41 Comments

Summary:

It turns out that Google, the great proponent of net neutrality, is paying Orange to handle its traffic on the carrier’s mobile networks. That’s an unwelcome development, and here’s why.

Google's Lame Defense of its Net Neutrality Pact

The concept of net neutrality means different things to different people. Some see tiered access pricing for connectivity as the key debate point, while others are more concerned with the idea of content providers having to pay network operators to carry their traffic.

I fall into the second camp for a variety of reasons, all of which have been brought to the fore by the revelation that Google is paying France Telecom-Orange to deliver its data to users. It’s not clear how much Google is paying Orange, or what the precise terms of the deal entail (I’ve asked both parties for clarity), but it does look like a line has been crossed. Here’s why that’s bad.

Google is rewarding greed

Telcos are very fond of complaining about the cost of building out modern mobile networks that can support the explosion in data traffic — despite the fact that mobile broadband usage is the carriers’ current cash cow. A group of European operators even tried (and failed) to get net neutrality banned globally, so that they could try getting content providers to pay for having their traffic reach the consumer in a usable state.

But this is not necessary. The carriers already make money off delivering data, and they make it from the consumer who signs up for a data tariff or pays by the megabyte. The content providers, meanwhile, already pay on their end to deliver that data – through their own internet service provider and/or through a content delivery network such as Akamai, and also through investing in private delivery networks.

If the receiving ISP wants more money on top of that, you’d think that they would provide extra value in turn. That’s not what’s happening here. So Google generates half the traffic on Orange’s network? That helps drive and develop Orange’s business, so it’s not something that should be penalized.

Google is abandoning its principles

Let me briefly pass the mic to one Eric Schmidt, who said back in 2006:

“Today the internet is an information highway where anybody — no matter how large or small, how traditional or unconventional — has equal access. But the phone and cable monopolies, who control almost all internet access, want the power to choose who gets access to high-speed lanes and whose content gets seen first and fastest. They want to build a two-tiered system and block the on-ramps for those who can’t pay.”

Those were the days. Fast forward six-and-a-half years and Google finds itself in a somewhat different position. The main agent of that shift is Android, which makes the company both a content and platform provider in a hugely competitive market.

The biggest gains to be made there lie in emerging territories such as Africa, where people are currently abandoning feature-phones for low-cost smartphones. When he revealed the hitherto secret Google deal this week, Orange CEO Stephane Richard was clear that his carrier’s strong position in Africa gave it the leverage it needed to extract cash from the U.S. firm. In other words, Google stuck by its principles until self-interest dictated otherwise, and in the process…

Google is messing things up for other content providers

As Schmidt’s words from 2006 make clear, one of the key attractions of net neutrality is the fact that both large and small players get equal access to the information highway. As he went on to say in that screed: “creativity, innovation and a free and open marketplace are all at stake in this fight”.

This is really all about barriers to entry. If Google is paying a carrier such as Orange to handle its traffic better than it might otherwise be handled, then Orange has the incentive to demand the same from other content providers. Even if it does not, we hit the problem of telecoms network capacity being a zero-sum game – if it weren’t, Orange wouldn’t have any leverage here, short of blocking Google outright.

In other words, Google has not only set a terrible precedent for up-and-coming mobile innovators, but it has also made it more likely that the quality of new services will be degraded over Orange’s networks — all so that the quality of Google’s services can be maintained.

It’s probably not a deliberate tactic on Google’s part to disadvantage potential rivals, but it could sure work out that way. And for that alone, Google should hang its head in shame.

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  1. This is why anyone who thinks Google is trying to be nice with their Google Fiber is out of their mind. They want to control everything from your connection in your house to what you use on the internet. Once they have you on Google fiber, what stops them from giving YouTube better network speeds while throttling Netflix? This will happen, and it is amazing how critical the SF based tech media is of a company like Facebook (i,e, privacy) etc while giving Google a pass over and over again.

    It won’t be long until we hear that Google is starting their own mobile company in the US to rid of the the awful telecom companies, when in truth is they just want to run their own.

    1. Of course they want their own networks, however do you think you would get better service from Verizon and AT&T or from Google? If Google wants to have it and all the pies that’s fine so long as it benefits us the consumer, and so far it has.

      1. I don’t trust either one of them, that is why we need net neutrality to be law. I am sure YouTube and Gmail will work great on a Google network, but when my Netflix app or a Vimeo app buffers because YouTube gets network priority people will be pissed.

      2. @Darren Cohen – Why is Google/Youtube more of a threat to your Netflix usage than competing TV offerings from the Cable/Telcos who are likely your current ISP?

      3. @brown_te I don’t think they are more of a threat, but a similar threat. Like I said I don’t trust either side to do what is right if they have the power of the network on their side.

  2. saidimu apale Friday, January 18, 2013

    So you’re blaming Google for being blackmailed by Orange?

    How do you account for the fact that Google will be the biggest loser, and knows that, if telcos get rid of net-neutrality? Unless you have evidence to the contrary, I think Google deserves some benefit of the doubt.

    If, on the other hand, details emerge that corroborate your sinister reading of Google then you will be justified in calling for heads to hang (Google’s first).

    1. The big joke about the telcos’ stance on this sort of net neutrality over recent years is that they had not succeeded in getting any major content provider (if anyone at all) to pay up. They were trying to seek legal protection for a tactic that they had never successfully deployed, because the content providers all told them ‘no’. I am not naive enough to believe that solidarity was the only reason for this, but I do think there was a recognition of how damaging the precedent could be.

      There was also another reason why the content providers could successfully resist: someone like the BBC, for example, knew that any attempt to throttle or degrade their services would make customers angry at the internet provider, not them.

      In short, what you refer to as ‘blackmail’ has been going on for a long time, but without success. It has now been successful, and I think it is reasonable to suggest that Google has allowed that as a calculated decision. The advantages to Google that I note were brought up by Orange’s CEO, and they make sense. Google loses and wins at the same time, but it has put other content providers in a losing-only position.

      I should add that I asked both Google and Orange for comment on this earlier today, and waited nearly six hours for a response. If I get one, I will add it in and revise the piece if necessary.

      1. “Google loses and wins at the same time, but it has put other content providers in a losing-only position.”

        Without being privy to the other content-providers’ thinking (or tactics), I think it is unfair to single Google out. Of all the content-providers out there, none comes close to Google’s words and actions on net-neutrality (and openness in general).

        While you ultimately may be correct in this particular instance with Orange (we’ll find out soon enough I hope), I think you do net-neutrality a disservice by singling out its (possibly greatest) champion. I would rather the hangman’s noose were widened a little to include committed “wall-gardeners” like Apple, Facebook, Amazon and the like.

        I get that you seem to hold Google to a higher standard; I think that higher standard should also make allowance for the realities of competitors (Apple, Facebook, Amazon) with much lower openness/net-neutrality standards.

        1. I’m not sure what you’re implying here – are you saying Amazon and the others have agreed to pay operators to carry their traffic? That’s the only kind of net neutrality I’m talking about here (I really wish the term wasn’t used to refer to so many things).

      2. The comment system doesn’t seem to allow deep nesting so I’m responding to this comment here:

        >
        > I’m not sure what you’re implying here – are you saying Amazon and the others have > agreed to pay operators to carry their traffic? That’s the only kind of net neutrality I’m > talking about here (I really wish the term wasn’t used to refer to so many things).
        >

        Net-neutrality doesn’t exist in a vacuum. It is part of a broader conversation/debate under the “openness” umbrella. I’m saying that solely discussing net-neutrality, and doling out shame, without placing it in the larger context misses the point.

        And my point is that Google has done pretty decently overall. Specifically with net-neutrality: I’m not aware of any other content-providers bidding $4 billion dollars in a wireless spectrum auction to keep the airwaves open. Or attempting to run around the carriers’ control by directly selling unlocked phones (with uncertain success it seems).

        In short, Google’s record when it comes to net-neutrality is far better than your article suggests.

        That said, I’m quite keen to see what the Orange deal is about.

        1. All of this is true, but in those cases Google was also clearly acting in its own interest – and who can complain, when the overall result is beneficial?

          I think the main outstanding issues here are what Orange said would happen if Google didn’t pay up, and what Google is actually paying for. Both companies have had adequate time to provide an explanation, and Google’s failure to do so is particularly curious. Like you, I am keen to find out exactly what happened there.

      3. Not sure if you are a Google fan or just trying to be fair in discussing the topic by applying the same logic to other companies. Either way you are missing a very obvious point that Google with its clout (both in terms of money and reach) should not be doing this. It is totally in contradiction to your belief of how open Google is, even you can’t deny it. On top of it this is one of the worst things to happen to the internet.

        As of now since we know Google has done this then it is only natural that they are criticized for such practice (rightly so). There might be worst violators out there but that doesn’t negate the fact that what Google is doing is wrong.

        If you justify the fact that some content providers should be allowed to buy their way through then 99% of the rest of the content providers have already lost and by extension 100% of the consumers are the loosers.

  3. Why are you surprised or disappointed? If Google is the cause of half of Orange’s costs, it’s only fair they should pay for that half of them instead of being given a free ride. The alternative is a doubling of your Internet bill, which would make some people shut off the Internet which would hurt Google even more.

    Worse than that, the “tragedy of the commons” (no incentive not to over-consume something that seems “free”) would then lead Google to consume infinite network capacity gratuitous wireless 4K HD everything — doubling or quadrupling your internet bill yet again, and causing more people to not be able to afford Internet service, devolving the Internet.

    Maybe Google just woke up and realized it’s better to keep the Internet service providers alive than to send the Internet back into the dark ages.

    Network neutrality doesn’t mean free. It just means different kinds of traffic, subject to the usual irregularities (delay, jitter, dropouts) that occur over data networks, should not be discriminated against. Everyone should pay for their fare share.

    1. I have heard this argument many times, which is why I spelled out how content provision is already anything but free for a provider that’s achieved scale.

    2. As David pointed out, the carriers are already paid for delivery by consumers. If a provider (supplier) wants to subsidize the delivery cost (e.g. Amazon et al) the benefit should go to the consumer, not the delivery company.

    3. > If Google is the cause of half of Orange’s costs, it’s only fair they should pay for that half of them instead of being given a free ride.

      If cows represent half of McDonald’s costs, should cattle pay to be slaughtered for use in Big Macs?

  4. Google should be ashamed but even more ashamed should be Orange and the EU,especially the EU,it’s their job to make sure something like this can’t happen.

  5. This article is misleading in many ways. First, you cannot compare European operators to US operators. For example, you can get a 2 Euros/month (not a typo) mobile package from Free in France (MVNO). There are four wireline operators that can offer you a triple play service in France. Where I live in the US (Bay area), only one operator can deliver 20 Mbps DS (I am not counting VZ Wireless LTE local loop service). There is no competition and the BB operators in the US are making a decent margin. In Europe (France, as this is the example used), there is such a fierce competitive landscape that here is no margins left (for both landline and mobile operators). It is only natural that the network operators turn to content owners to subsidize these offers..

  6. @Craig. Google and other content providers are already paying their share (I’ll leave whether it is fair to others.) Content providers pay at their network ingress. They want a 10Gb pipe, they pay a monthly recurring charge to the network provider they connect to for the priviledge. You and I, consumers, pay our respective ISP’s for our capacity. The carriers in the middle either peer (an agreed upon exchange of service that both sides think are equitable where they don’t pay each other anything. Basicall, I pay you $10, you pay me $10, let’s not do that and carry traffic) or they transit where one side pays the other to connect.

    Everyone is paying and getting paid for their share of the network.

    What Meyer is pointing out is that Google is paying both it’s provider (transit or peer, it’s still a business arrangement) to carry its traffic and THEN Google is paying Orange AGAIN to deliver it (if that is in fact the case. So Google is paying both ends. That forms a bad precedent where other ISP’s can attempt to charge content providers a “delivery charge.”

    It’s really quite simple.

    PS: I wonder if Google is using it’s own network to deliver it’s traffic to Orange and Orange, not wanting to peer (carry traffic for no fee), is charging transit. If that is the case, Google is paying once, to Orange, to send traffic, and that is a business decision.

    1. Here is an example to consider. Suppose the main thing I want to do on the Internet is Skype with my girlfriend in Africa. She has a broadband connection, and I have a broadband connection, but there is a bottleneck somewhere in between. Should my ISP be prohibited from selling me a premium access plan that gets those packets to Africa? Or, should my “Internet” access only apply if I remain on the beaten path (i.e., wherever end-to-end capacity is already in place due to aggregate end-point demand)? How is what Google doing any different?

      1. The difference is that Orage is doing the equivalent of your girlfriend’s ISP being the one charging extra money for access.

      2. Anony, Google paying Orange is just a hack to get around the fact that the business machinery for end-to-end quality of service does not currently exist. In some future world, Google would just pay their own network provider, who would work out the settlements with whoever else is on the end-to-end path.

  7. At the same time this “pay by size of ingress/egress and take your chances in between” does not cover every application need. So the IETF has for a long time been working on end-to-end quality of service provisions that would allow a network customer to pay a higher rate to insure their data is delivered. Absent the widespread deployment of these provisions, Google is achieving the same basic result by contracting directly with Orange. At some future time, Google would be able to put a marker on their packets which all carriers would respect. For now, the marker is simply “originated from Google,” and only Orange is respecting it. I can’t see anything wrong with this.

  8. I believe Google is also paying Comcast to carry its traffic. Talk about the pot calling the kettle black. Some decision makers at Google should be shamed for this.

  9. I’m not french but I speak french, and follow the french tech news from time to time, only to see if it’s different from here.

    “Free”, another telco/cable company, has made a case of wanting google to pay money to route youtube content.

    In this case, I think Orange made this statement, which I doubt is complete (more on that later), more to irk it’s competitor (Free), who has started a price war on mobile subscriptions.

    Knowing Google, the deal (if it really exists) is not simple money thrown at orange, it’s surely a package. Moreover, in France, business is politics, and Orange is is subsidiary of “France Telecoms”, a behemoth with tight ties to the government. (your french AT&T, if you will).

    And it appears that Google is helping Orange develop mobile network in Afrika, where it’s presence is very strong.

    I feel however that “Google France” managers might have done a mistake by doing business the french way.

  10. AND why should that be? Google is a company!!!… not a philanthropy or charity!!!

    I’ve never recieved anything for free from my ISP or Mobile carrier!!!

    Profit drives them all… Like greed and averice drive drive many on this planet!!!

  11. Brilliant! This should be adopted by public transit here in Portland. “Nice store you’ve got there. It’d be a shame if our buses didn’t stop at the nearby bus stop.”

  12. In business all it counts is “what is better for me”. Google’s concepts of freedom, opennes, and not being “evil”, and even treating their employees well, are all values from its origins when they needed those things to compete and differentiate. Now they have been struggling with maintaining that since there is no real incentive and the incentive is really to extract more utility from their clients and providers.

    The only reason they have to negotiate with carriers is because they are stronger at the point of sale (they have the end contact with the customer) and the carriers are few and cartel.

    In business there is no democracy and no “feel good” values. How will someone be in favor of benefiting their competitors?

  13. If it came to it, cold potato routing and regional distribution platforms could solve problems like this without the need for such public mud-slinging…

  14. Nikhil Shetty Sunday, January 20, 2013

    I think the fear is that Google’s traffic will overwhelm traffic from all other small startups trying to compete with Google.

    Though I see the advantages of having a one-on-one deal with ISPs, I also see the utility of having an open Internet.

    It is a question of property rights to the ISP’s bandwidth – and it is best to have a middle way where both social and ISP ownership is maintained on the bandwidth. The middle way is best emphasized in a number of papers on this subject.

  15. Google supported all kinds of principles when they were smaller and needed protection from other competitors. But now that they have the leverage, they want to shut down that which brung them, lest it open up opportunities for others all financed by monopoly search/ad profits.

  16. Excellent article. Unfortunately not everybody understood the consequences for that act. I think that if Google is responsible for a big slice of Orange’s traffic they should do more peering and deploying caches instead of doing that. I recommend reading this article: ” Internet traffic exchange: 2 billion users and it’s done on a handshake.” It explain how good peering can be to improve performance. Paying for having your bits carried with “extra quality” was definitely not the right thing to

  17. For those who didn’t understand the real implications, they will soon realize that in a not so distant future, creating the “next big thing” will be so expensive because we will need to raise money to pay to a bunch of ISPs to have our bits travel in an “acceptable” way. Only the deep pockets companies will have enough money to have a decent quality for their service, making the process of innovation almost an impossible task. Strange that Google benefited from the “best effort” when they started and when they bought YouTube and now they are pushing for a new environment that only the rich can have a decent quality for their services. The real game here is to avoid the competition of the future, the same one that keeps the industry innovating, creates more jobs and make everybody else happy. I never bought the “don’t do evil” stuff. It was a clever marketing idea to gain sympathy(I wonder why this is not spoken anymore). The examples of the first version of their browser’s End User license and then the street view cars collecting more than “photos” showed their intentions.

  18. “Don’t be evil” ???

  19. laurentperche Monday, January 21, 2013

    David,

    The important issue here is to know what Google is actually paying for. Before knowing that, everything we write and comment is pure speculations and jumping to conclusion is not the right thing to do.
    Being a native french speaker, I did watch the Interview (http://youtu.be/-_g2zB-TUtk). What Stephane Richard is saying is the following ” The proportion of traffic which is generated by Google on our networks and which is subject to some sort of monetization is about 50%”. He also said that Google was not the only traffic that Orange was monetizing.
    This could mean a lot of different things. For example, it could be that Google has Google Caches installed in Orange network and that Orange is charging Google for Colocation and Bandwidth. If this was the case, should Google be “ashamed” of doing so?

    The Eric Schmidt analogy to an “highway” is interesting because the reasoning works only if everyone is driving at a similar speed and respects the road regulations. If you start to have lots of Ferraris and Lamborghinis on the fast lane then nobody else can use the fast lane until an additional fast lane is being built. The question being: “who pays for the additional fast lane?” some would argue that the Ferraris owners should fit the bill.
    Will wait on your update on this on-going story.

  20. I think “perception” is different than the “reality”

    FT/Orange is (also) a Transit provider (AS5511) and Google pays them to reach certain ISPs/eyeballs (in this case mostly FT/Orange affiliates), like Google pays other Transit providers to reach still other ISPs/eyeballs. Google has always paid for Transit in those cases where they don’t have a settlement free peering, probably some 30% of all their traffic.

    Is Google thereby funding mobile network build-out, and paying a termination fee?, I don’t think so!
    I assume Google pays market rates for this traffic, in the order of 1$/Mbps/month for a Transit service.
    However, the costs of building a Local Mobile network are in the order of 1000$/Mbps/month.

    That is, Google’s contribution to mobile network funding is negligible, and the money exchanged is immaterial to both parties.

  21. Have you ever considered that bill and keep fosters monopoly? Google is now a monopoly internet company in terms of scale on par with the incumbent carriers. The key difference is that it got their via true and open competition and a lot of what Google is doing still supports and represents, IMO, openness.

    Vertically integrated carriers are information age dinosaurs. They don’t scale or price particularly well. Everything is averages with them; no marginal cost or consumption. You are commenting on the final stage of a struggle that began in the early 1980s and got way-laid by failed US regulatory policy beginning in 1996 and culminating with the death of equal access in 2004.

    Instead of vilifying Google, you should equate net neutrality with equal access. You should also look at the carrier and internet models and argue for scaled horizontal exchanges in the lower (access and transport), middle (addressing, network management, security and settlements) and upper (application and marketing) layers.

    You should also decry the notion of bill and keep and support balanced settlements. Albeit competitively costed and priced. Balanced settlements effectively “clear” supply and demand from the top to the bottom layers and vice versa, as well as unilaterally across different providers. That’s how new services and technology are rapidly introduced and amortized. Just look at how slowly things have evolved in the “internet” world with a bill and keep model. IPv6 is but one example. Furthermore, a lot of negatives (spam, phishing, security issues) are dramatically reduced with balanced settlements.

    (As an aside, have you ever considered that the combination of all you can eat unlimited consumption and bill and keep killed the rural wireless broadband market in the US in the 2000s? And that metered pricing and bilateral settlements are the only way to ensure rural broadband?)

    This open, horizontal model with balanced settlements will actually support universal and free access, as centralized procurement will be the key driver to infrastructure investment; not edge subscription. The foundations for balanced settlements are already developing organically with Big data and online advertising platforms whereby the central procurer can see the return on the “free” or subsidized communications session married to some commercially supported transaction.

    You wouldn’t have believed me in 1984 if I told you that 90% of all long-distance communications would be free or perceived as free/unlimited by 2000; and yet it was. That’s the future we need and the sooner people see what Google is doing to take on the vertically integrated carriers, and not criticize them, the sooner we’ll get there.

  22. Is Google Net Research ? Not really sure ! There’s no equal treatment provided by Google…more you pay and better will be your position.
    Finally, if you’re asking for QoS you’ll have to pay: network and research engine.
    Orange and Google are asking the same.

  23. David Parsons Friday, January 25, 2013

    ISPs like Orange are companies who buid their own infrastructure to make money from it. Google also wants to make money from Orange’s infrastructure, and that’s OK with the “net neutraltiy” people. But it’s not OK for Orange to take some of that money back from Google? Huh? Are all “net neutrality” people just Google shills?

  24. Is this really new? Telcos being greedy? Shouldn’t it be noted that telcos already overcharged before mobile broadband got to be such a big thing? 12 pennies (GBP) for 160 characters (1.28 kilobits) of text message is outrageous. To transfer that much data over the Internet costs a fraction of that. And don’t get me started on the roaming charges.

    To transfer 1.28 kilobits over a T-Mobile mobile broadband connection would cost 0.0000005 GBP, at the rate of 15 GBP for 5GB per month (their plan of cheapest value), which works out at 0.0000004 GBP per kilobit.

    (1 byte = 8 bits)

    Telcos being greedy in the face of new technology is nothing new.

  25. I think its fair Google pays the Telecom operators. Telecom operators pay a huge licensing fee and most of the reveunue from M-Commerce is going to Google and the E-commerce merchants. Operators in Europe have to comepete on price and cannot get a share of the pie even after providing the infrastructure than enables fast internet. When the government is charging License fee apart from collecting Service Tax from Customers and Corporate tax from Operators, why can’t Operators charge Google for providing the bandwidth in their infrastructure ?

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