Silicon Valley Watcher - Former FT journalist Tom Foremski reporting from the intersection of technology and media

Google's Billions In Internet Subsidies...

Posted by Tom Foremski - February 17, 2010

Google is the world's single largest user of Internet bandwidth. But it doesn't have to pay for most of the bandwidth it consumes, in the form of its spiderbots copying web pages, and YouTube video streams.

A study in December 2008 estimated Google's 'free' bandwidth use to be about $6.9 billion, today it could be double that amount. [Precursor study- December 2008]

Scott Cleland, head of Precursor, is a leading Google critic especially of its position supporting net neutrality. Google has been lobbying the Federal Communications Commission (FCC) to maintain net neutrality regulations, which prevent Telcos from charging companies for bandwidth based on usage. He claims that Google is pushing net neutrality because it is the biggest beneficiary of such rules.

This is from his post: How much should Google be subsidized? | The Precursor Blog by Scott Cleland

- Google is world's largest Internet user and uses 21 times more bandwidth than it pays for.

- Google's lobbying for open access restrictions on auction of 700 Mhz spectrum resulted in $7 billion less money for the US treasury.

- Google received $89 million in taxpayer subsidies from the state of North Carolina to build a data center. It does not disclose subsidies received from other data center sites.

- Google's recent push for 1 gigabit networks could force other Telcos to also offer similar networks. Yet Google would be the biggest beneficiary of such high speed networks.

- Google is lobbying the FCC over what broadband providers can charge consumers because it takes attention away from its own massive use of Internet bandwidth.

Google's massive hidden implicit subsidy in the FCC's proposed open Internet regulations is that it is acceptable for broadband providers to charge consumers more for faster service, but it is unacceptable for broadband providers to charge web companies like Google more for more speed.

He makes the point:

Why should a consumer have to pay more for more broadband speed and capacity, but Google should not?

Mr Cleland's criticism of Google comes from his long standing position representing the Telcos and their ability to charge companies such as Google for bandwidth use.

Both Google and the Telcos are spending a lot of money trying to influence the FCC. [Google Spends Millions To Influence Washington]

While Google might be protected in the US from such charges, at least for now, that might change in other countries. Recently, Spanish Telco Telefonica spoke about charging Google.

Google has called Mr Cleland a "payola pundit" because of his Telco funding.

It's clear that Google has made an enemy of the Telcos, both in its net neutrality lobbying and because of its mobile strategy.

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Please see:

Analysis: GOOG Messes Up Mobile Strategy As Jittery Telcos Fear Becoming "Dumb Pipes"



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