Saturday, August 09, 2014

Doing The Math On "Net Neutrality"

Doing The Math on "Net Neutrality"
By Braham Singh

I'll try keeping this simple to avoid confusing myself.

There was a time when men were men and would sign off on Internet peering arrangements in bars over a beer - drawing up the T&Cs on a napkin over a handshake. Devolving down through UUnet and PSINet and the erstwhile MCI etc. & etc., these grandfathered arrangements continue to be the Internet's backbone.

As a result, as well as from Internet Transit providers kowtowing recklessly to competitive pressures, the wholesale cost for connecting to the backbone (Internet Transit), comes to around a buck per Meg today, maybe less. The winners? YouTube, Hulu, Netflix, Internet TV who massively use the highway at a price/Meg that may connect them to the consumer, but has no connection to reality. Netflix alone takes up 40% of the Internet's capacity - mull over that.

At the other end of the Internet - where the wholesale network ends and customer delivery begins - the cable companies and Mobile Operators (MNOs) have to keep upgrading, increasing throughput, reducing costs to keep abreast of the flood of content pouring in over the wholesale network to meet customer demand. All the while, the video content provider is paying a buck a meg to his ISP and nothing to the cable provider or the MNO carring his content.

Additional irony: The MNO & cable operators who don't directly peer with the content providers, pay their ISP to flood their network with content and then pay more to ramp up the network to handle the flood. The only way to recover the cost is from the end-user who anyway has reached the end of his tether re. ability to pay. The MNOs were advised last year that their mobile Internet costs had to drop to 0.1US cent per MB to remain profitable. This is when Netflix and Hulu and Internet TV video have yet to become a major portion of the Mobile Internet stream, as they shall in a few years from now. A few years from now, is also when users will no longer want to be tied to WiFi to watch their movies but insist on doing it while on the move. Best of luck, Mr. MNO.

Now I am no fan of cable monopolies or any monopolies and as a consumer myself, am rooting for real net neutrality. However, net neutrality should not equate to a subsidy. The Comcast - Time Warner merger is potentially more harmful to net neutrality than Comcast charging Netflix to carry their content and thereby remove some of that burden from the Fixed Line consumer (that's me!).

Similarly, AT&T's Sponsored Data service provides a bigger highway for the video gang as well as for the RT Apps in return for payment, instead of passing that cost to the Mobile consumer (that's me again!)

Therefore, if the FCC is really serious about consumer protection this is what it can do: Allow the ISP/cable guy/MNO to charge the content provider. However, once a content provider is charged for access, then there should be no double-dipping and the consumer cannot be charged more by Comcast or AT&T to view the same content.

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