Watch CBSN Live

Carriers Hate Net Neutrality Because They Want to Double-Dip Revenue

Carriers, whether telephone or cable companies, have made their distaste for net neutrality well known. This has only sharpened since the FCC noted its plans to increase regulation on the industry by partially treating carriers like telephone service providers.

But why? Is it the lack of control over networks? Not a chance. This is a fight all about money and how many times the industry can charge for what is essentially the same service. Telecommunications is a great bastion of financial double-dipping.

When carriers say that they need control over their networks, they really mean they want the freedom to charge companies fees for access to their networks. The argument goes like this:

  1. Carriers own the networks that transmit data as part of the telecommunications infrastructure.
  2. Some companies like video streamers or search engines like Google (GOOG) use significant bandwidth.
  3. Those heavy users essentially get a free ride from carriers that are remote to them.
  4. Therefore, the carriers want to charge the heavy users fees to offset the cost of carrying the traffic.
Back in February, the president of the Spanish carrier Telefonic said that companies like Google essentially get bandwidth for nothing, and they should have to pay for the services that make it possible.

It sounds logical, except that it ignores the basic facts of the telecommunications industry. When a company like Google transmits a lot of data into a network, it's because users on that network have requested the data. Those users pay their telecommunications carriers for both the traffic they send and what they receive.

So a large traffic creator either pays a carrier on its end or, like Google, essentially pays for its own connections into the infrastructure. The user's carrier charges the user for the traffic received and, presumably, structures rates to pay for its operations, support, and to have enough money left over for profit.

Trying to charge a company on the far end is simply trying to get paid twice for the same traffic: double-dipping. If the companies -- whose annual revenues tend to reach into the tens of billions of dollars -- can't make money, they should look at either adjusting their customers' rates upwards or driving their costs downwards. But charging twice to deliver the same data is just absurd and unreasonable.

Related Coverage:

Image: user TACLUDA, site standard license.
View CBS News In
CBS News App Open
Chrome Safari Continue