Orange Says Google Pays Orange for Carriage

Orange CEO Stephane Richard says Google now pays an unspecified fee to Orange for essentially terminating Google traffic on Orange end points. That might be true, but might not mean much of anything.

The agreement appears to be a voluntary business-to-business agreement between Google and Orange that should be not be properly characterized as a case of Google "paying Orange for access."  

It appears to be more like a standard IP transit arrangement between two networks with unequal traffic volume. 

Separately, European content firms have been arguing for mandatory payment of fees of some sort for use of their content in Google's search results displays.

Both of those issues--new Internet forms of intercarrier compensation and participation in Google's advertising revenues--illustrate the difficulties regulators will face in crafting appropriate regulatory frameworks for IP-delivered content and usage of IP network resources.

Traditional regulatory models do not work so well in an IP context. Application or media providers do not have traditional intercarrier compensation obligations. But there is little question today's new IP network traffic generators--video, media and content apps--impose "use of network" cost issues very similar to traditional intercarrier termination issues.

Nor does the traditional media model work so well. Traditionally, media have used their owned networks to deliver their content. TV broadcasters, radio broadcasters, newspapers and magazines provide the key examples in a classic sense.

Cable networks long ago became a new model, though. To be sure, local TV and radio broadcasters have commercial relationships with their content suppliers. But cable operators have taken the model much further, essentially signing up whole programming networks and then packaging those networks for delivery to cable customers.

There is no intercarrier compensation analogy there, since cable operators own their own networks. The problem with IP content is precisely that the ownership of the networks and ownership of content are separated, by design.

Current regulatory frameworks were not designed for such business arrangements. For media and cable TV style business models, there is a well-understood framework for sharing revenue created by the services, but those arrangements do not require intercarrier compensation mechanisms.

The problem is that all networks are becoming IP networks, which, by design, separate the network access from the content people use on those networks. And there is, by design, no reason for actual bilateral business relationships between the providers of network access and the providers of content.

It's a growing and important issue, and app providers will have to make business decisions the way communications carriers sometimes must: make voluntary business arrangements that solve a problem or wait for regulators and legislators to "do it for them."

The reported deal between Orange and Google is something more akin to a cable TV network carriage agreement than anything else. Some won't like that.