Posted on January 18, 2006 at 11:29 AM in thoughts
Note: The below is an archived entry from Earthling, formerly EarthLink's official blog. The blog itself has been decommissioned and is no longer updated, and comments are trackbacks are no longer accepted.
The battle over Net Neutrality continues.
Thanks to Earthling reader John Foltz for pointing out a Marketwatch(registration required) article that suggests BellSouth may start charging content providers surcharges for moving their files over BellSouth's network. The idea is that when you buy a music file or movie online, they'd like to add a charge to the company you buy it from to pay for their moving the file to you. The article quotes BellSouth CTO Bill Smith as saying selling access to content is "the shipping business of the digital age."
Huh?
That's kind of a weird analogy. Maybe if UPS handed off your package to a dozen smaller delivery companies in tiny pieces it might stand up a little better. But if you are a BellSouth customer, BellSouth is not "delivering" content end-to-end from Yahoo or iTunes to your computer. They are merely the first and/or last couple of hops in the chain. And your monthly fee should be sufficient to pay for your ISP's part of the "shipping" service. After all, that's what the internet is there for. That's all it is.
Business 2.0's Om Malik argues that if all of this is inevitable, and "someone is going to have to pay", as SBC CEO Ed Whitacre has suggested, then (a)it shouldn't be the consumer, and (b)any savings or profit should be passed on to the consumer, since the consumer's monthly fee is what pays for the pipe.
Another potential solution to the apparent concern about overburdening the networks is tiered service, where you pay a different rate depending on how big and how dependable an internet connection you want. Mark Cuban has written extensively about this model.
Maybe it makes sense for businesses that depend on a certain level of constant connectivity to pay extra for it, but this sounds like a dangerous idea for the consumer.
For one thing, it tempts ISP's to artificially slow down bandwidth coming in to your home to pressure you for a more expensive service agreement. For another, as Malik points out, who is to say that Internet Service Providers can truly and reliably guarantee a consistent available speed of connection to the internet. That's not a guarantee that they put in their terms of service today.
Comments
The shipping analogy also falls apart because when I use UPS, I am the only one paying them. The company sending me a product isn't also paying UPS for the privilege of using their services. A shipping company that tried to get two different fees for sending a product would quickly go out of business.
There's an article about this up on Slate as well:
http://www.slate.com/id/2134397/
This seems to me to be nothing more than an attempt by grabby telcos and cable companies to get one service paid for twice. It's outrageous and they won't get away with it.
The Slate article discusses the intriguing possibility that Google will be setting up public WiFi in urban centers. That'd be cool, but I'd imagine it would take quite a while to set up giant networks all over the country.
Posted by Jeff Durland | January 18, 2006 1:37 PM
Maybe, Jeff. But I live pretty much in the middle of nowhere. It's not rural Wyoming, but it's rural. And I just got access to high-speed wireless for the first time, so I'm dropping dial-up. (Sorry, Earthling, nothing against you.) My point is that if I can get high-speed wireless, that's gotta mean that very soon, 90% of the country will have it somehow. How? I don't know. But 2 years ago, the thought of high speed out here was absolutely out of the question.
By the way, this is a nice blog, Dave. Good work.
Posted by David Brazeal | January 18, 2006 2:01 PM
You may be right--I don't have much knowledge of what sort of effort and/or money would be required for Google to do a project of that size. It's just that to me, a relative layman in this area, it *seems* very ambitious. But considering Google's resources, I'm sure they can tackle very large projects such as this one. We'll see, I guess.
Posted by Jeff Durland | January 18, 2006 5:10 PM
Bellsouth is clearly launching a full court press on this position as Bill Smith also had a letter to the editor in the Finanical Times (FT.com) yesterday. He's advocating this pay per bandwidth/content model and asserts that "14% of their internet subscribers make up 80% of the internet traffic the company carries". He carefully does not say that those users are probably already paying for their big pipes. I'll bet that Turner, CNN, Delta and a few other choice Bellsouth customers make up the majority of that 14%.
Posted by runs with dogs | January 18, 2006 7:40 PM
Jeff, this statement intrigues me:
I made a withdrawal from an ATM that wasn't affiliated with my bank a few weeks ago. My bank's nearby ATM gave me an "out of service" error, and I was out of cash -- otherwise I wouldn't have used another bank's machine. The bank that owned the ATM and my bank each charged me a service fee. This kind of double-dipping isn't new, I don't feel very confident that various 'Net-related companies won't try (and get away with) the same thing.
Posted by Tracy | January 18, 2006 8:38 PM
Tracy, I realize that they will or at least might try to get away with this. But I think the existing model is entrenched enough that it'll be difficult for them.
Plus, even if they manage it, various workarounds will appear. As with your bank account issue--there are credit unions that not only don't charge a fee, but reimburse other banks' ATM fees. The trouble is that you have to look for them. They're not nearly as ubiquitous as a Citibank or Bank of America.
Posted by Jeff Durland | January 19, 2006 10:21 AM