The Other Side of the Net Neutrality Argument
There's been a lot of focus - blogging and, increasingly, mainstream reporting - about the impending demise of net neutrality as carriers push to implement downstream tollgates on service and content providers. The carriers want compensation because they built the high-speed networks and no one should ride for free, blah, blah, blah. For a change of pace, let's look at the other side of this issue from the perspective of the content and service providers. These companies will suddenly have a huge line item on their financial statements: network access costs. For more popular services/content such as Google, eBay, Yahoo, AOL, etc., this fee could be enormous. Even for a service such as Boing Boing, which attracts millions of users, the cost could be prohibitive. As the idea of tollgates becomes more possible, I'm sure content/service providers will kick and scream about the unfairness of it to the media and politicians. Vinton Cerf will be a lead spokesman about how tollgates will hinder innovation and the U.S. economy. But what if the carriers go ahead anyway and demand downstream tollgate fees? Then what? What if Google says "Not a chance. Your broadband customers go online a lot because of us so we're not going to pay". Do carriers block access to Google? Or do they wait until a rival such as Yahoo or Microsoft agrees to pay a downstream fee, which gives their traffic priority over Google? Then what happens if broadband consumers, who pay for access, become pissed off because the world's most popular search engine is less user-friendly? Do they simply leave for cable broadband? There are so many questions because the concept of tollgates and packet prioritization fees are still being developed. It will be difficult to see how content/service providers will be affected until a carrier unveils a tollgate pricing package. Then, everyone will be able to calculate how much they'll have to cough up. Personally, the idea of tollgates is flawed in so many ways. Broadband carriers already have a variety of revenue-generation tools at their disposal. This includes the ability to offer tiered services based on speed and byte consumption (BT offers these options), the sale of value added services such as anti-spam and anti-virus. Carriers also have a billing relationship with the customer to easily offer all kinds of e-commerce opportunities - be it music, video, consumer electronics, clothing - through partnerships. The idea that carriers should blow up net neutrality because (1) they can and (2) they're hungry for more revenue is misguided. So what's it going to take to stop tollgates from happening? All of us - consumers, content/service providers, politicians - are going to have to scream and shout to put the spotlight on what's happening. If we make enough noise, maybe we can talk louder than AT&T/SBC's CEO Ed Whitacre and BellSouth's William Smith.
Update: Another component of the tollgate/packet prioritization battle is Verizon's plan to put aside 80% of its broadband network for its own services such as IP-TV. This would leave 20% for all other content/service providers - setting the stage for a scheme where Verizon could offer better downstream service for a fee. Om Malik has a post providing a variety of views from the blogosphere. Maybe a way for Google, et al to avoid or reduce their tollgates is establishing their own backbone networks to carry traffic. The Times of London has a story that rehashes the speculation/talk about Google buying dark fiber and setting up data centres. (Robert Cringely's column about Google creating data centres in shipping containers has apparently become accepted fact.)
February 4th, 2006 at 9:13 am
How hard can it be, at some point in the not too distant future, for Google, Yahoo!, Microsoft et al to manifest / create their own WiFi / WiMax networks, free of the carriers?
http://jimparsons.blogspot.com/2006/02/rumors.html
February 4th, 2006 at 11:46 am
good point. there's a times of london story today about google's buying dark fiber to create its own internet backbone. i've put the link in the updated post.
mark
February 5th, 2006 at 12:29 am
Most of the discussion of RBOC “threat†to tamper with IP traffic – and any attempt to favour some traffic requires disadvantaging other traffic – misses some key points.
First, SBC can do all it wants and it will have little or no effect on Google’s performance. The intelligence of Google’s design has always been that it is a simple, lean website. Given the limited amount of bandwidth needed to serve a customer, there isn’t much to gain or lose based on the carrier actions. The performance of many websites is largely unchanged even if you switch from a 256K line to a 10M line.
Second, VoIP doesn’t require significant bandwidth and doesn’t impose any strain anywhere in the carrier network. The VoIP challenge is not bandwidth, but latency and jitter. While the RBOCs can certainly interfere with the quality of a VoIP connection, they take on the significant risk of getting caught (as some did when they tried to block Vonage). Preferential treatment for their own, or a paying partner’s, VoIP service only adds value if the “best efforts†delivery is poor. Not a serious issue today, and likely not one on the future without deliberate sabotage. (In fact, reducing bandwidth taken by P2P services could actually improve VoIP performance.)
Third, total network usage remains heavily dominated by P2P file transfers. In this case, the RBOCs simply have no one to charge to deliver better performance. They can take steps (as some probably do already) to throttle P2P traffic, but P2P is something to run in the background. If a download takes 3 hours instead of 2, most people won’t notice. The RBOCs may interfere with commercial video streaming services or VOD businesses, but we are still some way from any of them being significant drivers of Internet traffic. (Besides, I have iTunes download my podcasts automatically while I sleep. So again, the speed doesn’t matter much.)
Fourth, this type of strategy only works when customers are dependent on a single carrier for Internet access. Many people (most?) have at least two points of connection – home and work – with multiple networks and technologies between themselves and the service providers. Unless a single carrier (or a group of affiliated carriers) can manage the entire end-to-end connection, there is no guarantee that paying any one for “premium†service will add value.
Fifth, these schemes are dependent on the cable companies following suit. While this is possible, and the cable companies have a solid record of gouging customers wherever possible, they have much less incentive to do so. Cable Internet services are already quite profitable, they generate more revenue, and have larger market share. The status quo is acceptable for cable and leaves them well-positioned to rapidly grow share in telephony. Cable could choose to go along, or they could decide to use “neutrality†as a competitive advantage. (They will eventually start to screw around, but not until Internet distribution — not the RBOCs IPTV — begins to impact their core business; actually, if they were smart, they’d scream and yell in Washington to force the RBOCs to open up the 80% of the IP pipe they plan to dedicate to their IPTV services.)
Finally, all these plans assume the RBOCs have some kind of “tollgate†on consumer Internet access. Right now, they have a significant share of high-speed access at home, but not even half if cable doesn’t go along. Over the next few years, they will face WiFi, WiMax, EVDO/ HSPDA, and possibly BPL. Will everyone go along, or will someone see free access as the means to establish a place in the market? More important, even if everyone tries to control the traffic, what are the odds that no one will figure out a workaround? (After all, wasn’t Skype’s principal accomplishment devising means to bypass all the firewall/ NAT issues that had limited previous IM/VoIP software?)
In conclusion, the RBOCs may try this (although, I’m still not sure technically how they differentiate between Google and Yahoo packets), but it is unlikely to be successful. In fact, they might be much better off taking the money they will invest in interfering with IP and using it to improve their networks and customer service. If their service were better, they wouldn’t have to discount their service ($12.99?) so heavily to keep competitive with cable. The extra revenue (from their actual customers) might address their financial problems.
February 6th, 2006 at 1:34 pm
And with this news, it appears the battle is joined…”America Online and Yahoo, two of the world's largest providers of e-mail accounts, are about to start using a system that gives preferential treatment to messages from companies that pay from a quarter of a cent to 1 cent each to have them delivered. The Internet companies say this will help them identify legitimate mail and cut down on junk e-mail, identity-theft scams and other scourges of users of their services.”
And where does Google stand on this? They've already ceded the moral high ground in China to the Dictators by swallowing censorship as the pirce to pay for doing business. How can they now turn around and claim net neutrality is the most pressing issue of the day? Interesting
February 6th, 2006 at 1:37 pm
And with this news, it appears the battle is joined…”America Online and Yahoo, two of the world's largest providers of e-mail accounts, are about to start using a system that gives preferential treatment to messages from companies that pay from a quarter of a cent to 1 cent each to have them delivered. The Internet companies say this will help them identify legitimate mail and cut down on junk e-mail, identity-theft scams and other scourges of users of their services.”
And where does Google stand on this? They've already ceded the moral high ground in China to the Dictators by swallowing censorship as the pirce to pay for doing business. How can they now turn around and claim net neutrality is the most pressing issue of the day? Interesting