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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.
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.
Parent
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.
Parent
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.
Parent
Mushrooms (Score:5, Insightful)
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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)
Parent
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.
Parent
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.
Parent
Re:This Ain't No Free Lunch (Score:5, Informative)
Parent
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...
~
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.
Parent
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.
Parent
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)
Parent
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?