Gestalt: Not the 'Free Lunch' Line!

As predictably as the sun setting in the west, the big communications companies are going after Google -- from the pulpit and soon enough, the halls of Congress. "Network builders are spending a fortune constructing and maintaining the networks that Google intends to ride on with nothing but cheap servers," is how John Thorne, a Verizon Inc. executive, put it at a conference, as reported by The Washington Post in February. Sites like Google, he continued, are "enjoying a free lunch that should, by any rational account, be the lunch of the facilities providers."

Why be surprised? Phone and cable companies were once the organizing systems of our lives. They don't want to stop dictating how we organize our lives and our communications. So they're arguing that Google and its ilk have been freeloaders, using an established cable and telephony infrastructure to build their franchises. There are valid points here. Phone companies and cable operators will spend billions of dollars to construct faster and fatter broadband around the country to deliver all these great services. Why shouldn't Google pay the freight? The pipe people think of themselves as utilities, and Google certainly pays its water and electricity bills.

Well, a few answers:

>> First. Google isn't so much eating the phone and cable companies' lunch as making it. Without content and quick access to it, no one would sign up for broadband. As one smart investor said to me, "If you think about the sites as programming, it is clearer. Comcast pays to carry ESPN, etc. Perhaps the wireline guys should pay the sites that create the traffic that creates the demand for broadband!"

>> Second. By making all this content available, the Googles of the world allow the pipe companies to charge you and me, the consumer, more than ever. Why should we pay twice?

>> Third. The interconnectedness of data has raised all boats. I pay a pipe company like Verizon for access, while an Internet service like Amazon buys connectivity and bandwidth from a provider like Level 3, and all flows beautifully. Put a toll between Amazon and me, and it will seek other pipes -- say, Comcast. Of course, if the pipes collude with each other, I guess Amazon is screwed. When the bigger fee is passed on to consumers, so are you and I.

The real issue here is control. The pipe companies could have provided the organizational systems for our new online worlds -- but it hasn't happened. Now they want to do what all would-be monopolies try to do: play catch-up. This kind of thinking slights innovation in favor of what has always worked, including doing everything, by any regulatory means available, to slow down or kill competitive innovators.

It need not be this way. To date, Comcast has not only been mum about these gating charges, it has also slowly and quietly shown itself to be one of the world's most innovative pipe companies. The company is on a path, in fact, to be thought of as more than just a pipe company within a decade.

One doesn't have to be a genius at scenario analysis to see that the Verizons of the world might be alienating the very customers and technologies that have given them a chance to grow. Notes one experienced hand in the Internet world, "The monopolists have a long history of shooting themselves in the head in the long run in order to maintain control in the short term."

Christopher M. Schroeder is CEO and president of The Health Central Network, a ChoiceMedia company. (,

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