First-Ever Study of U.S. Consumer Internet Usage and Cost Finds Google Uses 21 Times More Bandwidth than it Pays For

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The core conclusion of the study is that any sustainable national broadband policy must ensure that the heaviest Internet users pay their fair share of Internet infrastructure costs. It is neither economically rational nor equitable for the biggest users of, and beneficiaries from, shared resources to not share fairly in the recovery of costs

McLean, Va (PRWEB) December 4, 2008

Today Precursor LLC released a first-ever research study of U.S. consumer Internet bandwidth usage and costs with the objective of estimating how much bandwidth Google uses and pays for. The data confirm the study's core hypotheses, that: Google is by far the largest user of Internet bandwidth, Google's share of bandwidth usage is rising rapidly, and that Google's bandwidth use is orders of magnitude greater than its payment for its cost.

The study estimated Google used 16.5% of all U.S. consumer Internet traffic in 2008, and that share is estimated to grow to 25% in 2009 and 37% in 2010. What drives this conspicuous bandwidth consumption is Google's search bots regularly copy every page on the Internet, some as frequently as every few seconds, and Google's YouTube streams almost half of all video streamed on the Internet.

The study estimated Google's payment to fund just the U.S. consumer broadband Internet segment to be approximately $344 million in 2008 or 0.8% of U.S. consumer's flat-rate monthly Internet access costs of $44.0 billion. Thus Google's 16.5% share of all 2008 U.S. consumer bandwidth usage, is ~21 times greater than Google's 0.8% share of U.S. consumer bandwidth costs - or an implicit ~$6.9 billion subsidy of Google by U.S. consumers.

This research study of Google's usage vs. cost is relevant to the current broadband policy debate, because Google is the driving force behind InternetForEveryone.org which is pushing "to adopt a national plan to bring open, high-speed Internet connections into every home, at a price all of us can afford." Internet connections could be more affordable for everyone, if Google paid its fair share of the Internet's cost.    

•     "It is ironic that Google, the largest user of Internet capacity, pays the least relatively to fund the Internet's cost; it is even more ironic that the company poised to profit more than any other from more broadband deployment, expects the American taxpayer to pick up its skyrocketing bandwidth tab," said Scott Cleland, President Precursor LLC, and author of the study.

"The core conclusion of the study is that any sustainable national broadband policy must ensure that the heaviest Internet users pay their fair share of Internet infrastructure costs. It is neither economically rational nor equitable for the biggest users of, and beneficiaries from, shared resources to not share fairly in the recovery of costs," Mr. Cleland added.

Since Google often compares the Internet to the public highway system, the study also examined how the U.S. highway system apportions costs among business users and consumers. Any analysis of public highway funding will show that businesses/trucks, which put the most cost burden on the highways, pay substantially more than consumers/cars - the exact opposite of Google's recommended broadband model, where consumers shoulder most all of Google's costs for using and profiting off the Internet -- more than any other entity.

•     The study highlights the inconsistency in Google's position supporting government ownership/regulation of the Internet like the U.S. highway system but not adopt the economic model and fairness of the highway system -- where the heaviest users that cause the most costs -- shoulder their fair share of the costs.

The study's methodology is straight-forward, transparent, well documented and replicable so Google or others can provide improvements or alternative estimates -- and so other countries can estimate if Google uses more of their country's Internet capacity than it pays for.

•     The study's author, Precursor President Scott Cleland, said: "While I expect the study to generate a healthy debate over the methodology, assumptions and estimates, any rigorous analysis of the data will lead to the same incontrovertible conclusion of this study -- that Google's U.S. consumer Internet bandwidth usage share vastly exceeds its payment share of the cost."
•     The study was conducted over the last several months by Scott Cleland, President of Precursor LLC, a leading techcom research and consulting firm.
•     Cleland was formerly an Institutional Investor Magazine top independent telecom analyst in 2004 and 2005.
•     Cleland also has a high-profile track record in spotting big anomalies in Internet traffic. In late 2000, Cleland was the first analyst to expose that Internet traffic was in reality growing 90% slower than what the market assumed, heralding the bust of the telecom bubble that wiped out over $1 trillion in market capitalization in 15 data-dependent companies.
•     Precursor now provides research for companies and Cleland is Chairman of NetCompetition.org a pro-competition Internet forum funded by broadband companies.

Read the full study here.

Precursor is an industry research and consulting firm, specializing in the converging techcom sector. Precursor offers rare forward-looking expertise and national credibility at the nexus of: capital markets, public policy and techcom industry change.

NetCompetition.org is a pro-competition Internet forum funded by broadband companies.

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