Arnold Kling  

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A story in the Washington Post says,

A Verizon Communications Inc. executive yesterday accused Google Inc. of freeloading for gaining access to people's homes using a network of lines and cables the phone company spent billions of dollars to build.

The comments by John Thorne, a Verizon senior vice president and deputy general counsel, came as lawmakers prepared to debate legislation that could let phone and cable companies charge Internet firms additional fees for using their high-speed lines.

Fiber to the home may be a huge white elephant technology (which, of course, liberals like former FCC Chairman Reed Hundt wanted to spend taxpayer money to provide). If the phone companies think they can shake down Google, they may want to think again.

I'll stick to my predictions that the last mile is going to be wireless and the landline phone companies are going to be bankrupt.

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COMMENTS (11 to date)
Adam writes:

Verizon, AT&T and other Telcos miss the point: Google is paying for internet access. So is Microsoft, eBay, Yahoo and every other internet firm. This is just another shakedown by companies built on old business models. Instead of adapting and evolving, old business companies would rather sue and/or double-charge customers.

Robert Schwartz writes:

What the devil are the phone companies complaining about. I am paying them a bloody fortune.

David Thomson writes:

My family canceled its land line phone service around six months ago. Each of us has a cell phone. Many of the younger generation have no intention whatsoever of ever subscribing to a land line service. A few more price drops should be sufficient to bankrupt the old telephone companies. I suspect the total collapse might occur in less than a decade.

daveg writes:

lawmakers prepared to debate legislation that could let phone and cable companies charge Internet firms additional fees for using their high-speed lines.

Let's say TelCo's are "allowed" to charge google. Let's also say that google refuses to pay.

What next, the ISP shuts its users out from google?

If it was my ISP I would switch. I have zero loyalty to my ISP, but I need google.

Conversely, google could sign exclusives with certain ISPs, much like satellite radio and/or satellite TV. In this case the ISP would pay google for each new subscriber.
In that case I would be forced to switch to the ISP that offered google.

Do the TelCo’s really want to play that game?

The ISP would then try to develop or buy their own "in house" search technology.

And this is just google. Are the TelCo's going to go through this with the NYT, WSJ and every other content provider? What a nightmare.

In the end, would all this fighting be good for the consumer? Right now things are running pretty well.

All this avoids discussion about what the telcoms "owe" everyone for the monopoly they had in the past, and whether it is fair for them to start charging for a network that was allowed to develop without competition.

Timothy writes:

I pay for my internet access, the end. Shut up, Verizon.

daveg writes:

I pay for my internet access, the end. Shut up, Verizon.

Better tell your senator and congressman. They are most likely going to sell you down the river on this one.

I know that it is not directly tied in, but I have been looking at copper prices at my blog.

Either way copper is less likely to be used for data transmission in the long term basis. But for rural areas wi-fi and other wireless communication systems the distances are too short. So fiber still might be used in many locations.

Lex Spoon writes:

I'm betting on wireless, too, Arnold. Technical issues aside, wireless is a competitive market. The companies will fight for customers, and the best wireless connectivity is bound to be better than the only phone/cable connectivity. Already a handful of major cities are building city-wide wireless infrastructure. I bet this trend continues.

I'm feeling this personally, as I get shafted by the phone company in my current town. There's nowhere else to go, so my choices are to accept the shaft or to go without a home connection.

The only way I can envision wireless *not* taking over is if the FCC (or some similar org) gives out monopoly or near-monopoly control of huge swaths of the airwaves. If the FCC allows multiple companies to offer wireless, then they will compete and they will find ways to be cheap enough to outdo the aging wired monopolies of today.

Stefano writes:

I'm betting on Google in this showdown. They are already experimenting with self-contained data centers that fit in a shipping container ( so that if the local telco charges too much, they may simply truck their business elsewhere.

Brad Hutchings writes:

This debate is so out of hand it's funny. No ISP is talking about shutting out Google. What they are talking about is having a guaranteed quality of service for some packets. These packets would presumably be packets where real-time mattered, such as streaming video, VOIP, etc. The rest of the packets would continue to move on the "best effort" basis that they do now. Presuming the best effort network capacity keeps up with user demand, there would be no perceivable effect from network bottlenecks using e-mail, web pages (especially simple ones like Google's search page) etc.

Big high-bandwidth content providers, like Yahoo!, Google, Apple iTMS, etc. aren't even in the ISP's scopes, as the big content guys have predictably balked at paying for quality of service. The people this really effects are real-time P2P application developers and VOIP providers. My business makes screen sharing software. Screen sharing requires 200Kbps up and down to be effective. Perceived latency of more than a couple seconds can make it difficult to use over the phone for presentations. Latency of more than one second can make it unusable for remote control of another computer. The system is completely P2P (no server middleman), so I wonder who is going to pay the ISPs for the fast lanes if they end up being needed for that application. At the same time, the screen sharing systems with server intermediaries (GotoMyPC, NetMeeting, etc.) would have to pay for guaranteed QOS, raising their operating costs, and making my business's solution all the more attractive. So I'm a little torn over whether tiered service would be good or bad for my business.

daveg writes:

Just for the record I never said the ISP's would block Google.

I just ran through a thought experiment to show illustrate the balance of power issues.

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