Google uses 21 times more bandwidth than it pays for -- per first-ever research study

There are several instances where I believe the report overlooks several key issues.

Individuals pay for access for access to the internet at a certain speed. If Google then sends these customers data, the bandwidth is paid for by the user. That is the purpose OF the customer charges themselves. Are you advocating this bandwidth be double charged, that both I, as a consumer, pay for bandwidth which should be paid for by both parties?

Additionally, lacking content, broudband providers would have nothing to provide. This situation could be a reverse of the arguement used in the document itself. Bandwidth providers are not paying their share for content. Some bandwidth provides are attempting to deliver simular content, however they have all generally failed. As an example, Comcast has tremendous availability of media rich services which could be crossed over from their existing media technologies from Cable and VoIP. And yet, they are not competing at the same level as Google is with its holdings. But they are able to capture more and more market share of the broadband customer base, all of which demand the services in order to utilize Googles content.

Please, lets continue to discusion, I'm curiouse why the value of the content was never mentioned in the report as a second way of viewing the debate.

Re:Charge more? (Score:5, Insightful)
by budgenator (254554) on Sunday December 07, @12:18PM (#26021513) Journal

The customers paid for a shared connection. Google (Youtube) paid for a commercial connection. The ISPs are already being paid twice for transporting the same bits.

Since the customer's connection is shared, there is no service guarantee. If contention is too high, bits get dropped. If too many bits get dropped, and the customer has a choice, they can go to another ISP.

To summarize, ISPs are currently double-dipping, and they don't like competition. To solve this "problem", they propose triple-billing for transport so they don't have to re-invest as much in infrastructure. The "net neutrality" spin is just an obfuscation of what would otherwise be an obvious abuse of their position.

But do a better job of being a paid shill, please.

Review these two links and then write something a little bit better, eh?

http://arstechnica.com/journals/law.ars/2008/12/05/can-we-get-some-better-telecom-shills-please

http://arstechnica.com/guides/other/peering-and-transit.ars

While Google may not fault Mr. Cleland for trying to do his job, I certainly do. Any role that requires an assault on logic and the spread of confusion is better left undone.

The basic claim is that a public company (Google) uses 20x more of an outside service (network bandwidth) than it pays its suppliers for using. Could this ever be true for any company and any service? Could a company use 20x the steel, water, fuel, electricity or other supply than it pays for--month after month and year after year--without the vendors noticing? Without an overdue notice? Without the deliveries being cut off? Without a lawsuit?

Mr. Cleland's claims therefore are incorrect. They are incorrect irrespective of net neutrality, his financial support, Google's actions, and Google's network bandwidth suppliers. They are false on their face and serve only to confuse the unthinking. The only bright spot in this is that the job was done so poorly.

I challenge Mr. Cleland to test his theory and rhetoric by sending his ISP just 5% of the bandwidth charges he owes from now on and observing first hand how quickly network vendors take notice and how swiftly they act to correct the imbalance.

Just wanted to suggest we have a legitimate conversation about the issues. Throwing insults around isn't helpful.

After all, it's clear that Cleland isn't trying to post an honest evaluation of the internet's bandwidth consumption. He's adding to the collection of misleading studies that are attempting to muddy the waters about net neutrality.

With this in mind, let's not get petty about his math skills. Instead, let's focus on the facts. Cleland sold out. Now, we all have a price, and the telcoms might be paying him extremely well, and at some point, we would all break. So the question is Mr. Cleland, how much money did it take the telcoms to buy out your integrity? Or were you always dead inside?

Anxiously waiting your response.

surrounding Net Neutrality, and even though it's your job to be a public relations liaison surrounding the net neutrality debate, and on the side against any such notion; I know very few people who weren't persuaded the other direction after actually understanding how the economics of the Internet work.

Please read this article that explains exactly in CLEAR detail how the industry, economically more importantly, actually works.

http://arstechnica.com/guides/other/peering-and-transit.ars

It's a series of peering and transiting agreements of sizable networks, you're rewarded depending on your size and accessibility.

The telecoms should be competing on becoming TIER 1 networks, which give them access to the entire internet/network below them for free, and where every other ISP/Telecom/Consumer best go through them (and actually pays them) to get the greatest access to information. The bigger you are, the bigger your paycheck. In fact if you're a TIER 1, bandwidth doesn't cost you a dime, only demand for bandwidth growth, will cost you, so that's when you take your big-fat paycheck, collected from all your tolls, and upgrade your infrastructure every once in a while, to ensure you remain a TIER 1.

In other words, you can't put up toll booths for people who don't use your roads. In the end it's my self who decides how best to use my traffic, if I choose to use Google: Google pays their end, and I pay my end, that's that.

Scott, again, I know where you're coming from, I had a similar view prior to me actually understanding the actual structure we have in place. Please, I beg you to read the article, it's not bias, it lays out pretty much how it's nearly impossible for these Telcos to actually be billing Google for traffic they've actually already paid for (and so have I for that matter).

They just aren't very happy that they haven't tariffed the revenue they're finally bringing in, and want to set some sort of precedent to change an already successful business model of the Internet.

After reading the article you'll understand that the bandwidth business is actually already a very very profitable business compared to other businesses, provided they expand their business: actually invest in bigger infrastructure to meet consumer demand, rather than starve it. If you come from an economics background, I'm sure you'll appreciate a tariff analogy, and what kind of effect tariffs have on business, it just creates DWL = (dead weight loss), it'll stifle innovation on the internet, and allow large telco's to start controlling exactly what traffic comes across their lines: Sounds more like shoddy television packaging.. *shudder*

By the way, maybe you can tell me what happened to all those billions of tax dollars we gave the telcos to upgrade their networks, and didn't spend a dime of it on what they said they would?

surrounding Net Neutrality, and even though it's your job to be a public relations liaison surrounding the net neutrality debate, and on the side against any such notion; I know very few people who weren't persuaded the other direction after actually understanding how the economics of the Internet work.

Please read this article that explains exactly in CLEAR detail how the industry, economically more importantly actually works.

http://arstechnica.com/guides/other/peering-and-transit.ars

It's a series of peering and transiting agreements of sizable networks, you're rewarded depending on your size and accessibility.

The telecoms should be competing on becoming TIER 1 networks, which give them access to the entire internet for free, and where every other ISP/Telecom/Consumer best go through them (and actually PAYS them) to get the greatest access to information. The bigger you are, the bigger your paycheck.

In other words, you can't put up TOLL BOOTHS for people who don't use your roads. In the end it's my self who decides how best to use my traffic, if I choose to use Google: Google pays their end, and I pay my end, that's that.

Scott, again, I know where you're coming from, I had a similar view prior to me actually understanding the actual structure we have in place. Please, I beg you to read the article, it's not bias, it lays out pretty much how it's nearly impossible for these Teleco's to actually be billing Google for traffic they're actually already paid for.

They just aren't very happy that they haven't tariffed the revenue they're finally bringing in, and want to set some sort of precedent to change the business model of the Internet.

After reading the article you'll understand that the bandwidth business is actually already a very very profitable business compared to other business, provided they expand their business: actually invest in bigger infrastructure to meet consumer demand, rather than starve it.

I sincerely hope politicians are smart enough to recognize how poor your grasps of the internet, economics, and basic math are.

I'm sorry if my comment doesn't seem particularly constructive, but really, if you're going to shill for major companies it would behove you to at least understand the subject material well enough to do a convincing job of distorting the facts.

I pay my ISP for bandwidth to connect to arbitrary points of MY interest. If I'm interested in ancient Babylonian Sculpture, and Juno Skinner has a website with streaming video of digging scientists, to whom do you charge the fees? I pay for the ISP connection to the Internet, and the Juno Skinner site pays for the connection to the internet. Firstly, how do you parse the benefit to the two parties? Suppose I buy a unique piece from Juno (hey! I'm a dealer in ancient art. ;-) for $500,000. When you think about this, doesn't it fill you with outrage that this website connection is the direct reason for Juno to be able to buy those warheads? Shouldn't the ISP get a cut of that action?

No, please find a way to make an ancient art deal so that you will have the (significant) resources to buy a grip.

I pay for the ISP to connect me to the endpoint of the cloud. That has a specific value determined by the broadband market in place. Slow is about $30, fast is $45-50, and for blazing, the sky is the limit (OC-3 or similar). Google, as well, pays for it's bandwith to the endpoint, which again is the cloud.

The above art deal is an example of leverage. Leverage happens and never has a value until it is instantiated. As a class, leverage has no value. You are arguing about the class, and you are arguing for a cut of that "leverage". Because of Google's deep pockets, there's a deep sense of injustice here. I understand your pain. The kid next door has a cherry pie and your mom won't buy you one. Get a grip, use your own leverage, and make your own money. Don't stand here and cry on my shoulder that these mean people are peeing in your pool. I'll listen, but I don't agree.

Your argument is pure idiocy. Even a paid hack like you should find sounder arguments than this one. I can't believe they pay you for this dribble.

If I Look at a video on you tube I am doing it using the Bandwidth that I or My employer pays for. Shareing the cost in this way is fair

Surely are you arguaing that ISP's should be able to charge twice for the same thing? once for the data provider and once to recive it?

7 points by ars 2 hours ago | link

Someone failed at math!

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.

When I stream a video, that bandwidth should be charged to me, not to Google. I get the benefit.

It sounds like you think that all bandwidth should be paid for by both the originator and the receiver of content.

The numbers cited in this study are a manipulation of paid research. Google, like any other internet utility that uses public interconnect via private termination agreements, pays the rates that it negotiates with private parties that are empowered to control these contracts.

As an analyst, I find this type of research and findings something on the order of "Alice in Wonderland", where it gets stranger and stranger, more and more.

Total shill for the telecom industry. Anyone who doesn't work for a telecom provider will tell you this is a technically idiotic perspective.

1. Users of Google are paying for the bandwidth used to access Google services. Why should Google have to pay?
2. Of course Google's bandwidth costs will be low -- ever heard of economies of scale?

This is analogous to mobile phone billing around the world. In practically every country, the caller pays for the call. The recipient didn't originate the call -- why should he have to pay?

But in the US, both the caller and the recipient are billed minutes while on a call.

Don't take this report at face value.

Scott,

You've done some very interesting and useful analysis here. Thank you for sharing it with us.

However, one criticism is that you conflate two things and treat them as if they were the same and part of the same category: namely, consumer broadband spending and service provider bandwidth spending. These two things happen at opposite ends of the internet value chain and are entirely separate.

In chart VI of your report you act as if consumer broadband and dial-up internet access spending and Google's spending on bandwidth were the only chunks of money being spent on bandwidth/broadband in the US. This is, of course, not true. Google's spending should properly be put in the context of overall service provider spending on bandwidth, not treated as part of consumer internet access spending.

Measuring Google's spending as a proportion of consumer internet access spending is meaningless - it's like asking how much it costs the Yankees to drive their players to the stadium as a fraction of how much it costs all the fans to get to the stadium. You'll get a number of out that but it won't mean anything.

I would suggest calculating how much Google pays for bandwidth as a portion of all the spending by service providers on bandwidth used to serve US consumers. Your numbers might be just as stark, but at least then you'd be measuring the right thing.

The study attempts to push a theory that AT&T under Ed Whitacre but also others among the broadband providers have attempted to push for some time, which is that consumers and Google and others should all just pay their "fair share" of the costs of the Internet. However, this simply isn't the way free markets work: the fact is that there is a value chain and different players pay for different parts (as they do in any other free market).

Google pays less than it otherwise might because it has so many peering arrangements (entered into voluntarily by the various parties to them) which it doesn't pay anything for. That's the way the system works, and large broadband providers benefit from it too. AT&T, Verizon, Qwest and the cable companies are perfectly free to develop their own business models to compete with Google and are entirely within their rights to sign whatever agreements they want to. No-one is forcing them into anything. They can also charge their customers less or more if they think that will solve the problem. The real issue here is that bandwidth use is skyrocketing and broadband providers don't want to pass the costs on to their customers, but those customers are causing the increase in costs and should rightfully pay for it.

I'm not a stooge for Google or the broadband providers (though the broadband providers are clients of mine) but I think this analysis needs some tweaks before it becomes really meaningful. Thanks again for some very interesting groundwork though.