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…
If you haven't already, please take our Reader Survey! Just 3 questions to help us better understand who is reading Telecom Ramblings so we can serve you better!Categories: Government Regulations · Internet Traffic · Wireless