Award Winning Blog

Friday, January 29, 2010

The Greatest Free-riders of Our Time

Former Southwestern Bell CEO, now General Motors CEO Ed Whitacre famous accused Google of free-riding his network, despite the obvious truth that Google pays for traffic delivery to peering points and ISPs gladly enter into reciprocal peering agreements in lieu of cash transactions that would likely result in a near zero payment as roughly equivalent traffic balances out. Mr. Whiteacre did raise a legitimate question whether there are free riders and I’m see one darling and one unexpected group flying below the radar.

My list of supreme free riders: Apple and cellular radio carriers. Anytime an Apple customer and/or a wireless carrier customer pays for and downloads content via a wi-fi connection, Apple and the carriers avoid having to pay for transport, or providing transport respectively. So Apple can get paid for a book delivered to the iPad without incurring any delivery cost. Such a deal. I have not heard that Apple will pay a gratuity to Starbucks and all the other wi-fi hotspot operators whenever a book gets downloaded “off network.”

Similarly recognize that anytime a wireless carrier subscriber uses wi-fi, in lieu of the carrier’s network, the carrier has avoided having to provide service. Subscribers are not conserving monthly service minutes when they use wi-fi, particularly for data downloads by all you can eat data plan customers.

Some time ago, wireless carriers required cellphone manufacturers such as Nokia to disable wi-fi access in the mistaken perception that the carrier would not benefit when subscribers avoid having to use the carriers’ network. Given the sorry state of these networks in the face of vastly increasing demand, wireless carriers wised up.

Now Apple and the cellular carriers qualify as the greatest free-riders of our time.

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chris said...

Great post Rob - and how about femto cells? Mobile carriers sell these to users to give them proper 3G service at home - by piggybacking on their home wireline connection!

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