Google pays the cost of transporting its packets to certain points in the Internet; Google's users pay for transporting packets the rest of the way. It may be the case that the users are paying dramatically more than half the cost, but that doesn't indicate a problem per se, because transporting packets over the last few miles is genuinely more expensive than over the backbone.
There are some interesting questions about net neutrality that shouldn't be dismissed off the bat, but "google doesn't pay their fair share" isn't one of them.
Internet connectivity and bandwidth are now largely commodities, and hence not as high-growth or profitable as, say, Internet advertising pre-crisis. It's only natural that telecom companies want to cash in, and I personally think that all such companies* should be able to regulate packets as they see fit.
*that are not taking advantage of government-mandated monopolies in their infrastructure
So google floods the pipes cheaply with the stuff that everyone wants but we all have to pay extortion prices to local monopolies to crack the little valves at our houses and eek out the barest minimum to get it...and this makes google the villain in this situation how exactly?
In other news massive factories that use steel paid less per pound than your local railing fabricator, and General Mills was paying less for a bushel of corn per pound than we pay at the grocery store. If only these giant corporations paid their fair share we wouldn't have to be subsidizing them at the hardware and grocery stores of this fine nation.
I've heard rumors that Internet providers actually make money selling Internet bandwidth. They even make money moving packets between two ports on the same switch!!! The thieves!!!
I've also heard rumors of peering arrangements between organizations that don't charge each other for Internet bandwidth.
Why won't someone subsidize my Internet connection? Can I get someone to pay for the maintenance of my circuit? Tech support? And the bandwidth too? (yeah and the taxes and monopoly rates, that's an entirely different matter)
I have something of value I can barter in return. Let me think about this for a second... no, I don't have connectivity to other parts of the Internet, and I don't think my ISP would trust me anyway. Hmm... maybe, I could do something useful for someone else, get paid, and take some of that and pay my Internet provider for service?
"Thus Google’s 16.5% share of all 2008 U.S. consumer bandwidth usage, is ~21 times greater than Google’s 0.8% share of U.S. consumer bandwidth costs – or an implicit ~$6.9 billion subsidy of Google by U.S. consumers."
Um, economy of scale, anyone? If Google paid the same rates the average consumer paid they would probably be bankrupt.
Lets say google used 100% of all bandwidth, they would need to pay for 334mil/.165 = 2024.24. Now to calculate the overage: Other peoples share = 44000-2024 = 41976 divide by google payment (2024.24) = 20.7 - magic - the overage number didn't move! Still 21.
Now lets try the reverse.
Say google used 1% of trafic: 334/16.5 = 20.25 - other people will then pay 44000-20.25 = 43980 divide by google cost = 2172, adjust for 1% usage (* .01) = 21.72.
My head asplode - is seems no matter how much google uses they always seem to have an overage of 20 to 22 times as much!
Could it be, no, but could it be that home users pay 21 times too much for bandwidth??
No couldn't be, then this firm "funded by broadband companies" would have to tell it's people to drop prices by 22 times.
Seriously this has to be the stupidest study ever funded. I wonder if the authors of the study put their names on it. They completely ignore the fact that the recipient of the traffic should also pay for it, so lets see how much of that 44bil is home users, adjust for 16% and then we'll see.
Edit: As I thought, the authors did not put their name on it. And to make it stupider the 44bil is consumers bill only! Doesn't include costs paid by any other company!
They are seriously comparing the costs of home users vs the cost of google, and ignoring every other site on the internet! It's like they think the only thing home users do is browse google and nothing else.
At the very least adjust that 44bil by 16% to at least account for that. That would turn the overage into 3 times as much - which would imply that wholesale prices for bandwidth are 3 times cheaper than retail.
Actually ignore that last conclusion - the study is riddled with so many errors I would not want to draw any conclusion whatsoever from it.
Take a look at this little gem:
...[some math]... trucks pay 4 cents/mile, cars pay 1 cent/mile. So "trucks/businesses pay over four times more for their usage of the U.S. Interstate Highway system than cars/consumers do."
Is he brain dead? I mean if you want to compare adjust for the weight of the vehicle, the volume of it, the number of people you could fit in it, something.
But no - just straight compare.
(PS. Damage to roads goes by 4th power of weight. So 3000lb car/2 axles=5.1 * 10^12 of damage, and truck is 34000 per axle=1.3 * 10^18 of damage - so trucks do 254,901 times as much damage to roads as cars do, but they pay just 4 times as much.)
And he testified before congress! Is there some way to tell them he's an idiot?
You have to look at the graph on page 11 - he extrapolates data in such a way that he assumes that by 2012 google will have a 130% share of the video-to-pc market. Yes you read that number right, google will have 30% more share than actually exists. Not sure how they'll manage that.
PS: Someone please register for his site (he - blog author - is the author of the "study") and post this as a comment - I give you copyright permission. Let's see if he'll have the guts to post it.
I don't know, but since it was posted right before midnight and a number of funky things are happening with voting on this thread... the possibility that we are being played does need a look.
I like the headline, and it did go live. I have to say I'm surprised - maybe he didn't read it, or maybe it won't stay. I'll check on it after the weekend.
“It is ironic that Google, the largest user of Internet capacity, pays the least relatively to fund the Internet’s cost; it is even more ironic that the company poised to profit more than any other from more broadband deployment, expects the American taxpayer to pick up its skyrocketing bandwidth tab,” said Scott Cleland, President Precursor LLC, and author of the study.
I would be surprised if the opposite were true. The company that gets the most bandwidth for its dollar will probably be the one that spends the most dollars on bandwidth (if someone were able to get gas for $.20 per gallon other people pay for the rest, would it surprise anyone that this person was responsible for a huge fraction of the gas sold in this country?).
Even if it is paid by someone with inherent interest it can still have some level of validity. It is definitely economically inefficient to have someone who reaps so much traffic and revenue to not have to pay their costs, and it inherently makes it costs more for everyone else, hurting other web based companies if Google gets a great deal.
I hope this guy realizes that most internet businesses are more than happy to pay the freight on the bits google pulls. If a slightly better ranking in the SERP can double your revenue for the month, then it's well worth it.
And you could make a strong argument that google is using that bandwidth on behalf of it's users.
But yeah, this article betrays a staggering, if outright wilful ignorance of the actual functioning of the network.
Does the author of this junk really think there would be a internet worth mentioning if everybody had to pay the same inflated bandwidth-rates as consumers does?
If anything, this is a (flawed) argument about how consumers should pay less and not how google should give extra free money to net-providers all over.
