IP Democracy: Broadband Access: Who Pays Who For What, and Why?

Ed Felton, a Professor of Computer Science and Public Affairs at Princeton University, raises some interesting questions in response to Ed Whitacre’s comments quoted here and here by Business Week, and discussed in earlier IPD posts here and here.

[Whitacre] shows amazing disrespect for his home broadband customers, who are paying $40 or so every month to use SBC’s pipes. If I were an SBC broadband customer, I’d be dying to ask Mr. Whitacre exactly what my monthly payment is buying, if it isn’t buying access to Google, Yahoo, Vonage, and any other $%&^* Internet service I want to use. Didn’t SBC’s advertising say I was buying access to the Internet?

Second, if somebody is going to pay somebody in this situation, it’s not clear who should be doing the paying. There is some set of customers who want to use SBC broadband service to access Google. Why should Google pay SBC for this? Why shouldn’t SBC pay Google instead?

Sure, SBC would like its customers to have free access to Google, Yahoo, and Vonage. But as Mr. Whitacre would put it, the Internet can’t be free in that sense, because Google, Yahoo, and Vonage have made an investment and for SBC or anybody to expect to use those services for free is nuts!

My point is not that SBC should necessarily pay, but that there is no rule of nature saying that one layer of the protocol stack should pay another layer. If SBC gets paid by Google, it’s because SBC faces less competition and hence has more market power. As Susan Crawford observes, Mr. Whitacre speaks with “the voice of someone who doesn’t think he has any competitors.”

Posted by Mitch Shapiro on October 31, 2005 5:52 PM to IP Democracy