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AT&T fires back at Google on net neutrality rules

Prince McLean, AppleInsider

AT&T has written the Federal Communications Commission’s Wireline Competition Bureau to insist that any new net neutrality rules need be apply to everyone in the industry, including web companies like Google.

AT&T fires back at Google on net neutrality rules
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Google has helped lead the drive to impose net neutrality rules on cable and phone operators, in order to prevent Internet service providers from selectively blocking or slowing access to content or network applications from competitors. AT&T, which would be impacted by such rules both as broadband provider and as a wireless mobile company, maintains that Google itself needs to comply with the same regulations AT&T must if it wants to compete with telephone services like Google Voice.

An article published by Reuters reported that Robert Quinn, AT&T’s senior vice president for federal regulations, wrote the FCC on Friday saying, “To the extent ‘net neutrality’ is animated by a concern about ostensible Internet ‘gatekeepers,’ that concern must necessarily apply to application, service, and content providers.”

Quinn said Google has blocked its Google Voice users from placing calls to some phone numbers in rural locations in order to cut costs. AT&T, like other phone companies, are prohibited from selectively denying service to their users by regulations designed to guarantee phone access to all users regardless of whether it is profitable for them to do so. Without such regulations in place, much of rural America would never have been commercially viable for private phone companies to service.

Quinn said that “Google Voice thus has claimed for itself a significant advantage over providers offering competing services.” His comments were echoed by USTelecom, a telephony trade group which issued a statement that accused Google of “effectively assuming the power to decide who its customer can call and what content they can access.”

Google opts itself out of regulation

In reply, Google lawyer Richard Whitt told Reuters, “We feel comfortable that [Google Voice] is not a regulated service. It is a service that originates from an online platform.” Whitt acknowledged that Google Voice was blocking calls, and said that “the company is doing that because certain local telephone carriers in rural areas charge AT&T and other long-distance companies especially high rates to connect calls to their networks.”

Marguerite Reardon, reporting for CNET, explained, “Because they are small, rural phone companies are allowed to charge connection fees that are about 100 times higher than the rates that large local phone companies can charge. But in a practice known as traffic-pumping, some of these rural carriers are sharing revenue with adult chat services, conference calling centers, party lines, and others that are able to attract lots of incoming phone calls to their networks. The rural carriers charge the high rates and then split the revenue with these partners.”

In its public policy statement on the issue, AT&T wrote that “A June 2007 FCC decision prohibits other providers, including those with which Google Voice competes, from taking such action [to selectively block calls]. Google has dismissed the Commission’s order, claiming that Google Voice ‘isn’t a traditional phone service and shouldn’t be regulated like other common carriers.’”

AT&T insists that Google Voice is simply a “creatively packaged” service with the same features as existing FCC-regulated phone services. “By openly flaunting the call blocking prohibition that applies to its competitors,” Quinn wrote, “Google is acting in a manner inconsistent with the spirit, if not the letter, of the FCC’s fourth principle contained in its Internet Policy Statement. Ironically, Google is also flouting the so-called ‘fifth principle of non-discrimination’ for which Google has so fervently advocated.”

“While Google argues for others to be bound by net neutrality rules, it argues against itself being bound by common carriage, which the Financial Times aptly recognized as an ‘intellectual contradiction.’” Quinn wrote. “Such a contradiction highlights the fallacy of any approach to Internet regulation that focuses myopically on network providers, but not application, service, and content providers.”

He concluded, “the Commission cannot, through inaction or otherwise, give Google a special privilege to play by its own rules while the rest of the industry, including those who compete with Google, must instead adhere to Commission regulations. We urge the Commission to level the playing field and order Google to play by the same rules as its competitors.”

  • Brau

    And so it continues … One would hope as new technologies come and render older ones obsolete that the market would have to adapt and consumers would benefit, but instead of racing to keep up, the status quo simply conspires to lobby the government to limit new technologies by applying protectionist legislation.
    Oh, and it’s always under the guise of “fairness” and morality; Can you imagine how many jobs would be lost if Google could offer free ad-supported communications, bypassing telcos? Oh no, we can’t let that happen!

  • Dorotea

    Why is expensive for Google Voice to connect to rural telcos? What exactly is the expense to Google?

  • gus2000

    “We can’t let that happen!”

    I dunno, I’d like to end my subsidy of phone service to people that chose to live in the middle of nowhere. If not, then can we at least agree that rules are pointless unless they apply universally?

  • http://www.adviespraktijk.info Berend Schotanus

    Rural access is the favorite argument for old-time monopolists to defend the market protection that allows them to continue their obsolete business practices. It makes me sick.

    Having said that, there is a huge paradigm-shift going on that seems to confuse all parties. Communication is moving from a business with specific hardware for specific services to a business of generic digital lines connecting general purpose devices. 15 years ago when I got my first internet connection it was a modem connecting over a voice phone line. Today it is then other way around, my voice phone is using a voip protocol over my all day on DSL internet line. Behind the scenes the technology has completely changed, it is all digital.

    But the markets and the regulation didn’t change. I am paying my cable company for TV channels and my telecom provider for phone minutes and that’s how they are marketing their services.

    The obvious change would be that I choose my telecom provider upon bandwith, reliability, latency and price while choosing separately service providers that can get me the dedicated services and content I desire. Both telecom and service providers would be able to optimize and innovate within their own profession.
    Telecom would be about leveling peak loads, arranging radio frequencies, knowing how to accommodate high urban demand or long distances in rural areas, distinguishing data streams that require high reliability / low latency from bandwidth sipping bulk that can wait a few seconds. Services would be about all the nice things we like to get on our devices without bothering about the technology that is accommodating it.
    Problem is: this kind of telecom is not in big demand because consumers have never learned to ask for it. They have no idea what bandwidth or latency would mean for them. And they keep asking for voice minutes and TV channels.

    The way to leverage the new technology in the old markets is offering old value for free. That is basically what Apple and Google are doing. Apple gives “free” data subscription once you buy an iPhone. Google gives free voice minutes on Google Voice. That is how they are able to break down the old market forces.
    But it is only half the story, the “old” value has gone, the “new” value has still to be discovered. What is the value of “free” data on your iPhone if the network gets overloaded when you really need it? So if it is valuable you might be willing to pay for that and when you are willing to pay there might be companies that are able to transform that payment into a valuable investment.

    In this whole story I would have expected Apple to be more on the innovation bandwagon. The iPhone is inherently flexible with data connection: you can use WiFi on your own private internet connection, WiFi hotspots, a MiFi interface to any 3G network, there is an interchangeable SIM card that allows you to choose your own provider for the built in 3G capabilities. On the services side it is extremely flexible as well with the modern Safari browser and the App Store.
    The “phone” on the iPhone is *not* a hardware facility, it is just one of the apps. 3rd party apps for voip, for Skype, for watching TV, for listening radio are *not* theoretical possibilities but reality. I would have expected Apple to be more on the Google side…

  • ChuckO

    Don’t we have to acknowledge a basic inequity here wherein AT&T and similar build the physical backbone that companies like Google exploit and especially in the case of a service like “Google Voice”.

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  • Jesse

    I dunno, I wouldn’t want to use a service that chose on its own which numbers it would connect to. If you have a phone number, I want to be able to call it with a phone. And if you sell a phone service, I want to be able to use it to call any phone number. I think AT&T’s position makes sense, and actually benefits the consumer more than Google’s.

  • MikieV

    @ Jesse

    “And if you sell a phone service, I want to be able to use it to call any phone number. ”

    Who said Google is “selling” a phone service?

    When I check Google’s page for Google Voice – it states the service is free.

    Google doesn’t have to connect to every phone in the world because they aren’t a part of the POTS [plain old telephone system] monopoly-system which allows allows one phone company to provide exclusive service to a geographical area.

    Since they aren’t charging you for the service, they are under no obligation to pay above-standard connection fees to the destination carrier.

  • MikieV

    @ ChuckO

    “Don’t we have to acknowledge a basic inequity here wherein AT&T and similar build the physical backbone that companies like Google exploit…”

    And that is the heart of the Net Neutrality debate.

    Comcast wants to sell me internet, phone, and TV/Movie services over their system – while Verizon wants to sell me internet, phone, and TV/Movie services over their system. And neither company likes the idea that Vonage, Google, or Magic Jack are getting a free “piggy-back ride” on infrastructure the online-only companies didn’t build.

    Comcast, Verizon, et. al. don’t want to be “utility” providers – just charging us a flat fee for a given connection speed, or pay-as-you-go metered usage of the internet. They want to get the middleman’s cut in delivering content, especially if they can get their own branding placed on the content.

    But those hardware-based companies exist as regulated-monopolies, who are allowed to maintain uncontested service areas in exchange for being regulated as to how much they can charge and how fast their rates can go up.

    To my mind, the fairest way to run things would also be the least popular: have the internet service providers be relegated to utility status by limiting them to providing metered or flat-rate internet service, and then let consumers decide which free, ad-supported, or fee-based online services they want to use.

    But, of course, that will never happen.

  • ChuckO

    I always thought the way to go with cable TV/high speed internet was to have every town own their own fiber optic lines and then charge providers to access them to pay for installation and upkeep. I suspect cell phone’s access working similarly would offer equal benefit’s.

  • MikieV

    @ Dorotea

    “Why is expensive for Google Voice to connect to rural telcos? What exactly is the expense to Google?”

    Welcome to the world of regulated-monopolies, where communications travel between service-areas of regional and local telecommunications companies.

    And in the US, where regulations [laws?] require that people in suburban and urban areas have an extra charge on their phone bills to subsidize the phone service for people in rural areas – who would otherwise have to pay exorbitant rates to maintain phone service to their sparsely-populated areas.

    Each phone call has an origination and a destination – which are often on the networks of two separate companies. The US model has the originator charge the person making the call, and the originating company is then billed by the destination company for the use of the destination company’s network.

    Common Carrier rules [laws?] require the originating company to pay whatever the destination company is allowed to charge – because they are both regulated monopolies – so the destination charges do have a limit to how high they can go.

    When we were charged for each individual call, any outrageous fees would just be added to your bill for that call. And you would know plan accordingly if you called that number on a regular basis.

    But the move to a flat-rate model has made calls to these exorbitant destination-fee areas an unexpected hit on the profits the flat-rate or “free” [ad supported] phone companies – since they model there expenses based on the standard destination-fees most carriers charge each other.

    It appears that Google is willing to subsidize the cost of normal destination fees in order to keep their Google Voice service free, but they are refusing to pay the much-higher fees some rural companies are allowed to charge for completing a call on their network.

  • MikieV

    @ ChuckO

    “I always thought the way to go with cable TV/high speed internet was to have every town own their own fiber optic lines and then charge providers to access them to pay for installation and upkeep.”

    Portland, OR had an interesting run at something slightly different, a few years ago. They lost a lawsuit against AT&T Broadband [now Comcast] to force Comcast to open its network to competitors [some of the local, dial-up ISPs who were eventually forced out of business because they couldn’t afford to build their own broadband networks].

    Portland then looked at building their own fiber-optic network, and then had a city-owned wireless network established – with wifi nodes installed on a lot of downtown traffic lights – which failed when the company contracted to run it couldn’t make enough money off of online ads].

    Now, with Comcast & Quest competing for hard-wired connections in Portland, Comcast & Verizon competing for hard-wired connections in the towns to the East & West of Portland, and Clear providing WiMax service in the Portland metro area – the city isn’t too worried about a single provider having a monopoly on access.

    The thing I see as ironic is that Clear is having a tough time as the new kid on the block, so it has agreed to allow Comcast & Quest to sell its WiMax service re-branded as if they were actually Comast & Quest networks.

    So, while Comcast fought tooth & nail – several years ago – to prevent dial-up ISPs from being able to pay Comcast for the ability to migrate their customers to cable-based broadband, Comcast is now happily paying to use Clear’s network to transition their Comcast customers to WiMax. :)