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Euro Carriers Want Apple, Google To Pay Extra Bandwidth Toll
Apple, Google 'ain't gonna ride Vodafone's pipes for free.'
by Karl Bode 10:40AM Wednesday Dec 08 2010
According to Bloomberg News, France Telecom SA, Telecom Italia SpA and Vodafone (who co-owns Verizon Wireless here in the States) are pushing for new rules that would require that content companies like Apple and Google pay an additional usage toll to carriers. Why? Just like here in the States, government-pampered carriers with a tenuous grasp of reality believe they're magically owed a slice of the money being made over their networks, and don't really care if that desire makes any sense or not. Says Bloomberg:
"Service providers are flooding networks with no incentive" to cut costs, France Telecom Chief Executive Officer Stephane Richard said last month. “It’s necessary to put in place a system of payments by service providers as a function of their use." ...The mismatch between investments and revenue "is set to compromise the economic sustainability of the current business model for telecom companies," Bernabe said.
This idea that content companies should subsidize network operators has been circulating within the isolated yes-men halls of major phone companies since 2005, when then-AT&T CEO Ed Whitacre oddly declared Google should pay him an extra fee to travel his "pipes" and reach his customers. This bizarre sense of entitlement has since gone global, and is now a cornerstone of "telco think." Never mind that it's total nonsense, or that both content companies and subscribers already pay plenty for connectivity; this particular discussion has never been about facts or rationality.

What this is really about is the (accurate) fear all government-pampered carriers have that they'll be relegated to dumb pipes as the idea of voice minutes, landlines and SMS become historical footnotes. Being a simple broadband provider certainly isn't a bad thing, what with the continually dropping cost of bandwidth & hardware, largely fixed costs, significant profit margins, and abundant new revenue streams (advertising via webmail, BVAS, selling your clickstream data, DNS Redirection revenue, charging to get around spam filters, targeted behavioral advertising).

The problem? ISP investors are too impatient and myopic to support costly infrastructure improvements -- especially the migration from copper to fiber.

So, every few months since 2005, phone company executives try to trot out the idea that somebody else should pay to upgrade their networks, and amazingly this request gets taken seriously despite making absolutely no sense. This sense of entitlement and continual threat of irrational surcharges is what sits at the core of the network neutrality debate, but over time this fact has gotten lost under the hysterical din that passes for conversation on the subject.

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