Is Google Really Using 21x The Bandwidth It Pays For?

Is Google Really Using 21x The Bandwidth It Pays For?: "Scott Cleland is a 'telecom analyst' who, in reality, is actually paid a large sum of money by the telcos to slam Google. He's become sort of a joke in DC circles. In the past, we noted his ridiculously bad math in claiming that Google fleeced taxpayers out of $7 billion, as well as his claims that 'open spectrum' is somehow anti-American. His main issue, of course, is trying to dispense bogus arguments for why net neutrality is really a big scam by Google to keep its broadband bills cheap. To give Cleland credit, at least he's not as bad as Mike McCurry, who once claimed that Google doesn't pay a dime for broadband. McCurry, of course, has moved on from spinning for the telcos to spinning for the entertainment industry, so Cleland needed to up his game.

He's now released a 'study' claiming that Google uses 21 times as much bandwidth as it pays for. First of all, this is simply incorrect. Cleland doesn't know how much Google actually pays for broadband, so he comes up with a small number, which is wrong for a variety of reasons.

He seems to conflate consumer broadband and Google's broadband. This is based, in part, on the old telco argument that when you buy internet access, you're only buying access to the middle of the internet, and you should have to pay a second time to actually reach any endpoint or other user. So, even though consumers pay for the bandwidth they use to reach Google, Cleland appears to calculate that as being Google's responsibility, ignoring that consumers are paying plenty for the right to reach Google (and the rest of the internet). As Cord Blomquist points out, this is like pointing out that Best Buy should pay for the gas it takes for people to drive to Best Buy. Broadband Reports also does a nice job deconstructing this.

However, even if we ignore all the basic facts and information that Cleland gets wrong, if we grant his premise, his argument still doesn't make any sense. If anything, rather than being an argument in favor of the telcos' position, Clelands report (if true) suggests that telco execs all deserve to be fired. After all, they're the ones who set up the business model and the billing relationship, and if they're undercharging Google by so much, then shouldn't they raise their prices? Of course, there's a good reason why this doesn't happen: because Google is paying fair market value for its bandwidth, and if anyone tried to charge them 21 times more, Google would quickly take its business elsewhere. So, based on this report, either Cleland is dead wrong in his report, or the telcos who funded it are run by morons who don't know how to set pricing correctly. Which one is more likely?

(Via Techdirt.)