Verizon CEO slams Net neutrality
Verizon Communications CEO Ivan Seidenberg, speaking at the Supercomm 2009 show, says his company is concerned about the FCC's proposal for stricter regulations.
(Credit: Marguerite Reardon/CNET)CHICAGO--The day before the FCC is expected to start the ball rolling on new regulations to keep the Internet open, Verizon Communications CEO Ivan Seidenberg painted a doomsday picture of what could happen in the industry if stricter rules are imposed.
During his keynote address Wednesday at the Supercomm 2009 trade show here, Seidenberg said that Verizon is very troubled by the regulations being proposed by the Federal Communications Commission. He argued that imposing stricter regulations would pit network providers against application providers in a way that would ruin the Internet's potential for economic growth and societal change.
"Proponents (of Net neutrality) have a worldview that network providers and application providers, like Google, occupy different parts of the Internet: dumb pipes versus smart apps," he said. "This is a mistake pure and simple. It's an analog idea for a digital world. It completely understates the need for sound practices and ignores the benefits of smart networks."
Last month, FCC Chairman Julius Genachowski said he plans to make the FCC's four open Internet principles official regulation and also proposed adding two more rules. The five-person commission is controlled by Democrats, who all favor Net neutrality regulation, which means new rules almost certainly will be adopted.
On Thursday, the FCC will begin the process of developing these official rules.
Verizon and other large broadband providers, such as AT&T and Comcast, have opposed Net neutrality rules. These companies argue that imposing new regulation will stifle innovation and hamper investment in the network.
Seidenberg pointed to telemedicine as an example of how strict rules could hamper innovation. He said that companies like Verizon need to be able to prioritize packets that are transmitting medical monitoring data--over such items like e-mail or spam--to make sure they get through the network quickly. But if rules are in place that prohibit carriers from prioritizing traffic, he said, then such medical services cannot be offered.
Loss of ROI?
He also alluded to new business models that would allow network operators to sell different tiers of service. Verizon's CEO said that without the ability to provide these types of services that the FCC will essentially be taking away the company's ability to make a return on their investment.
While Seidenberg and other network providers make good points about how strict rules could hurt innovation and network investment, the FCC's chairman has stated he has no intention of creating overly strict rules that would prevent carriers from managing their networks. Genachowski has said several times that he simply wants to protect the rights of consumers to use the Internet freely.
Verizon and other network operators already agree with the first four Open Internet principles adopted by the FCC. In summary, these principles state that operators cannot restrict access to lawful Internet content, applications, and services nor can they prohibit users from attaching nonharmful devices to the network.
Genachowski has also proposed adding rules that would prevent network providers from discriminating against particular Internet content or applications, while at the same time allowing for reasonable network management. And he proposes ensuring that Internet access providers are transparent about the network management practices they implement.
Google and other influential Web companies, such as Amazon.com and Facebook, have banded together to support Net neutrality regulation.
Earlier this week, several CEOs from these major Web companies sent a letter of support to the FCC.
Vint Cerf, Google's chief Internet evangelist and one of the original architects of the Internet, joined other pioneers in sending another letter to the FCC expressing support for the commission's proposed rules.
Cerf discussed the letter with a reporter from The Washington Post and offered his thoughts on why an open Internet is needed to ensure innovation and growth on the Web.
"The issue is nondiscrimination against applications and against consumer choice," The Washington Post quoted him as saying. "That should be clear by the letter from my colleagues, and by others, that the fundamental concern is that the provider of broadband service not be able to take advantage of that to act in an anticompetitive fashion against others that are trying to provide competitive applications using the same broadband facilities."
Can't have it both ways
But Seidenberg said these Net neutrality proponents want to have their cake and eat it too.
"It's really ironic that the digital elites in Silicon Valley are also pushing for faster broadband and more wireless networks," he said. "The two don't add up."
Seidenberg also warned that if the new rules favor one part of the industry over another, that the policy repercussions could mirror what happened after the 1996 Telecommunications Act, which tried to create competition in the broadband market.
He said this ill-fated policy led to investor speculation and the build-up of the telecom bubble in the late 1990s and early 2000s. And he said it ultimately led to that bubble bursting in late 2000 and 2001. He even blamed this policy for helping cause the WorldCom debacle.
Instead of wasting their time with Net neutrality, Seidenberg said, the FCC should focus on creating conditions for more growth. Specifically, he said the agency should increase the amount of available wireless spectrum. He said the FCC should also streamline the process for getting cell phone towers approved.
These are actually two issues that the FCC chairman has previously said the commission is working on.
"I personally believe that government can play a role in public policy," Seidenberg said. "But it should not be a means to an end. You can't create a smart economy by dumbing down the critical infrastructure."
Marguerite Reardon has been a CNET News reporter since 2004, covering cell phone services, broadband, citywide Wi-Fi, the Net neutrality debate, as well as the ongoing consolidation of the phone companies. E-mail Maggie. 
1) Deal with living under Net Neutrality, or...
2) Eventually have the government(s?) take his company's infrastructure out from under him, and regulate (that is, own) it like a public utility. Given enough public outcry and lobbyist lubricant (via Microsoft, Google, Apple, Facebook, Netflix, et al), that's what's most likely to happen w/o Net Neutrality. Why? Because Congresscritters on the state and/or federal levels (like most gov't politicians) love nothing more than to expand governmental power. Comcast, Time-Warner, and etc would end up facing a similar fate.
The Internt has reached "utlity" status. It actually needs regulation to achieve it's full potential. That full potential being everyone has access to broadband. I'm actually suprised it took this long for the FCC to start pondering this reality. Or at least act on it.
Both power and phone service were spread to all corners not by private companies (it's not in their interest to do so) by by public tax and funding. Capitalizm is great but you have to heard those cats every now and then to get the job done.
All you guys thinking this is just going to mean having everyone subsidize your heavy bandwidth use are going to be in for quite the rude awakening when Nancy Pelosi and Fedzilla turn the internet into their own little utopian failure that runs like a public bus system.
But just keep giving the Chicago Machine more control over everything they can grab...
Yep, same old crap. Packet prioritizations means nothing if all providers aren't prioritizing in the same way. If packet prioritization were an issue it's something the FCC or some other body should regulate, not individual carriers. Like others have suggested they want to make their paid services perform better by giving them higher prioritization.
Saying they cannot offer medical services because they cannot regulate the packets is just pure B.S.. They would have no problem at all if they continue to upgrade the hardware and backbone of the systems to keep pace with all the bandwidth they sell. It's just like airlines overselling seats in their planes, some people will lose out because of the companies greed. If they keep the system upgraded enough to handle all the bandwidth they have sold then offering medical services would be no problem whatsoever.
Just by spouting off these oh so obviously flawed arguments he is proving these companies will just make up poor excuses to get their own way.
It's perfectly fine if the regulations are put in place and these companies don't perform well. Other companies will sprout up offering the same services at faster speeds with better hardware. These old companies like Verizon will have to keep up or shut up as hordes of customers abandon their crappy networks.
What's the matter buddy? Afraid your kid won't be able to have that new Porsche for his summer break? Yeah, well maybe you and the rest of your cronies should put that money into upgrading your crappy networks while you still can.
How many problems with the internet now are from service providers deciding how it is best for you to access information? Comcast spies on your traffic, Time-Warner caps your service, Charter redirects your failed URL's...
The problem is Network Neutrality, the problem is service providers greed based on getting the most from of an outdated system.
If you do not like your cable company, you can always switch to dialup.
What are the odds that users that only check say email and the weather will only be charged 3.99 a month for their bandwidth?....
Is this going to be fair the same way text messaging plan rates are fair?
20 cents for ONE MESSAGE actual cost to verizon is .001 cent?
Verizon is great at Tiers. The only issue is that they believe EVERYONE belongs on the top tier.
Regulation please, and while you're at it check into that text messaging thing! It costs me more a month to send text messages for my family plan then my broadband!
What unlimited text messaging option costs $5/month? I get 200 texts (inbound+outbound) for $5/mo with my iPhone; that's 2.5c per text. The unlimited option is $15/mo. That's pretty silly for a service that costs next to nothing to deliver, especially when I already pay $30 for a data plan that includes serveral gigabytes of bandwidth. When I was with Verizon, I had the unlimited IN network texting and 500 out of network texts for $10 or $15 per month.
Etc.
Isn't that because the former is more competitive then the latter?
Prime example - RCN in Allentown, just made a requirement that ALL customers had to install a cable box to descramble the digital service. First box is 5.00/month and add'l boxes are 3.99/month. Simple math - 25,000 existing customers now required to have boxes at $9/month (two boxes) = $225,000/month and $2.7 million per year!! Cost to install the boxes - 2 hrs/box @ $50/hr=$100 x 25,000 = $2.5 million. Takes them less then 1 year to make their money back (and I'm being generous). Cable - what a joke.
If one puts on maximum squeeze and another opens up and says "neutral net here" and they charge the same, only one set of stock holders will be happy with the result. That's how competition is supposed to work. I'm not sure why our main ISP's all act like monopolies. (Other than most of us have one real choice).
Net neutrality is just like the power company wanting to sell you light bulbs. That was outlawed years ago. And ATT had the Carterphone decision to deal with when it tried to restrict innovation.
This is like Fedex saying they need to know contents of packages so that they can make sure shipments of transplant organs are not delayed. Does anyone ship organs by Fedex? I presume not. Similarly, why would anyone do realtime telemedicine over a line that does not have strict QoS provisioning?
Are we supposed to say 'Oh, how awful that telemedicine packets may be delayed because someone is watching streaming video of 30Rock!' Next he will claim that 911 calls may not go through unless they throttle FIOS to specific ports. (What? It already is? Oh, yeah, I remember, that's why we still keep DSL - from a CLEC.)
I used to have some respect for Verizon. They should just keep in mind that their job is to get bits from here to there. What those bits mean is none of their business.
The FCC should not allow carriers to even get close to the content business.
mce
"Google and other influential Web companies, such as Amazon and Facebook, have banned together to support Net neutrality regulation." Banned? I think you meant banded.
Oh, and +1 for net neutrality.
With all the streaming media, applications moving from the desktop to the hosted online model, online games, social networking sites, online distribution, etc.. there is going to be a big losing game for the average consumer at the end of the road they want to take. In the end to stay profitable the infrastructure providers are going to have to invest billions of dollars into the networks and the will have to pass this on to the consumer.
It won't get passed on to companies like Google who have the clout to demand low rates when they buy bulk access for their data centers. It will be the consumers that pay the tab to all the service providers of the five different networks that carry Googles data to their computer.
A lot of people like to get on these sites and say that AT&T or Verizon should not be worrying about the profits. What world do you live in? They are a business plain and simple. If they aren't making a profit they should just pull the plug on their networks completely. Google sure as hell doesn't do anything that isn't profit motivated, yet they are everyone's hero, but anyone else that does the same is a villain.
It's about the ISP local monopoly using anti-competitive behaviors, more than about reasonable network management. Yes, the network needs to be managed, but in a way that does not leverage the ISP's monopoly against competing content services, and done in a transparent way so the consumer understands the limitations.
The issue is whether your ISP has the right to apply filters and bandwidth shaping to the last mile based on the service. The answer is simply no. I rent the pipe. The provider has a virtual monopoly. In my area there are two providers, that is all, and they are both opposed to network neutrality.
If you think that ATT, Verizon, Comcast, RoadRunner, Optimum Online and others are not already turning a profit on the monthly connection fee, you are deluded. They profit from the pipe. Now what they want to do is generate additional money by demanding fees to guarantee service from content providers.
It is all crazy. If Verizon is concerned that they are missing some of the revenue from the content side, perhaps they should build up their own content division and have it compete fairly on the open market. That would be fun to watch.
1) Google pays to access the net and use their pipes.
2) I pay to acces the net and use the pipes.
3) ISP's get money from both google and myself. Meaning each bit of data is paid for twice by the orginator and user and their respective ISP's.
Nobody is accessing the net for free so we should all full and unfettered access. That's what net neutrality is about. Keeping ISP's out of the middle so originators and consumers can do business like they have already paid to do.
This is a matter of the marketing entities within the providers having way too much control over the company. I am PERFECTLY fine paying more for unlimited, unrestricted bandwidth if their revenue model is out of whack. I am not ok with them going to Google, Microsoft, and Hulu and wanting kick backs or they start throttling down my connections to those sites. That's BS. Especially since many of these people have virtual monopolies over the broadband access in their areas.
"In the end to stay profitable the infrastructure providers are going to have to invest billions of dollars into the networks and the will have to pass this on to the consumer."
They do. Those who want more bandwidth have to pay more for higher tiered plans. As the bandwidth intensive applications you mention become more important to people, they will either be willing to buy more bandwidth (ie, invest more in the infrastructure), or decide to make more efficient use of the bandwidth they purchase.
Remember, network neutrality does not say anything about the pricing of bandwidth. It is more about the freedom of the consumer to use the bandwidth they purchase as they see fit, and preventing providers of that bandwidth using their position to gain unfair competitive advantages.
I personally do not understand to politics between the various companies that manage the backbone. Quite frankly, that should not be my concern. If they market their product as an Internet connection, then it really should be an Internet connection, not some subset that makes corporate sense to them. What that is is clearly defined by many RFC, those same RFCs that enable the many different networks that make up the Internet interoperable. If it is a subset with prioritized services than stop the false advertisement, and call it something like AOL instead.
They are still a for profit business, so may the one able to sell more bandwidth at cheaper prices with more reliable service win. (If only real competition from non-entrenched companies was a viable proposition, like it was back in the dial-up days)
Just as dangerous as Verizon is ESPN and their tax everybody model. ESPN wants ISPs to charge everyone for access to their 360 website. If your ISP isn't paying up, you can't get the content. There's no way to buy it yourself. They tell you it's "free", but if your ISP is paying, the cost will be passed on to you. I'd like to see the ESPN make-everyone-pay model banned as well. ESPN supposedly charges over $3 per cable subscriber, so it's a good bet that they're getting $3 for every broadband subscriber as well for those ISPs who give in to the evil ESPN.
Mr. Seidenberg, please quit insulting us. The solutions will prevail if Verizon's glorious Walled-In Green Garden is opened up. The major providers are creating their oligopoly-arguments through limiting its client?s access and then dishonestly crying about capacity limits at the same time.
The only ones that could believe them would be the FCC protectionist.
Watch the rest of the world competitively pass the USofA by.
The US govt invented the internet but we refuse to give the speed to our citizens like Korea and Japan has..... all because of greed..........JERKS!
The United States is over 26 times the size area wise with only slightly more than double the population. Of those figures land wise, 95% of japans population lives in only 20% of the land area with 70% of the land mass being mountain/volcanic areas with almost no population at all.
If you actually worked out the populated areas of the two countries the US probably has more like a guesstimated 50 times the land area to cover. Imagine if you were to take all the infrastructure needed for the whole US and packed it into a area that is smaller than California. Actually the entire country of japan is smaller than California, so the 20% populated areas of Japan would be equal to the Los Angeles / San Diego area of California.
If that tiny area was all that was required to be serviced there would be no excuse for not having top tier service, i grant you that. Seeing as the US providers have to cover that guesstimated 50 times the area with only double the population paying the bill i personally think that everyone saying we should have equal service is volunteering to pay many times what we pay now to help support the cost of the entire network.
That my own personal view of it, if anyone wants to explain it differently feel free to correct my layman view of the whole situation.
I didn't want to pay for water or sewer to your house, or your education, or your roads. Sometimes, though, we do things that help everyone. It's part of living in a SOCIETY. For people who are opposed to society, there is still plenty of space in the Appalachians.
San Jose, California, is also suffering from lousy cable TV service and it calls itself the Capital of Silicon Valley.
Japan has better service because the population (in control of its government) wants it.
That's what this is about. Nothing more, nothing less.
PS What Verizon etc. are doing should be illigal based on the FCCs eavesdropping rules. I don't know how they get away with this.
For some reason, Verizon's "alternative" DNS servers are not very reliable, and my router usually has to fall back onto the default servers. Maybe Principle 7 should force compliance with adopted RFC specifications.
Translation.... I'm going to soak the customer for the pipe, and then I'm going to say the only way I can be as profitable as I'd like to be is to also be able to ensure I can soak them for the content as well. THEY want to have their cake and eat it too... not Internet users.
That said, I'm psyched about Skype on iPhone+ATT. It's good to pressure the industry to open up, just don't go overboard. But I guess that's what we'll get for these 4 years. hehe.
Bandwidth should not be metered. Nobody should have to watch the clock (or in this case bytes) when using their internet connection for any reason. As the internet is going to be how we do commerce, educate, entertain, and communicate with each other, we need fast, reliable connections to keep up with the rest of the world (that's sad to say as we Americans used to lead the world).
Companies cannot handle themselves without regulation. Did you already forget that latest stock market crash and recession?
1) These are publicly traded companies and some of them are struggling for money at the moment, not "swimming in cash" as you seem to suggest.
2) There's nothing inherently evil in trying to make money... so even if they were "swimming in cash" that's not necessarily a bad thing. In a free market the idea is that if you're soaking your customers a competitor will come along and offer the same service for slightly less cash. The governments job is to make sure everyone plays "fair."
3) You seem to suggest that we all "deserve" fast free internet. Why is that? It's not like it's free to produce. It costs money to build. More bandwidth = more cost. Why shouldn't people be charged for it? Why shouldn't people who use more be charged more? Would you assert that we all deserve free food or free gas or free housing? Maybe you would... but I'm much more of the opinion that people need to pay their own way. A system that promotes personal responsibility is far FAR superior to one where people don't even have a clue what the cost of the resources they're consuming is.
- by Renegade Knight October 21, 2009 10:55 AM PDT
- "It's really ironic that the digital elites in Silicon Valley are also pushing for faster broadband and more wireless networks," he said. "The two don't add up."
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- by bj1126 October 21, 2009 1:15 PM PDT
- Exactly this is my point. We want fast dumb pipes that give us the bandwidth we pay to anything we want to access. If they can't provide the bandwidth they promise at the price then raise prices or lower bandwidth. Don't take a dishonest mafia like approach in dealing with the content providers.
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- by drfrost October 21, 2009 2:01 PM PDT
- If the pipes are fast enough to handle everything then, yes, they can be dumb. If, on the other hand, they can't handle everything at peak usage (or even nonpeak periods) then it only makes sense to prioritize data that is time critical over data that is not time critical. The real issue, however, is that if the people who control the network get to decide what is prioritized and what isn't.... there's a real potential for abuse on their part. On the other hand, if they have to treat all bandwidth equally there's a real potential for abuse on the part of their customers (i.e. a small % of customers can significantly impact network performance for everyone else).
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Showing 1 of 3 pages (92 Comments)The real irony is that is exactly what I want from my ISP. Fast dumb pipes. I don't care how you mange your pipes as long as I have full access to the net at the speed you promised with all the date that can be crammed through the pipe. No cap (the bandwidth is a cap), no restrictions on my apps, tethering, connections etc. That merely complicates my ISP service.
If you use the network for any sort of real time applications, how are you going to feel when online movie sales take off (and other similar high-bandwidth applications) and, without smart network management, ANY real time network applications are basically impossible?