• by Wendy Davis  @wendyndavis, December 8, 2008

In the latest salvo on net neutrality, a consultant who works for telecom and cable companies has issued a reporting alleging that Google is using more than 21 times the share of bandwidth it pays for. But industry observers question the study's logic and dispute its conclusion, while Google itself said the report is riddled with "significant methodological and factual errors."

The 27-page report by Scott Cleland, chairman of the anti-net neutrality NetComepetition.org, concludes that Google is not paying its fair share for bandwidth by comparing estimates of the company's bandwidth costs with the traffic it draws.

Cleland examines figures from research firms like Hitwise and comScore to conclude that Google will account for 16.5% of U.S. consumer Web traffic this year. Cleland estimates that consumers paid Internet service providers a total of $44 billion in subscriber fees this year, while Google paid $344 million for U.S. bandwidth--a figure he arrives at by examining stock reports and other indirect measures.

Cleland then juxtaposes all these various figures to arrive at the conclusion that consumers are subsidizing Google. "Thus, Google's 16.5% share of all 2008 U.S. consumer bandwidth usage is (approximately) 21 times greater than Google's 0.8% share of U.S. consumer bandwidth costs--or an implicit (approximate) $6.9 billion subsidy of Google by U.S. consumers," he writes.

Industry pundits immediately questioned his logic. "This is stupid on so many levels I'm almost too stunned to know where to begin," Julian Sanchez at Ars Technicawrote. "Why would you ever imagine that the per-byte cost of getting upstream traffic out on a few enormous pipes would be the same as the per-byte cost on the downstream side, where the same traffic is dispersed to a bazillion consumers, each with their own broadband connection?"

The report's conclusions puzzle observers because consumers pay their Internet service providers for bandwith, usually by paying a flat monthly fee for unlimited access. Therefore, it strikes pundits as odd to state that Google is getting some sort of free benefit in the form of traffic, when consumers have paid their Internet service providers for the ability to visit Google.

Defending his conclusion, Cleland told Online Media Daily that broadband users, who typically pay a flat fee for unlimited Web access, might not consume as much bandwidth were it not for Google. "If Google didn't exist, would there be as much usage right now? There probably wouldn't be," he said.

But others argue that consumers might not pay for broadband service at all if there was no Google (or YouTube) to visit. "People pay phone and cable companies so they can get to Google," said Craig Aaron, a spokesperson for net neutrality advocacy group Free Press. "His claims just don't add up."

Google itself responded in a post on its blog. "There's a huge difference between your own home broadband connection, and the Internet as a whole," wrote Richard Whitt, Google's Washington telecom and media counsel. "It's the consumers voluntarily choosing to use our applications who are actually using their own broadband bandwidth--not Google. To say that Google somehow 'uses' consumers' home broadband connections shows a fundamental misunderstanding of how the Internet actually works."

Whitt also wrote that Google currently pays "billions of dollars" for bandwidth and server capacity. "Not surprisingly, in (Cleland's) zeal to score points in the net neutrality debate, he made significant methodological and factual errors that undermine his report's conclusions," Whitt wrote.

Cleland's report raises the same issues that telecom and cable companies have been arguing for years, in the context of net neutrality. In 2006, a senior Verizon executive publicly complained that Google was getting a "free lunch" off of the network providers.

At the time, Verizon was arguing against a net neutrality bill. The company indicated that it wanted to have the flexibility to charge more to companies like Google, which draw high traffic. But net neutrality advocates argued that consumers, as well as Web companies, already pay for the bandwidth they use.