Talking at the FTTH Conference and Expo, Verizon CTO Richard Lynch said out loud what is almost certain to be many ISP’s response to network neutrality:
At the end of the day the concept of a flat-rate infinitely expandable service is unachievable. We are going to reach a point where we will sell packages of bites. Now I’m not announcing a new pricing plan. But we have already gone this way in wireless because that is where the resource is most constrained.
In other words, unlimited broadband will soon be a historical concept. Of course, it’s not a new development. For some consumers this is already the case explicitly as usage caps are in place, and in other cases it is more implicit. There are two lines of reasoning justifying this, one of which is for public consumption and the other not so much.
The public face of bandwidth caps will hinge on the obvious truth that infinite bandwidth is not economically viable, that in order to pay for the bigger pipes ISPs will have to ration them and make the bandwidth hogs pay for extra. Just where the caps need to be in order to make the economics work out is not clear. If one looks at Japan and Korea, it seems like a whole lot of bandwidth can be delivered economically before caps are needed. But frankly, the price is not likely to be determined that way in the US market, which leads us to the less public line of reasoning.
If you can’t stop network neutrality in the battle against over-the-top video, just make sure your own video doesn’t travel over the network and then limit the network – neutrally of course. In other words, video offerings like those of Comcast and Verizon FIOS are separate and therefore ‘unlimited’, but if there is a usage cap on internet access then competing services like Netflix or whomever else are definitely limited. Will it be magic or even coincidence that the usage caps put in place by ISPs to help them keep pace with traffic growth just happen to hamstring over-the-top video offerings? I rather doubt it.
But it won’t be quite that easy. If usage caps do become the next big thing, the magnitude of the cap is actually more important to consumers than the maximum theoretical speed itself. Different ISPs will have different attitudes toward over-the-top video, if caps are set too low those who don’t have competing offerings could use higher caps to gain marketshare. That is, assuming there is sufficient competition in the first place. Hmmmm.
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