Exactly What Are European Wireless Carriers Seeking?

December 10th, 2010 by · 4 Comments

Earlier this week, Bloomberg and others reported that a group of European wireless operators are renewing their call for Google, Apple, and others like them to help pay for network upgrades.  France Telecom, Telecom Italia, and Vodafone say that they need content providers to pay fees based on usage, lest the cost of upgrades outstrip revenue growth.  That’s the general concept, but what exactly are they asking for?  Because the details are everything.

If they demand all websites and devices pay directly for access to some or all wireless customers, you are talking about a huge, huge, huge logistical mess that will inhibit the growth of new services outside of the already-giants like Google and Apple.  If you say it’s just the richest ones who must pay, then just where do you draw that line?  Any line you draw would distort the market in artificial and unanticipated ways.  And even then who is going to measure that usage?  Sounds like a giant, bureaucratic, wealth-transfer machine to me.  Surely they don’t mean this literally?

But actually, I think that these European providers have something else in mind.  I think they’re watching the Comcast/Level3 debate with more than a passing interest.  They may see in it what I think Comcast sees: a way to a new ecosystem in which they can charge more at the edge after crippling the pricing power of the Tier-1 carrier system.  They may be talking about unspecified fees for Google as a way of introducing the more indirect idea of demanding paid peering for data destined for wireless networks – whether it comes direct from the source or through intermediaries.

In other words, soon the argument will become something like “You can have your network neutrality, but we will take our pound of flesh by rewriting the unwritten rules of peering and transit that make up the internet’s system of interconnectivity in favor of the last mile operators.  We will use our last mile dominance to force that change and you will let us do it. Otherwise, we just won’t have an incentive to upgrade those wireless networks you like to use so much.”  The changes would of course filter up to Google and Apple and everyone else, and have all sorts of other consequences.  But from the large wireless carrier’s perspective, it’s a much easier path than convincing Google to pay money to restore fairness.  In the business world, appeals for fairness are easily ignored.  Greed and inertia, however…

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Categories: Government Regulations · Internet Traffic · Wireless

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4 Comments So Far

  • Anon says:

    At some stage, the economics of content delivery – and maintenance of the supporting infrastructure – need to become aligned.

    It could only be Level 3 that would initiate the opening up of these can of worms.

  • FAC says:

    right, just like the telcos called for subsidies for class 5 switch upgrades during the late nineties, because they had failed to properly take into account the onslaught of landline demand…

  • Nashville Fiber says:

    Is it just me or is anyone else tired of hearing these network operators cry and complain about content over the network. Network operators made a business decision to build a network rather than develop content. Do network operators, especially wireless, think there would be such demand from the public for connectivity without Google, Apple and Yahoo?

    To continue my rant why offer faster wireless speeds if you are going to limit data usage via pricing? It’s like offering someone a drink of water out of a hydrant and suggesting they try and drink it from a straw.

  • mhammett says:

    Increased pricing to the end user is the only acceptable option.

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