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Free market Internet pricing and diversity of choice

The reality of market pricing for Internet usage is naturally gaining more attention.  

  • The New York Time's had an informative Sunday page one story: "Charging by the Byte to curb Internet traffic." 
  • Today the Wall Street Journal highlighted why market pricing for Internet usage is evolving with dramatic changes in the Internet marketplace in its story today: "Cisco projects growth to swell for online video."  

The big economic takeaway here is that in a free market Internet, where users have very different demand: i.e. needs, wants and means for speed, usage, mobility, latency, immediacy, reliablity, flexibility and other attributes -- suppliers (ISPs, application providers and content providers) must have the freedom to innovate, experiment and provide a diversity of choices, at a diversity of prices in order to meet the diversity of demand from users.

The big political takeaway here is that Internet "fairness" is not legislated/regulated net neutrality or a one-tier Internet where all bits must be treated the same and where light Internet bandwidth users must subsidize heavy Internet users -- but real and practical Internet fairness comes from users paying their way, paying for what they use above a certain amount and not expecting others to subsidize one's extreme bandwidth usage.

"All-you-can-eat" bandwidth expectation shenanigans

I wanted to follow up and build upon my post of last week: "The logic of Internet Pricing Diversity and the Fantasy of free limitless bandwidth."

  •  I keep hearing this backward-looking refrain from net neutrality proponents that because some people characterize dial-up and early broadband bandwidth as unlimited or as an all-you-can-eat usage model -- that that model should never evolve or change.
    • Balderdash! This is some people's wishes being presented as analysis.

I believe U.S. Internet access consumers have come to understand at least two truths: 

Unleashed: Transcript of Griffin/Cleland talk on Google, net neutrality, monopolies, click fraud, privacy

For those who like the written format, here is the link to the transcript of Chip Griffin's interview of me on all things Google.

This interview turned out to be one of the most comprehensive and in-depth discussions I have had on all things Google -- that's been captured for web listening or reading.

We discussed:

The logic of Internet pricing diversity vs the fantasy of free limitless bandwidth

The free market Internet works. Both Time Warner Cable and Comcast are logically and naturally experimenting with free market solutions to address increasing network congestion problems that threaten quality of service, because of extremely high and disproportionate bandwidth usage by a small slice of the broadband population. 

  • As widely reported, Time Warner Cable is experimenting in Beaumont Texas with a commercial offering that provides consumers with a range of choices based on their bandwidth consumption and desired speed, and includes a new $1 per gigabyte charge for usage above a plan's monthly limit. 
  • Also widely reported, Comcast is testing in Chambersburg PA and Warrenton VA, a protocol-agnostic network management approach which would potentially delay all of the traffic of extremely heavy users during periods of serious network congestion -- in order to maintain quality of service for everyone.

Free market experimentation is the best, fastest and most efficient finder of solutions to complex difficult problems.

Free market competition produces a diversity of choices for consumers, which is essential because consumers have a diversity of wants, needs and means. A free market naturally provides a diversity of supply offerings to meet the diversity of consumer demands.

Unleashed! Why I focus so much on Google -- Listen to Chip Griffin's interview of me...

Here is the link to Chip Griffin's 28 minute interview of me on "Conversations with Chip Griffin," an in-depth conversation about many of the reasons why I believe Google is becoming such a big problem and why I personally spend so much time focused on Google.

I believe you will find it an informative, interesting, and entertaining interview covering all things Google, the online economy, net neutrality etc.

  • Enjoy!  

"Google CEO: Get Ready for Cellphone Ads" -- Google sees users as "targets" to stalk

I had to chuckle when I saw the headline: "Google CEO: Get Ready for Cellphone Ads" on the US News and World Report Blog.

  • Google can't help but salivate over how valuable "targeted" ads could be on the most personal of devices -- the cell phone.

While Google's standard line is that Google is all about the "user" -- stories like this shed light on the truth -- it's really all about Google.

Google's self-centered, megalomaniacal mission to organize the world's information to be accessible and useful to Google -- blind Google to the very different privacy reality of the cellphone world:

"Googolopoly" the Board Game -- Kudos to Box.net for their great sense of humor!

Kudos to Box.net blog who created a clever Googolopoly board game modeled after the Monopoly board game most have us have played at one time or another.

  • Per Box.net: "...One day we got tired of being serious about the situation and came up with Googolopoly, a game where you can take part of ruling the internet even if you don’t work in Mountain View. The goal of the game is to use Google shares to buy as many properties as you can without landing in the deadpool and losing your stock. As with any great board game, there’s a very real metaphor to what’s going on…. What happens when the Google monster gobbles up all that is left in the web world, is present on your cell phone, desktop, and even controls your health information? For all their product excellence, the threat of amassing this much data is too serious to ignore."

I would be remiss if I didn't link to my own, differently spelled, www.googleopoly.net website which includes some of the most in-depth and serious analysis of Google's growing market power.

For those who wonder -- why should I care:

Why Google-Yahoo deal is collusion -- Yahoo's lifeblood in exchange for Google's caffeine

Microsoft's resumed interest in Yahoo's search business, suggests that Yahoo is close to outsourcing some of its search to Google. The antitrust implications of the world's #1 and #3 online advertising competitors, Google and Microsoft, fighting over the #2 competitor, Yahoo, has finally attracted serious media attention.

  • A Financial Times editorial: "Search for a rival" asks: "How do you spell Googlopoly?" (I spelled it with an 'e' in my www.googleopoly.net Google-Doubleclick analysis and Senate testimony.)
    • The FT: "Any deal that lets Google supply part of Yahoo’s search advertising, however it is dressed up, must be bad for competition." 
  • Today the New York Times', Steve Lohr, with contributions from Miguel Helft, produced the most in-depth reporting to date of the antitrust issues surrounding a Google-Yahoo search partnership: "Google Says It Will Defend Competitive Rationale of a Yahoo Deal."  

Now that the antitrust implications of this issue are beginning to get heightened media scrutiny, let me lay out my case of why a new Google-Yahoo search partnership is anti-competitive collusion and not benign collaboration. 

First, one must look at the competitive impact of a Google-Yahoo partnership.

Why Google storing personal health records is a really bad joke -- the public should be worried...

Given that Google began offering online personal health records to the public yesterday, I thought it would be timely and helpful to repost in its entirety a previous post of mine from February 21, 2008 on why Google being in the business of storing personal health records is a really bad joke.

  • The post has over twenty useful and illuminating links, and many of them contain mainstream documents that underscore why the public should be extremely wary about entrusting Google with its most intimate, private and personal information.

Below is my 2-21-2008 post in its entirety -- if you missed it, or care about this issue, it's a online privacy must-read post: 

AP reports "Google to Store Patient's Health Records." Let's count the reasons why Google storing Americans' private health records is a really bad joke.

New IAB data indicate Google & Yahoo have 64% share of US Internet advertising revenue!

The new 2008 Internet Advertising Revenue report just came out from the Interactive Advertising Bureau.

It has U.S. Internet advertising revenues for 2007 at $21.2b, up an impressive 26% from 2006 revenues of $16.9b, but nowhere near as impressive as Google's 56% overall revenue growth in 2007. 

With the pending Google-Yahoo outsourcing pact reportedly being negotiated, I thought it might be iluminating or instructive to see what share of U.S. Internet advertising revenues Google and Yahoo each have, and what they would have on a combined basis. 

  • Given that Google's 2007 U.S. revenues were ~$8.9b that would be about 42% of all U.S. advertising of $21.2b.
  • Given that Yahoo's 2007 U.S. revenues were ~$4.7b that would be about 22% of all U.S. advertising revenues of $21.2b.
  • That would put Google and Yahoo's combined Internet advertising revenue shares at 64% that the "partnership" would collectively control. 

At a minimum, the domination of these two players in the U.S. Internet advertising market, combined with Google's incredible momentum in taking share from all its competitors signalling powerful network effects, must concern both the DOJ and FTC.

If Google and Yahoo partner to not compete as fully as they did before... where is competition going to come from? 

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Q&A One Pager Debunking Net Neutrality Myths