As most have noticed, net neutrality storm clouds are gathering again and battle lines are being drawn. The flashpoint right now is Comcast’s decision to have its Xfinity streaming content not count against its bandwidth caps, but it’s not just Comcast. AT&T and Verizon are working on related ideas in which content providers would pay to have their traffic counted against data caps. While all this looks like it will develop into a purely partisan disagreement, I’m starting to wonder if there isn’t something useful buried in the idea.
Let me start by assert something that in today’s media is perhaps not obvious. The positions of network neutrality supporters and network operators are not diametrically opposed. Nor are they parallel of course, but this is not a zero sum game. At the core, network neutrality supporters want a fair, unthrottled playing field that encourages innovation and freedom of usage, while carriers want traffic growth economically linked to revenue growth so that their network investments are justifiable.
Rumors have been circling about the major wireless carriers implementing a model similar to that for 1-800 numbers in the voice business, where content providers can pay to be cap-free. I’m as suspicious as anyone and we don’t know the details of the actual 1-800-number-style plans under development, but suppose someone put out a grand compromise with the following features:
- Non-discriminatory cap exclusion would be allowed — Any app developer can choose to pay to have traffic generated by the app be excluded from bandwidth caps, but on a per-GB/TB basis across all subscribers at a fixed price. No special deals for large providers.
- A minimum threshold to encourage innovation — The first XYZ amount of bandwidth generated monthly across all subscribers for apps that have signed up would be free. This would mean that new apps have the chance to gain momentum, and hence cash flow before having to start writing checks.
- Carriers must track traffic usage reliably for registered apps – If they wish to tie revenues to this, they must be able to quantify it properly.
- Apps can choose not to participate — especially low-data-usage apps, which can convince their customers that their apps are not a threat to their cap.
- No filtering based on functionality — Carriers may only apply this regime in the context of traffic volumes. If Skype or Instagram or whoever disrupts a competing carrier product within these rules, then so be it.
Such a regime would correct several problems that have been intractable thus far:
- App developers would have a direct economic incentive to optimize the bandwidth their apps consume, whereas right now we have (in wireless) limited spectrum resources with potentially unrestrained demands.
- Carriers would gain a direct linkage between the traffic their networks support and the revenues they generate, giving them more visibility for long term network investments.
- Users would not have to worry as much about exceeding their caps, encouraging them to *use* their bandwidth rather than calling them data hogs.
- Large content providers would not have an undue advantage.
- Last mile providers would not need to start disputes like the Comcast/Level3 traffic exchange dispute.
It doesn’t solve everything (what does?):
- How are the prices determined? It’s always been unclear how to find a non-regulatory way to have fair prices across a last mile bottleneck. In this case though, perhaps the popularity of apps and devices could help balance things. If the app everyone wants is available cap-free from carrier A but not from carrier B which charges developers more, then carrier A would perhaps start to lose customers. But it’s not clear this is enough, and of course nobody wants access fees and such.
- Tracking actual traffic usage per app may not be easy for the carriers without standardized tagging and such, which would take time to work out. There are also probably privacy issues to overcome in collecting the data.
Now, I can hear the howls out there that anything with a carrier charging a new fee is bad. But we already have a new fee in place in the form of the data caps and the related overage fees. If things go as they currently are then they will just keep the caps low and charge fees anyway. That places the onus on users, and nobody should want it there – not carriers who bear the brunt of their customers anger on the subject, and not content providers who really want users to feel free to consume content without watching the meter anxiously out of the corner of their eye.
Virtually everyone is against network operators arbitrarily blocking and filtering our content. Heck even the carriers should be against that, they can’t possibly want to spend the next decade telling customers, with whom they already have an image problem, what they can’t do as opposed to what they can do. But the economics have to be aligned somehow, and right now they’re not. For network neutrality proponents to take too hard a line on all this leaves a giant gap here that would be similarly counter-productive. Why not use the need for economic balance in raw traffic growth to negotiate for freedom of the content itself?
Whether such a 1-800 model for last mile bandwidth can fill the current gap or not, sooner or later a compromise will need to be found. And this feels much better than other ideas we have seen in the past. There must be a more robust linkage between bandwidth usage by apps and users on the one hand and the capital costs for the network that must carry that bandwidth. And there must be the freedom of content and innovation too.
Neither side should win this battle outright, because both are correct on many fronts. It would be disastrous for the carriers to gain full, arbitrary veto power over content on their networks, but it would be equally disastrous for the economics driving infrastructure investment to become dysfunctional. We want an environment where so-called ‘data hogs’ are instead ‘valued customers’, where innovative products that use less bandwidth to create more value are celebrated, and where needing to add more capacity is a cause for celebration all-around. Utopia? Perhaps, but we can do better than the status quo.
What do you think? Would such an effort be a step forward, backward, or sideways?