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[February 07, 2006]

Verizon Executive Calls for End to Google's 'Free Lunch'

(Newsbytes Via Thomson Dialog NewsEdge)A Verizon Communications Inc. executive yesterday accused Google Inc. of freeloading for gaining access to people's homes using a network of lines and cables the phone company spent billions of dollars to build.

The comments by John Thorne, a Verizon senior vice president and deputy general counsel, came as lawmakers prepared to debate legislation that could let phone and cable companies charge Internet firms additional fees for using their high-speed lines.

"The network builders are spending a fortune constructing and maintaining the networks that Google intends to ride on with nothing but cheap servers," Thorne told a conference marking the 10th anniversary of the Telecommunications Act of 1996. "It is enjoying a free lunch that should, by any rational account, be the lunch of the facilities providers."

Verizon is spending billions of dollars to construct a fiber-optic network around the country for delivering high-speed Internet and cable TV services. Executives at other telecom companies, such as AT&T Inc. chief executive Edward E. Whitacre Jr., have suggested that Google, Yahoo Inc. and other such Internet services should have to pay fees for preferred access to consumers over such lines.

While Thorne did not specify that practice, he emphasized the need for companies such as his to find ways to make money to justify their investments. "The only way we are going to attract the truly huge amounts of capital needed to build out these networks is to strike down governmental entry barriers and allow providers to realize profits," Thorne said yesterday.

Thorne described two obstacles to building such networks: the task of getting thousands of local franchise agreements to offer cable television; and what he called "Google utopianism," a concept he likened to "spiked Kool-Aid."

He spoke as Congress is considering whether to write provisions that advocates say would ensure consumers unfettered access to the Internet. The Senate Commerce Committee will hold a hearing today on the issue, which is known as net neutrality.

Opponents have argued that there is no need for such laws because there have been few instances of network providers blocking Web sites; because their customers would not stand for such limitations; and because, as a general rule, regulation of the Internet should be avoided.

Thorne did not mention net neutrality by name in his talk, which largely involved an assessment of the 1996 telecom law and what he suggested were its lessons for the future.

"Will another set of restrictions -- the continental minefield of franchise agreements and the free-ridership of Google and its brethren -- choke off investment in broadband deployment?" he said.

Vinton G. Cerf, a vice president and "chief Internet evangelist" at Google, said in an interview that his company is worried that if net neutrality protections are not enacted, the Internet's freedom could be compromised, limiting consumer choice, economic growth, technological innovation and U.S. global competitiveness.

"In the Internet world, both ends essentially pay for access to the Internet system, and so the providers of access get compensated by the users at each end," said Cerf, who helped develop the Internet's basic communications protocol. "My big concern is that suddenly access providers want to step in the middle and create a toll road to limit customers' ability to get access to services of their choice even though they have paid for access to the network in the first place."

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