Stop crying, build the tiers

February 13, 2006

4 Min Read
Crocodile Tiers

The “net neutrality” crowd needs to stop whining and start dealing.

I'm talking to both sides of the debate here – the Internet groupies and the incumbents. It's time to put an end to ideology, which has made this an unproductive war of political fanaticism. (See Net Neutrality Goes to Washington, QOS Fees Could Change Everything , and The Future of the Net.)First you have the bloated, lobbyist-rich, incumbent crowd, whose main agenda appears to be intimidation through political action, primarily so that they can squeeze every last penny of free cashflow out of their eroding assets and support their inflexible bureaucracies, which include armies of lawyers.

This came to the fore recently when high-profile executives from North American incumbents such as AT&T Inc. (NYSE: T) and Verizon Communications Inc. (NYSE: VZ) launched a perceived threat to "net neutrality" – the idea that broadband is application agnostic – by suggesting they might charge ISPs special fees for handling premium high-quality connections for stuff like video and VOIP. Gasp! (See Light Readers Favor QOS Fees.)

On the other side, you've got the "broadband revolution" crowd, backed by powerful Internet players such as Google, who posit that "net neutrality" puts high-speed broadband on a higher spiritual plane, as a basic human right. (See Cerf's Up for Neutrality Debate.)If you want a taste of ideology, here it is: On the Center for Digital Democracy Website you can read an article titled, "Hijacking the Internet: How Big Cable and Phone Companies' Plans for Broadband Threaten Democracy."

Threaten Democracy? Gimme a break. If somebody is worried about the compromise of democracy on the Internet, ask Google why they agreed to a deal that lets the Chinese government censor their searches. Do no evil? This is hypocrisy at its best.

Both camps, in short, are wrong!

The bloated tele-lobbyists are wrong, well, not just because their industry is supported by a bloated lobby, but because their primary complaint isn't true. There really is no “free lunch," as they say.

It comes down to this: (1) The end-user customers are paying for the broadband bandwidth, at “all-you-can-eat” rates per the customer arrangement granted them by the supplier; and (2) ISPs such as Google (Nasdaq: GOOG) and Yahoo Inc. (Nasdaq: YHOO) are their customers as well, buying bandwidth from service providers – in the form of the access pipes to their server farms.

Don't like it? Well, go ahead, charge your customers more – if you can.

On the other side, the "Google as the cradle of democracy" Internet camp is almost as bad. So far, they've done a poor job at marketing and delivering high-quality video services. Google Video, so far, operates like a two-bit blog. High-value services require a higher quality infrastructure to support them, which you have to pay for. If the ISP is trying to deliver a bandwidth-intensive application, they should expect to pay for a higher-quality connection to maintain the user experience. The Internet, is, by definition, only best-effort.

And the people who pay for better experience should get it, rather than those who don't. I, for one, don’t want to pay the same amount of money for bandwidth while a 15-year old neighbor spends all day sucking most of it up with his limitless, gray-market BitTorrent downloads. If my adolescent neighbor wants to spend all day playing high-quality real-time online gaming, he should have to pay for it. Downloading illegal Widespread Panic bootlegs and playing multiplayer Quake doesn't mean you are carrying forward the cradle of democracy

Would charging more for such activities mean extortion? Please. Are the airlines extorting you because they require you to pay $300 for a seat to fly across the country? Well then, go Greyhound.

The bottom line? The industry is frozen by its own rhetoric. Like any good market, it's going to have to come together through partnerships and deals. The industry has to create value by aggregating the capabilities of the network, coming up with new services, and generating additional revenues by charging customers for them. These camps are going to have to work together. You know – make a deal. Isn't there a way to add new services so that everybody makes incremental money?

Take a look at the wireless industry, which by all appearances is healthier and growing faster than wireline broadband. Innovative players came up with new applications (push-to-talk) that added value. There's a viable ecosystem of third party-providers supplying gaming, video, music, and other applications. For a fee.

Yes, in the wireless market, you can pay for voice, Web, messaging, and video separately. Is this the end of democracy? I don't think so.

In the end, tiered services, or quality of service (QOS), is inevitable. It's not a dirty word. And it won't threaten democracy. Surfing the Web has already been established as the baseline for Internet service – which is in fact a best-effort service that shouldn't require any special engineering or fees.
Tiered services? Get over it. It's the way the world works.

— R. Scott Raynovich, US Editor, Light Reading

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