Dear WSJ: Will You Pay Google's Bandwidth Bill?

from the please,-let-us-know dept

Thu, Sep 24th 2009 4:47pm — Mike Masnick

And here we go again... The whole "network neutrality" discussion really burst onto the scene in 2005, when (then) SBC CEO Ed Whitacre made claims that Google was somehow "free riding" on SBC's (now AT&T's) network. Of course, that made no sense. Everyone pays for their own bandwidth. The only way that would make sense is if the bandwidth you paid for only brought you to the internet backbone, but never to an end point. Yet, that seemed to be exactly what Whitacre was claiming. You see, the bandwidth you pay for is only supposed to get you onto the internet. To actually reach a site, in this logic, the site owners then should have to pay to let you reach from the internet to their site (never mind that they already pay bandwidth themselves... in this logic, that's only the bandwidth from themselves out to the network, but not from the network for you to reach the site).

This, of course, makes no sense at all. And yet, PR people and telco lobbyists know that it makes for a good soundbite. Mike McCurry, a former Clinton aide who went on to run a telco lobbying group (and now runs an entertainment industry lobbying group) declared in 2006 that Google was getting such a free ride that they "never have to pay a dime no matter how much bandwidth they use." In response, I challenged McCurry and his organization (Hands Off The Internet) to pay Google's bandwidth bill. While the group clearly read (but did not understand) Techdirt, they never responded to the challenge (shocker), and Google had to go on paying its own bill -- though, McCurry assures us that it's not even a dime.

We had thought that such ridiculous reasoning had finally been taken away from the debate, but with the FCC back to pushing for net neutrality, we're seeing the argument pop up again. Holman W. Jenkins Jr., a WSJ editor has an editorial making the same bogus free rider arguments yet again, and accusing Google of wanting "internet socialism." Karl Bode, over at Broadband Reports provides a rather epic response (this is just a snippet -- read the whole thing):

It doesn't matter how many times you point out that companies like Google pay millions of dollars for bandwidth and their own infrastructure, the paid talking heads who work for Verizon and AT&T simply keep repeating the same myth. Telling these individuals that AOL users paid phone companies billions in tolls and long-distance fees will get you nowhere. By demonizing Google and repeating nonsense, Jenkins and AT&T can distract marginally unintelligent lawmakers, journalists and the public from the real issues. Unfortunately, they're right.

Yes, companies like Google are not saints. Yes, Google is solely interested in dominating the advertising industry. Yes, companies like Google can and possibly will turn into anti-competitive tyrants over time who violate user privacy and do everything in their power to obliterate competitors. However, the network neutrality debate was not started by Google. It was started by a very confused Ed Whitacre.

Network neutrality has always been about phone and cable companies trying to maintain power in the face of Internet evolution. If network neutrality confuses you (and it pretty clearly confuses Mr. Jenkins), at least understand one thing: network neutrality has always been about phone and cable companies trying to maintain power in the face of Internet evolution. You can't blame phone company executives for being terrified. They should be.

The evolution of the Internet is strangling decades old cash cows, herded across analog fields by monopoly dinosaurs who've been pampered by Uncle Sam for generations. As voice becomes simply data, charging nine dollars for services like caller ID or call waiting (both of which costs pennies to provide) becomes untenable. Suddenly, programs like Google Voice allow users to send free SMS messages, eroding hugely profitable SMS revenue. AT&T and Verizon, protected from competition for so long, are coming face to face with reality for the first time in generations.

With voice, video and other services all just bits, broadband has made cable and phone company empires as service providers irrelevant, whether they know it yet or not. That leaves them with one purpose: running a network. And while the baby bells make a perfectly healthy fortune simply selling flat-rate bandwidth in this new paradigm, investor pressure and the need for quarter over quarter stock improvement makes simply being incredibly profitable not good enough.

I have to admire one trick, however. Jenkins did flip one of the common stories. Usually the anti-net neutrality stories focus on the massive rise in internet growth and the threat of some non-existent "exaflood." Jenkins admits that's bogus: "Broadband growth is leveling out in the U.S." But... rather than note how telcos have been using the exaflood story to push for the right to break net neutrality, he pretends that this also is a reason to break net neutrality, because it means that broadband providers have to compete to steal customers from each other, and can't risk pissing off customers by blocking sites. Of course, that only works if there's real competition. And, in most markets, people have at most 2 providers. If both of them break net neutrality... then what?

While some will now insist that I support the legislation being proposed, let me make it clear that I do not. I am worried about the long term impact here. But, I do believe that the principles of network neutrality should be preserved, even as I worry about how the government might do it. And I am most certainly not convinced by the ridiculous arguments put forth about such "free riding." So, let's make the same offer to the WSJ that we made to Mike McCurry all those years ago. If you honestly believe that Google is "free riding" thanks to net neutrality, will you agree to pay Google's bandwidth bill? How about you exchange yours for theirs and make it a fair trade? Since they're doing so much free riding... it's cheap, right?

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Filed Under: ed whitacre, free ride, holman w. jenkins jr., mike mccurry, net neutrality

17 Comments

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The Buzz Saw (profile), 24 Sep 2009 @ 5:35pm

Free = evil?
When are people going to learn? Free is never evil unless someone suffers an unwilling loss by it.

Aside from free, benefiting off others is not evil either.

If someone opens up a successful candy bar store, and I open up a business involving cleaning up wrappers of said candy bars (people litter really bad in this imaginary tale), I am benefiting off of this other business. The candy bar store has only the right to offer a competing service, but no lawsuit can force my cleanup service out of business.
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Kazi, 24 Sep 2009 @ 5:59pm

...
I'm against government imposed network neutrality. Get the government for it and I'm in for the concept. Nonetheless, as an end user I'd like my Voice/Video traffic to be prioritized over plain old data service which only requires best effort delivery. It doesn't have any delay, jitter, or some other quality of service constraints.

Also, it's so true about the other companies just interested in the bottom line and afraid when competition comes in. ISP's are becoming utility companies. That's it.
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Anonymous Coward, 24 Sep 2009 @ 6:08pm

I'm in favor of net neutrality but like a compass not with specific legislation, if you don't define the guidelines it keeps things open for abuse.

About the telcos I think everybody should use Asterix it is an amazing piece of software that coupled with their boards can provide all the services you can possibly imagine the thing is ISP have to continue to be dumb pipes or else they will become barriers to new services.
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AnonoMouse, 24 Sep 2009 @ 6:20pm

seriously... these are the same companies that laughed about the internet a little over 10 years ago...

i think its time internet became a utility... let us let a true free market occur... since we are currently limited (by franchise laws) to cable and telco... lets add internet in there and watch these greedy lawbreaking (warantless wiretaps of us citizens) companies get what they deserve.
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..., 24 Sep 2009 @ 6:26pm

Name that Group
There are many people who perpetuate silly stories and ideas. Take for example those who deny man set foot on the moon. They are not that much different than those those that claim Google is free riding the tubes. They are either delusional or simply paid for mouth pieces. The intarweb has named many of these groups already, it may be time to name another. One possibility is Free Riderz, or how about Net Noobs. What would be a good name?
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Anonymous Coward, 24 Sep 2009 @ 7:49pm

If I pay my ISP and I go to Google and not yahoo or my ISP's website, that's what I'm paying my ISP to provide me. I'm paying my ISP to provide me for the google website. Google is not freeriding off of my ISP because I'm paying my ISP to provide me with Google's website.
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Anonymous Coward, 24 Sep 2009 @ 7:52pm

"Jenkins admits that's bogus: "Broadband growth is leveling out in the U.S."

So this person actually seem to be happy that broadband in the U.S. is falling behind broadband in other countries? How is this a good thing. and to top it off all of our broaband expansion plans will probably end up wasting taxpayer money that's supposed to go into expanding broadband into giving big corporations and the FCC more control over the existing broaband and into giving money to big corporations at everyone else's expense. At least that's what the FCC seems to be indicating.
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Monarch, 24 Sep 2009 @ 8:50pm

Maybe the talking heads at AT&T and Verizon are bitching because Google gets it's bandwidth in the U.S. from Sprint and Qwest.
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Huntsville Computer Services (profile), 24 Sep 2009 @ 10:25pm

Net Neutrality
We do have to ensure that Net Neutrality laws are not too strong. Imagine a scenario where a malware coder sues Comcast - and wins, because his malware packets are being blocked.

We see example of well intended laws going overboard all the time, it could easily occur in this case.
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Dan, 25 Sep 2009 @ 1:29am

Just another WSJ hack!
To many people imbue journalists with some native intelligence on the subjects that they expound on. Nothing could be further from the truth. They usually just repeat what they are told without checking accuracy or honesty. How are they any better then any random blogger on a rant? Mr. Holman W. Jenkins Jr. obviously has no knowledge of how the internet works and yet he mindlessly rambles on spewing obvious lies. Maybe he has another agenda and lies to advance it. In either case his views have no basis in fact and he needs to be exposed as an incompetent hack. Doesn't the WSJ have have an IT Dept. that he could check his facts with or are the still using paper memos to communicate.
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Anonymous Coward, 25 Sep 2009 @ 6:43am

Re: Free = evil?
Aside from free, benefiting off others is not evil either.

Why are people willing to pay the phone companies to access the Internet? It's because they want to reach the various sites out there, including Google, that they find useful. So Google and other sites have spent billions of dollars in hardware and infrastructure, in software development and web design, to develop sites that people find useful. Then the phone companies are profiting off all that effort by acting as gate keepers to allow people access to it. It's only because of Google and other's sites efforts and investment that people are willing to pay the phone companies to access their network. Yet the phone companies aren't paying anything back to Google or other sites - they're just profiting on those sites their hard work. I say that's not fair and the phone companies should pay Google part of their profits!
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Barold, 25 Sep 2009 @ 6:45am

Analogy
if the analogy was a highway, the toll being the tariff paid to access the highway, then should people paying the toll expect a level of service (congestion, average speed); also should I be allowed to drive whatever vehicle honda civic, Hummer, M1 abrams onto it? At somepoint we exceed the design capabilities - who is responsible for the upgrade in the highway?

Discuss.
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just this guy, 25 Sep 2009 @ 7:26am

Re: Analogy
Who we pay the Toll to is responsible for upgrading the highway.

If there was competition we would use the road that had the least congestion and would let us use the vehicle we want to use.

Since there isn't competition there needs to be some way for competition to flourish or ways to protect people from that lack of competition.
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Russ801, 25 Sep 2009 @ 2:39pm

Re: Free = evil?
I am waiting for clear channel to start paying my road taxes for the value they get from bill boards. Clearly they are making money off public works.
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Russ801, 25 Sep 2009 @ 2:42pm

Re: ...
I am not sure that you can't discriminate against different types of data flows (voip or video) just that if you do discriminate everyone is treated the same (the ISP can't squeeze out competitiors)
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Anonymous Coward, 26 Sep 2009 @ 5:58pm

Re: Re: Free = evil?
...which Google can then pay back to the phone companies for providing the internet service that allows Google to get views.

I know, let's just have everyone pay everyone else until all the money balances out!
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PrometheeFeu (profile), 27 Sep 2009 @ 10:44am

I don't get it Mike... How are we supposed to get more competition? I mean, you are talking about networks of cables which take a lot of money to lay in any one place and then take a lot to maintain. That's a huge barrier to entry. Also, once you have setup access to an area, it's comparatively very cheap to add cables to the different customers in the area. This is a textbook case of natural monopoly. The market is not going to take away the monopoly because it can't... If anything, is the answer really to lay more cables where perfectly good cables already exist? Is that really an efficient allocation of the means of production? The efficient outcome is a single set of cables being setup for the last mile and have competition for the rest of the services. But that means you need somebody to run the last mile who does not run the other services. (Why would I let my competitors access to the monopoly market I spent so much money to build?) And that guy has to be a monopolist who can be trusted to not abuse its monopoly power. You got it, I'm talking about the gov't or some sort of a government sponsored entity. Otherwise, you will never have competition in that market. Or you can pass net neutrality laws, but that's going to be a pain to deal with.
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