Why Google did not betray the Internet

All Seidenberg got was a piece of paper. Competition is coming to the last mile.
Written by Dana Blankenhorn, Inactive on

There is an assumption among Internet advocates that Google has just pulled a Neville Chamberlain, a peace in our time deal with Verizon that sells out the free Internet for a metered one.

That's not the case. In fact it's more likely that, in this scenario, Verizon CEO Ivan Seidenberg was taking the Chamberlain role.

This does not put Google in the part of Germany, but if you insist we'll make it a cat that looks like Hitler. (This one is named Chaplin. Buy his swag here.)

So what's my evidence?

  1. Internet in a Box-- Cringely has written about this, a data center in a shipping container Verizon has agreed to accept delivery on so Google searches are closer to users. Well, it's also a Point of Presence. It doesn't just handle local searches, but can move requests from Verizon's network to Google's.
  2. Dark Fiber -- When Wide Division Multiplexing (WDM), the dot-bomb, and the MCI scandal caused fiber carriers to turn off the lights, or not light new fiber at all, Google was a big buyer. It has tons of capacity that it can now transfer, via the Internet in a Box, and take a bigger share of the core for the cost of lighting glass.
  3. WiFi-- While carriers were not looking, WiFi has taken off. Hospitals, which are huge data networking users, are now going wireless. AT&T wants iPhone users to look for WiFi and not overload its network. WiFi provides what Bob Frankston calls ambient connectivity -- broadband everywhere -- and that's the whole end game right there.

In addition to this, there's WiMax. And there's the lesson taught by WiFi's relative success and WiMax's relative failure. When you use an open source process, defining the network based on hardware standards rather than doing a proprietary build-out, you get a lot more capacity and creativity.

Oh, and did I mention the 700 MHz auction? Sure, Google's bid wasn't the winner, but Google set the rules. Verizon won't be allowed to just bank the frequencies, and it won't be allowed to build them out on an exclusionary basis.

Why isn't Google seeking to compete directly with Verizon? Because it's a sucker's game. Deflation means prices are falling, meaning revenues are falling, and the only way to profit is to dramatically increase demand.

So what did Google give up? The capacity-constrained wireless networks of Verizon and AT&T won't have to follow net neutrality. Why do you have to use them?

Also, Verizon will be allowed to sell service level agreements on its wired network. I cover health care, and those folks won't move data without them. Sure, it's like the extended warranty on your old HiFi, but if people insist on paying something for nothing who can stop them?

At the heart of this confusion is a simple fact. The fears of open Internet advocates is we're bandwidth-constrained. They say Verizon has a lock on us, as a last-mile ISP, as a cellular carrier, and it can sell that bandwidth for big bucks, through an eye dropper, and force us to follow any conditions it sets.

Is Google doing this out of the goodness of its heart? No. Google is the low-cost supplier of Internet services, of connectivity and computing capacity, by a wide margin. Anything that increases demand improves Google's outlook, straining rivals' budgets while adding cash to its coffers.

Google wants to practice this economics of abundance, benefiting from increased demand. The economics of abundance means that if even one competitor can challenge the oligarchs, then the oligarchs are going to lose. If one can, others can. And one can.

The economics of the Internet and open source are going to win in the end. Resistance is futile. All Seidenberg got was a piece of paper. Competition is coming to the last mile.

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