy?
  • by Wolfstar (131012) on Tuesday February 07 2006, @08:03PM (#14664988)
    All the content providers have to do is charge a "Bandwidth Recovery Fee" to any provider who charges them a "Bandwidth Usage Fee".

    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?