Is Verizon a Network Hog?
The telecommunications giant wants to devote most of its capacity to its own traffic, to Internet companies' dismay — Last November, Vinton G. Cerf wrote a letter of warning to Congress. The legendary computer scientist, now a vice-president at Google (GOOG) …
Context & Ripple Effects
Vinton G. Cerf, now a vice-president at Google, wrote his letter of warning to Congress in November 2005 about carriers privileging their own traffic — and Business Week reports Verizon intends to do exactly that, devoting most of its network capacity to its own services. This is the opening skirmish of what will be argued as a network-neutrality question: whether the owner of the pipe may favor its own applications.
The timing matters for Google specifically. A day before this piece ran, Google reported a lukewarm quarter, missing profit expectations on a higher tax rate and shaving $15.3 billion from its market value — leaving its most credible technical spokesman fighting a carrier dispute while the company absorbs an investor backlash, even as surveyed marketers still rate its search ads ahead of Yahoo's and MSN's.
First-order effects
- Internet companies whose traffic rides Verizon's network face a carrier openly planning to reserve most of its capacity for its own services, degrading the delivery terms for any rival application that depends on that last mile.
- Cerf's November 2005 letter hands Google and its peers a standing document in Congress, converting an abstract grievance into a concrete lobbying position.
Second-order effects
- Congress becomes the deciding venue, forcing other broadband operators to either defend similar prioritization plans or distance themselves from Verizon's framing while lawmakers weigh whether existing rules cover it.
- Content and application providers must begin pricing in the cost of guaranteed delivery, shifting bargaining power toward whoever controls consumer access rather than whoever builds the popular service.
Third-order effects
- If prioritization spreads across carriers, the industry structurally divides into infrastructure owners selling tiered access and application firms renting reach on someone else's terms — the fault line that formal network-neutrality rules would eventually have to address.
- US telecom law, drafted for an era of regulated common carriage, comes under pressure to answer a question it never confronted: whether a broadband operator may lawfully discriminate among traffic types on its own network.
The trend: Broadband carriers are moving to monetize priority for their own traffic, pushing the application-layer companies that depend on open pipes — Google chief among them — to take the fight to Congress.