Google: Telecom-Funded Study Can't Be Trusted

In an unusually sharp rebuke, Google (GOOG) is slamming the author of a new report funded by major phone and cable companies, saying he can't be trusted because he's on the industry's payroll. The study, by Scott Cleland of the Precurser Group, claims that Google uses 21 times more internet bandwidth than it pays for, costing taxpayers nearly $7 billion a year.

In a strongly-worded response, Richard Whitt, Google's D.C.-based telecom policy point man, attacked Cleland's credibility, saying because he is paid by the industry, "most people here in Washington take his commentary with a heavy dose of salt."

Cleland is well-known in tech and telecom circles as a paid advocate for telecom and cable companies, including Verizon (VZ), AT&T (T) and Comcast (CMCSA). The study was released by NetCompetition.org, "a pro-competition Internet forum funded by broadband companies," of which Cleland is Chairman.

In the industry-funded report, Cleland says Google currently uses 16.5 percent of the internet's total bandwidth, but pays only a tiny fraction of that in broadband costs. The study echoes the famous comments made by former AT&T chief executive Ed Whitacre, who in 2005 charged that web companies like Google are essentially free-loaders who should pay to use his company's "pipes" to deliver content and services.

Cleland charges that Google uses vastly more bandwidth than it actually pays for, resulting in a "$6.9 billion subsidy of Google by U.S. consumers."

Google reacted swiftly and sharply, hours after study appeared.

"We don't fault Mr. Cleland for trying to do his job. But it's unfortunate that the phone and cable companies funding his work would rather launch poorly researched broadsides than help solve consumers' problems," Whitt wrote on the company's blog. "Not surprisingly, in his zeal to score points in the net neutrality debate, he made significant methodological and factual errors that undermine his report's conclusions."

Cleland's report -- which took several months to prepare -- is a shot across the bow aimed at Google and network neutrality advocates. Expect a full-bore confrontation over this issue once Obama -- a network neutrality supporter -- takes office.

Comments

[Russ/The Ba...:]

Interesting article. Slam the author for his connections to the industry, but offer no counter intelligent response. This is fact, not Politics. Think before you write. It makes the credibility factor standout. Google absolutely does use excessive bandwidth. A 17 year old could tell you that.

2008 Dec 07 09:43 AM

[ha ha:]

You're pretty much doing the same thing.....Besides the phone companies are still benefiting from the telcom act of 1996. Written to increase competition in actuality reduced it. If you wanted to enter a new market you had to open your network up to the company you're trying to compete with. Well the companies got around that by just buying the companies in the market they wanted to compete with. This eliminated the competition.

I don't have a "real" choice for my phone service. I have to go with verizon. If I want to go with vonage I have to drop verizon DSL because they will charge me to keep my phone number and add a surcharge for using vonage. If I drop verizon all together and go with time warner I have to pay more for the internet and lose my number.

My heart isn't bleeding for the phone companies.....any 17 year old would know that a company paying for a study is going to make sure the results represent their best interests.


On Dec 07 09:43 AM Mr. Telecom wrote:

> Interesting article. Slam the author for his connections to the industry,
> but offer no counter intelligent response. This is fact, not Politics.
> Think before you write. It makes the credibility factor standout.
> Google absolutely does use excessive bandwidth. A 17 year old could
> tell you that.
>

2008 Dec 07 10:30 AM

[mowo:]

Google's servers don't "push" content on anyone. They sit and wait for http requests for content. The end users request whatever content they want. If the phone and cable companies can't make a profit charging the people requesting content as things stand, then they should raise their prices (although I don't see any major phone companies in the bailout line-up).

2008 Dec 07 11:24 AM

[Rurik Bradbury:]

Consumers pay for Web access. They can (theoretically) shop around for the best prices. Google pays for huge amounts of Web access. They can (definitely) shop around.

If a broadband supplier to Google's datacenters thinks its customer is paying too little, they can try to charge them more. Then Google can switch broadband suppliers -- which it will.

If a broadband supplier to consumers (eg Verizon, AT&T, Comcast) thinks its customers are visiting Google 17 times too much, they could perhaps try to levy an extra surcharge on consumers for each visit to Google.com. Let's see how consumers, Obama and the FCC react to that...

This whole report is totally bogus. As a consumer, all I want from my telco/cable co. is a dumb, neutral pipe with maximum bandwidth for minimum price. The reason the broadband suppliers are fighting this tooth and nail - via fake research and other means - is that being a dumb pipe reduces them to a commodity and lowers their profits.

2008 Dec 07 11:26 AM

[phantom704:]

In a toll-road system, vehicles with different number of axels get charged at different rates, why shouldn't cable/telecom companies charge its customers based on amount/size/type of traffic ?

2008 Dec 07 06:05 PM

[mkreisel:]

Telecoms will get nothing from the next Congress and White House, considering AT&T didn't donate a single penny to Democrats in the 2006 election.

2008 Dec 08 03:52 AM