The FT reports: “Telefónica, France Telecom and Deutsche Telekom all said Google should start paying them for carrying bandwidth-hungry content such as YouTube video over their networks.” It quotes René Obermann, Deutsche Telekom’s chief executive as saying that “there is not a single Google service that is not reliant on network service,” and that “we cannot offer our networks for free.”
Compare this with news publishers’ views on the same enemy and you may get a sense of déjà vu. Take Murdoch: “Search on the internet, whether it be Bing or Google, whatever, it’s free and they simply take all our expensive and we think very good content such as Wall Street Journal ... They are technologically brilliant, they are a long way ahead but they do not have the right to do it if we want to stop them.”
The similarity between the net neutrality and aggregation debates is more than superficial. In both, Google can argue that without it its supposed opponents would make less, not more, money. Specifically:
- In the case of aggregation, inasmuch as it is true that the traffic that Google et al send to newspapers is incremental to what they would get otherwise, Google is good news: more visitors, more page impressions and more ad revenues. See my earlier post on this.
- In the case of net neutrality, without Youtube fewer people would go online, those who do would value their broadband subscription less, and ISPs would have to charge less.
If the last point is not obvious, imagine a world without the internet, and suppose that one day a company called Google comes along and says to telcos:
“We are going to launch a service called Youtube that people will love. This will allow you to sell something called ‘internet access’ to your subscribers. We will drop our content at your doors, and you will have to shoulder the cost of carrying the content from there on to consumers. However, you can charge your subscribers as much as the market will bear.”
Of course telcos would try to negotiate with Google so they can get a cut of what Google makes, in addition to broadband subscription fees. But suppose that on this point Google doesn’t budge, or better, suppose that it is credibly, strategically committed to not paying. ISPs can take it or leave it, nothing else. Would they take it? You bet.
Proponents of net neutrality worry that if telcos are allowed to block websites at will, consumers won’t be able to access the sites of their choice. For smaller sites this may be true (or then it may not be; among economists the jury is still very much out on this). But for large, popular sites, net neutrality seems to be a result of market reality. I can’t imagine any of the operators above deciding to block Youtube, iTunes or Hulu.
In both cases, Google’s opponents are trying to force a negotiation with someone who doesn’t want to negotiate. In both cases, their strategy is lobby politicians and regulators in the name of a public good – in effect, turning a negotiation into a public debate. In the case of aggregation, the good in question is the value of journalism for democracy; in the case of net neutrality, it is the need for a business case for investment in superfast broadband networks (which politicians want on grounds of national competitiveness). And increasingly, the content and ISP sides are talking to each other. The FT again:
“[Telefónica chairman César Alierta] said that if no revenue sharing agreement was possible between the internet search engines led by Google and the network operators, regulators should supervise a settlement.
To increase the pressure on Google, the telecoms groups are interested in finding common cause with content owners such as media companies, which get little or no money from the technology company when it aggregates their content on Google News.”
Note that I’m not taking sides here (I may at another time). Whether you agree or disagree with the arguments being used by Google’s opponents, it’s undeniable that they carry some weight, however self-interested they may be. Ultimately this is a matter of democratic debate.
See also: my primer to net neutrality