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Scott Cleland: Google Using 21x The Bandwidth They Pay For
Paid baby bell consultant ain't gonna let you use his employer's pipes for free!
by Karl Bode 02:31PM Thursday Dec 04 2008
If you recall, the network neutrality debate truly took off in the States back in 2005, when former SBC (now AT&T) CEO Ed Whitacre told Business Week in an article that Google wanted to use Ed's "pipes", for free. "I ain't going to let them do that because we have spent this capital and we have to have a return on it," insisted Ed at the time. The comment confused a hell of a lot of people, given that both Google and Google's users already pay for bandwidth. To many, Ed's logic seemed to share a resemblance to the South Park underpants gnomes.

Click for full size
It seems that Ed, lusting after Google's huge advertising revenue, figured he would please investors if he could somehow offload necessary AT&T network upgrade expenses on to, well, someone other than AT&T. In Ed's dream world, in addition to the bandwidth costs already paid by you and Google, you'd both pay the troll under the bridge to use that connection. Why? Just because. Shut up!

While it's absurd to think someone should pay an already hugely profitable business an extra "because we said so" toll so they don't have to use existing funds for infrastructure, Ed's point would become a core tenet in the church of telco-think. It would, over the next few years, be dressed up by lobbyists and PR gurus to resemble something vaguely resembling a coherent argument, used around the world every time a telecom company wanted a slice of a content company's revenues. Enter the pseudo-scientists and public relations wizards.

Scott Cleland is a policy consultant paid by AT&T, Verizon and Time Warner Cable to sell his client's Kool-Aid, and is frequently called to Washington as an "objective" industry analyst. As Cleland's blog attests, his employers have him spending most of his time lately attacking Google. Why? Google has angered Cleland's employers, by advocating network neutrality and increased broadband competition while fighting metered billing. Why? So that Google can sell more advertisements to more people over a greater range of content delivery systems.

Internet
connections could be more affordable for everyone, if Google paid its fair share of the Internet’s cost.

-Scott Cleland
With the network neutrality debate reheating in DC, and two of his clients busy trying to sell the public on the idea of metered billing, Cleland has presented a new twenty seven page self-authored research study (pdf) that has taken Ed's original "free ride" premise to a new extreme. This time, with graphs!

According to Cleland's scientific-looking study, Google is using twenty one times the amount of bandwidth they actually pay for. The report claims that Google (or their users, the study intentionally fails to make the reference) consumed 16.5% of all U.S. consumer Internet traffic in 2008, a total Cleland claims will grow to 25% in 2009 and 37% in 2010. In contrast, the search giant paid $344 million in 2008 for bandwidth, or 0.8% of U.S. consumer’s flat-rate monthly Internet access costs of $44.0 billion. Cleland's conclusion from this data?
quote:
The core conclusion of the study is that any sustainable national broadband policy must ensure that the heaviest Internet users pay their fair share of Internet infrastructure costs. It is neither economically rational nor equitable for the biggest users of, and beneficiaries from, shared resources to not share fairly in the recovery of costs.
Google doesn't report how much they pay for bandwidth, so Cleland guesses by examining Google’s 10-Q and 10-K filings with the SEC for 2007 and 2008. Google doesn't specify anywhere how much bandwidth is consumed by Google's webcrawling activities, so Cleland guesses there as well. The report then forgets that Google owns much of their own fiber, data centers and undersea routes while direct peering with many carriers, which oh -- kind of undermines Cleland's central thesis that Google doesn't contribute to the infrastructure of the Internet.

Most importantly the report ignores that consumers are paying for much of this bandwidth on their end too, which brings us back full circle to Ed's argument being dumb in the first place.

All noted, the report does a fantastic job of taking Ed Whitacre's confused, greedy ramblings made three years ago, donning them with a coat of pseudo-science, and representing it ahead of a rekindled debate over network neutrality before DC lawmakers. But it's not objective science, and shouldn't be treated as such. It's public relations, designed to vilify Google while fostering Ed Whitacre's dream of a future Internet where already very profitable companies don't have to pay for their own expenses, and everyone is double or triple billed.


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funchords
Hello
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join:2001-03-11
Yarmouth Port, MA
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reply to goliath28

Re: This is ridiculous!

Actually, it's very "Phone Company."

These are the guys that charge you $0.20 to receive a text message, and sell you packages to get all the text you want.

Then, once they get people used to that model, they want to charge the senders money, too. »Verizon Charges Companies 3 Cents To SMS Their Customers

These are the brainiacs that charged you extra for "Touch Tone," or to keep your number from being printed in the directory -- even though touch tone and unlisted phone numbers both save them money.

If they were Hoteliers, they'd charge you for the room and charge you for looking in the mirror.
--
Robb Topolski -= funchords.com =- Hillsboro, Oregon
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Sammer

join:2005-12-22
Canonsburg, PA

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reply to jmn1207

Re: Broken System

said by jmn1207:

If Google were to fork over 2 billion dollars, only .0001% of the wealthiest employers would see any benefits. I'm offended that it was even mentioned that the regular consumer could save money on our internet service if only Google paid their "fair share". That is complete BS.
You got that right, AT&T will charge consumers whatever the market will bear no matter what Google pays for internet service. AT&T would even like Congress to legislate that consumers have to pay more than they would ordinarily be willing to bear. This is simply an argument about whether AT&T should be able to to legally steal some of Google's profits and has nothing to do with consumers.

redhatnation
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join:2005-06-02
Woodbridge, VA

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Thank you, Karl

Well written summary.

Would be nice if the various Congressional committees, the FTC, and the DOJ, who are sniffing around this issue read dslreports.com.