Doug, Keith, Drywall, asokoloski, psmith, and others engaged in a lively debate about whether and how Google and other Web companies compensate the telecom infrastructure providers for our use of their network facilities. As many well know, the Internet’s longstanding charging arrangements allow each party to pay for its own connection to the Internet. That party then is free to utilize that connection in whatever lawful ways are desired. Google believes that consumers should be able to acquire higher speed or performance capacity from the broadband providers, and then use this capability to reach any service they wish on the Internet. In particular, consumers should be able to purchase tiered pricing arrangements, based on the use of bandwidth, latency requirements, or other objective measures. Such arrangements would constitute an appropriate, cost-based practice that fully compensates the broadband provider for the additional capabilities provided.
On the other end of the “pipe,” Internet-based companies spend billions of dollars annually on R&D to create and deploy compelling content, applications, and services for American consumers. This massive amount of material typically is deployed on millions of Web servers located around the country. In order for the content and applications to be delivered into the Internet, so it then can be made available to consumers, Web companies must arrange with network operators to: carry the data traffic from company facilities to their Web servers over local telecom lines (the “last mile”); carry the data traffic from the Web servers into the Internet over high-speed, high-capacity data lines (“special access”); and carry the data traffic over the numerous interconnected networks that make up the Internet (the “Internet backbone”). To accomplish these important connectivity and transport functions in a fast and effective manner, Internet companies collectively pay many billions of dollars per year to network operators, which fully compensates them for their network investment.
We believe that broadband providers should be precluded from charging content providers for terminating traffic to a particular end user. Allowing broadband providers to leverage their “situational monopoly” over terminating traffic would allow them to choose which content providers receive preferential treatment over others, thereby distorting the marketplace. The institution of terminating charges also could lead to the balkanization of the Internet, in which each of the hundreds of local telephone and cable operators around the country – and, perhaps even more importantly, around the world -- would assess its own set of fees for terminating traffic on its network.
I hope these clarifications have been helpful, and that you'll keep sharing your thoughts.
P.S.: Be sure to check out Robert Cannon’s outstanding blog, Cybertelecom, which should be required reading for anyone interested in the Internet and broadband policymaking discussions in D.C.