QOS Fees Could Change Everything

The revelation that BellSouth Corp. (NYSE: BLS) is looking to charge content providers – especially gaming companies and movie download sites – for a premium ride across its network is good news for several gear vendors. But, at the same time, the trend is causing a stir among standalone VOIP companies.

BellSouth's plans, first reported last week in the Wall Street Journal, hits the topic of "net neutrality" – a belief that owners of broadband networks shouldn't discriminate against the kinds of applications and content sent across their network. (See Chirac Loves FTTH and Brand X Decision Stokes VOIP Worries.)

The notion that service providers would charge extra for quality of service (QOS) challenges the idea of net neutrality, and could put third-parties using broadband connections for VOIP and other services demanding low-latency connection at a distinct disadvantage.

"Broadband providers are taking an unpopular stance and saying, 'We won't provide QOS for any other services but ours,' " says Benoit Legault, VP of marketing at Ellacoya Networks.

The move, of course, could provide a boost to those producing "packet inspection devices," or traffic management. Deep packet inspection technologies, such as those sold by Caspian Networks Inc. , Cisco Systems Inc. (Nasdaq: CSCO), Ellacoya Networks Inc. , and Juniper Networks Inc. (NYSE: JNPR), to name a few, would be in high demand once a service provider decides to give paying content providers traffic priority over emails, file downloads, and even consumer VOIP phone calls.

VOIP providers, meanwhile, aren't so thrilled.

Critics say the phone companies are cooking up these new fees as a way to book more revenues without significantly upgrading their networks. Bryan R. Martin, CEO of Packet 8, is excited that BellSouth is reselling his company's VOIP service, but that doesn’t mean he agrees with the idea of carrier QOS fees. "We're hopeful that the networks will get better, but if one of these companies were to approach 8X8 and say, 'Would you pay X many dollars a month in order to get some sort of improved access' – be it bandwidth or latency or whatever – we would just laugh at them and say, 'No,' " says Martin.

Proponents of net neutrality worry that if BellSouth starts charging for premium access, it may decide to limit what kinds of content users have access to – or it may charge users more money for sharing home videos or other high-bandwidth applications.

BellSouth spokesman Jeff Battcher says that his company isn't interested in being the content police or trying to limit what people can do on the Net. Rather, he says, they're trying to provide a service in the video world that's analogous to what companies get when they buy a 1-800 telephone number.

"When you call a 1-800 number to Lands End… they're willing and want to pay for that call so they can receive your business," Battcher says. He says that similarly, companies are approaching BellSouth to ask for a faster pipe to some consumers so those consumers won't be disappointed and, in turn, blame the content provider for a bad experience.

But if content providers don't pay for BellSouth's premium service, then nothing much will change, Battcher says.

BellSouth and other carriers haven't arrived at a firm conclusion as to whom they'll charge, whom they won't charge, and what kind of money is at stake.

BellSouth's Battcher says that none of BellSouth's deals with gaming companies and content providers will involve making the consumer pay more for a DSL connection. However, the very technology that BellSouth would use to deliver on those deals can be applied in reverse to allow consumers to pay for brief periods of higher bandwidth bursts. (See BellSouth's Smith Details IPTV Plans.)

Deep packet inspection companies say some network congestion problems can be solve by broadband providers looking at their network's traffic and applying some "proportional enforcement" to those heavy users of, for instance, P2P file-swapping services.

Junaid Islam, VP of marketing at Caspian, says in China one big carrier used proportional enforcement to keep P2P traffic from ruining the experience of casual Web users. The more often users downloaded large files during peak usage hours, the slower the downloads would occur. No traffic was blocked, but the slowdowns forced businesses and other heavy downloaders to either upgrade their services or wait to do their heavy use until odd hours.

In the U.S., deep packet inspection companies say that some very large carriers are looking at applying policy-based routing and other ways of building in QOS throughout their networks. And, to the chagrin of VOIP companies, the early discussions suggest that such services won't be free.

One motivating factor in going to the QOS model is that it would come before broadband has really hit its growth peak – and thus it would ensure better profitability going forward. For example, a carrier like BellSouth has hooked up less than 20 percent of the potential customers it can reach.

BellSouth last reported that it had 2.7 million DSL customers, and the carrier will update those figures during its next earnings call on January 25. Some 85 percent of the 16 million households the carrier serves – about 13.6 million households – can be reached by at least a basic 1.5-Mbit/s DSL connection.

How do you feel about this issue? Take our latest poll: Net Neutrality.

— Phil Harvey, News Editor, Light Reading

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paolo.franzoi 12/5/2012 | 4:09:37 AM
re: QOS Fees Could Change Everything
Selling network capability to get improved service with a business relationship to cover everybody's costs.

Choices that application providers have then are:

1 - Form a relationship, get better service (some sort of SLA will need to be established), and QoS will be part of the arangement.

2 - Use the public internet and get a best effort service. It's cheap, but not guaranteed.

This gives incentive to access providers (whether cable or telco or wireless) to upgrade their infrastructure knowing that popular high bandwidth applications will get them some additional revenue.

krbabu 12/5/2012 | 4:09:36 AM
re: QOS Fees Could Change Everything I agree. Anything of value has to be paid for; and the service providers are justified in charging for QoS through their network. Pure VoIP providers may have a problem with this because of their flawed business models. When they price their VoIP services, they have to build network costs into their pricing. Converged networks, by their very nature, will provide economies to all users of networks.
Enterprise IT departments (that have to provide VoIP service) will build - or lease - high QoS IP networks and can still derive economic use of their IT dollars.
ruready 12/5/2012 | 4:09:35 AM
re: QOS Fees Could Change Everything I agree with these two postings. In ATM and FR you paid for QoS, guaranteed bandwith, etc.

For the service providers to survive, and not be a dumb pipe provider, they need to be more than a bandwidth pipe. QoS, bandwidth guarantees, etc are part of an enhanced service.
paolo.franzoi 12/5/2012 | 4:09:34 AM
re: QOS Fees Could Change Everything
Unfortunately, none of the access providers are going to provide QoS for free. So, your choice of broadband provider is?

palaeozoic 12/5/2012 | 4:09:34 AM
re: QOS Fees Could Change Everything
While all of these postings seem to make sense, they miss a fundamental point. I (the residential broadband subscriber) am the customer. I will decide what to do with the service I have purchased. If I want it to go faster, I'll pay more.

But if I discover my broadband provider is artifically impairing my service (which is inevitable even if it is unintentional) or trying to make money off of my third-party content purchases, I will find another broadband provider.

In other words, the RBOCs are forgetting who the customer is.
unlimited 12/5/2012 | 4:09:34 AM
re: QOS Fees Could Change Everything "Converged networks, by their very nature, will provide economies to all users of networks."

This is not intuitively obvious but neither is it obvious that adding QoS is an easy thing to do. QoS will add complexity that will counter some benefits of convergence. Of course it is an attractive idea for Bell South to bill providers but there are many of them and therefore many contracts that will have to be put in place.

Also Bell South can only offer access to their subscribers. How many of the service provider's customers are on Bell South's network and therefore how much should they pay? Will Bell South measure, mark and treat their traffic fairly? This introduces the need for service assurance monitoring to prove service providers are getting what they pay for. And then how should the service providers pass on the cost. Can a VoIP provider charge all its customers the same regardless of whether they get special treatment from their access operator?

If only some access operators implement charging for QoS it may spur more competition for broadband access and offset initial revenue gains. A driver for wireless or powerline access?

How will the scheme work with International service providers and suppose they choose not to pay for their overseas users?

I'm not saying the scheme won't work. Without knowing details it's impossible to say but it will be no slam dunk!
unlimited 12/5/2012 | 4:09:33 AM
re: QOS Fees Could Change Everything "Unfortunately, none of the access providers are going to provide QoS for free. So, your choice of broadband provider is?"

That's a sweeping statement that you need to justify. Also you need to define what you mean by QoS. Then we can start to ask if user's need it.

Here's an interesting question. Today we pay for what is presented as a bandwidth contract with our broadband services. However, we never get close to what access provider's promise. All we get is a theoretical peak bandwidth capability (which is hard to verify) and a huge amount of aggregation into a shared pipe to the actual Internet. It's actually a wonder that VoIP works at all.

Before adding any additional bandwidth management we should clear up what users are actually paying for today.
HeavyDuty 12/5/2012 | 4:09:33 AM
re: QOS Fees Could Change Everything "Before adding any additional bandwidth management we should clear up what users are actually paying for today."

That's the question you should have asked before you signed the initial contract. The answer (if you could've gotten a straight answer) would've been disappointing enough to give you serious pause...
paolo.franzoi 12/5/2012 | 4:09:33 AM
re: QOS Fees Could Change Everything

Actually, what you pay for is a bit rate of the access port. You get no guarantees of anything else. This is massively oversubscribed.

The QoS being discussed here is guaranteeing bandwidth for apps like VoIP or VoD that need better than a best effort service to work all the time.

paolo.franzoi 12/5/2012 | 4:09:32 AM
re: QOS Fees Could Change Everything
They advertise the connection bit rate on both cable and DSL (and FiOS for that matter).

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