One Little, Two Little, Three Little Internets

Here is the unedited Publisher’s Outlook from the February 2006 issue of Internet Telephony Magazine:

We live in a country that prides itself on being on the forefront of technology yet we are behind in many ways. Interestingly we seem to constantly lag when it comes to communications infrastructure. While we brag that our country invented the Internet and probably 90% of the world population realizes how important the Internet is in business and our personal lives, no one in the United States is stepping up to the plate to ensure we will have the best Internet possible in this country.

First a word on cell phones. The US along with a small handful of other countries have standardized on various wireless network technologies. In our country the Sprint, Cingular and Verizon all use different telephone standards. While we are used to the way things work domestically, in other countries that have standardized on GSM you can freely take a phone from one provider and use it on another network. You can even choose from a half dozen providers at will. Which system do you think is more competitive and better for consumers? The best cellular devices are routinely developed in other parts of the world such as Asia and Europe. Even when a US-based service provider like Verizon Wireless embraces something universally useful, like bluetooth, they feel they can get away with crippling all bluetooth services except those that allow you to connect to a headset. They force you to transfer data to the device by either paying for a cable or by using their network and paying a fee.

Verizon Wireless is holding us hostage. They have the best wireless network in the US so many people don’t mind using the Verizon network on the company’s terms. As a point of fair disclosure I switched from a GSM provider to Verizon because hey have such great service.

Holding people hostage is something you can do if you have little or no competition. Interestingly there was a time many years ago when ISP competition was pretty fierce and hundreds of service providers wanted you to connect to the Internet through them. It got so competitive that companies such as NetZero gave away Internet access for free. One would surmise this was absolutely fantastic for consumers.

Fast forward 10 years and your ISP choices for broadband are limited pretty much to cable and DSL. You likely have two providers at most in you area. Take a guess. Do you think prices are decreasing for broadband delivery? No they aren’t.

We may marvel that certain parts of the country have access to broadband over cable and that people in these areas are able to receive broadband at speeds of 4 megabits per second. We call this innovation. We say, "WOW! This is so much better than dialup." What we may not consider and probably should is that in Japan, 100 megabit service costs $25 per month and in Stockholm, 1,000 megabit or one gigabit access costs just over $100 per month.

As if we weren’t behind enough already in the US, we now need to deal with a new wrinkle in telecom pricing and for lack of a better term, "hostage taking." The LECs are now in negotiation with content providers to sell them access to a second tier of Internet service. In other words if Google wants to stream video programming to your computer, they will have to pay service providers to ensure the quality of the video will be acceptable. What will Google be charged? It is unclear. When you have no competition, you can charge what you want. In fact the LECS can decide to charge enough so that Google just decides it makes more sense to not send you video at all. By the way this sort of business practice could have killed iTunes before the service got off the ground. The contrarians may be thinking that the cable companies will naturally allow Google to stream video without restriction. Yeah right. They are going to watch Google become a mega-TV station and eventually watch them take away their cable TV business? I can’t see this happening.

The principals that govern giving all content providers fair and equal access to Internet bandwidth is called Net Neutrality and there are debates taking place right now among government officials about whether this system makes sense for our future or is a better one allowing there to be a tiered Internet system?

Our government is heavily influenced by lobbyists and incumbent providers are some of the best lobbyists around. There is a great deal of concern by those in the know that the government will allow two levels of Internet to develop.

Imagine for a second that every company that makes a living by doing business on the Internet has to pay fees to ensure their web pages come up in less than 10 seconds. The potential for abuse is staggering. Will Amazon have to pay massive fees to ensure their customers can still shop online? Would you shop online if every page on a site you tried to reach took 10 or more seconds to load?

Will customers have to start using dialup to access their favorite sites? This is probably far fetched but what safeguards are in place to ensure service providers won’t abuse their powerful monopoly positions?

Service providers are arguing that they have spent considerable amounts of money on their networks and they need to recoup their expenses. The irony is that they also told the government that sharing their lines with the CLECs was unfair because they are spending so much money building their networks, it isnt fair to share. So the FCC decided to more or less demolish the CLEC market which now sets the stage for cable and phone companies to exclusively control our access to the Internet. Now we have a duopoly and with the potential for abuse.

The phone companies are in the process of developing their own content and also signing distribution deals with content producers to ensure they can become competitive with the cable TV companies. The more content they produce the more money they will be able to make. They also are in a position to ensure that content providers are at a disadvantage in providing service while their services receive priority.

How does anyone monitor how much priority traffic actually gets? If your Vonage calls start to sound lousy, you may switch to a competitive service from the LEC… Is this not a compelling reason for LECs and cable companies to tinker with the quality of packets you receive?

Indeed, would a service like Vonage or Skype ever even get off the ground if these restrictions were in place 5 years back? The answer is likely no.

We know that any sort of restriction on bandwidth and the holding of content providers hostage is just bad business for the Internet community as a whole. It is just beyond my understanding how our government can even entertain such conversations.

If service providers are allowed to threaten content providers, we will enter a new world of web extortion where everybody loses, especially consumers.

I hope there are people in the government monitoring these issues very closely and these same people realize how well the Internet works today. Any changes to our system that will allow service providers to hold content providers hostage is a giant step backwards. If anything, in order for service providers to be allowed to keep their government-sanctioned and actually encouraged monopoly status, they should be forced to provide consumers a better price/speed ratio than any other country in th
e world.

This is what we desperately need. We are a competitive country. We shouldn’t ever lose at anything, especially not the performance of Internet service. If the government were to adopt such ideas, we would all enjoy ever-faster Internet speed and this whole argument would go away altogether.

  • Ed_0x1b
    January 24, 2006 at 3:57 am

    Need help running an initiative that makes it illegal to use the word “Internet” in marketing material for any non-neutral network?

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