All men are equal, but some are more equal than others. This was the hypocrisy in George Orwell’s Animal Farm, in communism and so it also will be with fixed and mobile Internet access if network neutrality regulation ensues. Well intended but misguided attempts to level the playing field will in fact impair creativity, network investment and the consumer experience.
My favorite business dailies, the right-of-center Wall Street Journal (WSJ) and left-of-center Financial Times, have both weighed in recently against legal enforcement of net neutrality. They correctly identify this as the most significant IT and communications policy issue for the new Barack Obama administration.
Obama’s proposed net neutrality conditions for the Internet should be dropped forthwith. It makes no sense to ban higher prices for premium services. This is a common practice by the U.S. Mail, toll roads, air travel and in many other services. With cafeterias and restaurants or taxis and limos, we select among different types of service and suppliers depending on the class of service offered. Pricing constraints discourage service providers from investing extra to provide the higher-performance services some customers crave and will happily pay for. The lowest common denominator approach will not make America a world leader in delivering the Internet to its people.
The WSJ reported on wavering and withdrawn support for net neutrality from Amazon and Microsoft, respectively. It accused Google of trying to have its cake and eat it by stating its support for net neutrality while seeking to offer superior service to its users by collocating its edge routers with broadband access providers. In response, Google reaffirmed its stated commitment to “keep the Internet free and open.”
Some safeguards are needed to prevent outright anticompetitive discrimination or exclusion. These already exist in antitrust and other laws. It is illegal for major players such as AT&T and Verizon to abuse dominant positions by deliberately blocking or slowing particular service providers in preference to their own services. That’s a very different issue to preventing a large file transfer or video stream from choking-off applications with modest network demands such as simple Web page loading. The FCC apprehended Comcast for its restrictions on the service provided by file-swapping service BitTorrent.
Transparency is essential. Class-of-service parameters and quality-of-service achieved should be made clear to customers. Throttling back usage should not be prohibited per se. Slowing speeds to a trickle after the first 100 Gbytes per month for a user on an entry level price point is fair so long as users are forewarned.
Net neutrality would be most damaging in mobile because wireless capacity is inherently so constrained. Spectrum is a limited resource and relatively costly per bit in comparison to fixed connections with potentially limitless and cheaper copper or fiber capacity. Fast and high-quality mobile access to the Internet can command premium prices that will incentivize investment if only it can be offered reliably. This is impossible with unbridled access to the scarce capacity available at any particular time and place.
Service providers need the latitude to offer an increasing variety of service types and pricing for many user profiles on the mobile Web. Tiered wireless pricing already exists with charges around 10 cents for a 150-byte text message versus a penny or less for data over GPRS or 1X, and voice is priced differently altogether including variations according to time of day and place. The mobile Web is embryonic. Its development will arise from experimentation with new business models, customer propositions and pricing with a wide array of content services.
And when wireless goes all IP, including voice? LTE is an all-IP architecture that does not support circuit-switched connectivity. With current mobile technologies, voice is carried separately to data on circuit-switched connections. This ensures quality is not degraded by bandwidth-hogging services. It would be a travesty if this relatively low bandwidth and yet highly latency and jitter-sensitive application got all fouled up with the likes of video file sharing downloads.
Notable Silicon Valley titans Google and eBay and even pop musician Moby have lobbied in Washington for Net regulation since 2005. AT&T and others have held off, introducing significantly tiered classes of service and pricing in response. Meanwhile, U.S. broadband Internet penetration continues to lag behind many other nations. Europeans continue to point out that America is a follower in 3G. Let’s stop impeding things so service providers can exploit their creativity and some fundamental economic principles to accelerate development of fixed and mobile Internet access.
Mallinson is founder of WiseHarbor, solving commercial problems
in wireless and mobile communications. www.wiseharbor.com
Filed Under: Industry regulations