I am not sure what the right answer to this question is? There will be winners and losers in either case.
FCC (Federal Communications Commission) chairman Julius Genachowski has just outlined his much-awaited plan for Internet neutrality. If the plan is approved it would drag the wireless operators in the US into the public regulatory arena occupied by their wired cousins who have recently had to account for their neutrality policies to the FCC.
The proposed policy outlined today by Genachowski will mean the FCC will get to poke and pry into mobile operators' business policies and rule on how well they conform to FCC guidelines on neutrality in the same way that wiredtelcos must. The FCC will also impose new and tighter neutrality behaviour on the big phone companies including Verizon and AT&T.
In detail: Genachowski has reaffirmed the long-standing (since 2005) broadband principles that will now be formalised by the FCC.
- That consumers are entitled to access the lawful Internet content of their choice.
- That they are also entitled to run applications and use services of their choice, subject to the needs of law enforcement.
- That they are entitled to connect their choice of legal devices that do not harm the network.
- And that they are entitled to competition among network providers, application and service providers, and content providers.
"The rule-making process will enable the commission to analyse fully the implications of the principles for mobile network architectures and practises, and how, as a practical matter, they can be fairly and appropriately implemented," Genachowski said today.
U.S. phone companies may be forced to open their wireless networks to rival Internet services like Skype and Google Voice under the proposal. The proposal, if adopted, would be a victory for consumer advocates and big Internet companies like Google Inc at the expense of telecom operators like AT&T Inc, Verizon Communications and Sprint Nextel Corp.
"The risk to the wireless carriers is that they won't be able to stop customers from using free voice and text services like Skype or Google voice," said Bernstein analyst Craig Moffett. "Voice and text are where they make all of their money."
The FCC has already been examining why Apple Inc rejected Google Voice for use on iPhone, sold by AT&T.
The new proposal could result in mobile customers cutting their phone bills by opting for minimum carrier voice plans and doing without text-messaging plans if they use mobile voice and text services from Skype and Google.
Piper Jaffray analyst Christopher Larsen downplayed the risk, saying that if they have to, operators would be sure to find a way to change their fees in order to maintain profits.
Advocates of Net neutrality have long argued that service providers must be barred from blocking or slowing Internet traffic based on the content being sent or downloaded.
But service providers say the increasing volume of bandwidth-hogging services -- such as video sharing -- puts pressure on them as it requires active network management, and some argue that Net neutrality could stifle innovation.
AT&T, the No. 2 U.S. mobile service, said it was concerned about an extension of Net neutrality rules to the competitive mobile industry.
The new regulations would limit consumer choices and "affect content providers, application developers, device manufacturers and network builders," said an executive at Verizon, which owns the No. 1 mobile service with Vodafone Group Plc.
Wireless trade group CTIA, whose members include AT&T, Verizon Wireless and Sprint Nextel, said it was concerned the proposal would have "unintended consequences." Leading Cable provider Comcast Corp said it was pleased Genachowski "recognized that networks need to be managed."
Exactly my thoughts (but with proper technical terms, language and analysis ;) by Gary Kim in IP Communications:
In the communications business, rationing is a fact of network life. Since virtually every part of a communications network uses shared resources, and in a market where users do not want to pay too much for access to those resources, rationing of network resources is necessary.
Shared finite resources always pose a usage problem. Known as the "tragedy of the commons," the economic problem is that multiple individuals, acting independently, solely and rationally when using a common resource can ultimately destroy the shared limited resource.
Some people argue that this problem cannot exist with the Internet, which is virtually infinitely expansible. But that misses the point. In looking at shared resources, the "commons" is the access network's resources, primarily. In other words, the "choke point" is the homeowner's garden hose, not the reservoir.
Some might argue that IP technology, optics, Moore's Law and competition upend the traditional "scarcity" value of access bandwidth. Certainly it helps. Currently, most consumers have access to two terrestrial broadband providers, two satellite networks, three, possibly four mobile networks. Then, there are broadband pipes where people work, at school and at many retail locations.
Still, there are some physical and capital investment limits, at least at retail prices consumers seem willing to pay. If consumers are willing to pay much more, they can get almost any arbitrarily-defined amount of access bandwidth. That, after all, is what businesses do.
If consumers resist paying business prices, network investment has to be shared more robustly than it otherwise might.
Given that all network resources are shared, resources are finite. To support retail prices that require such sharing, networks are designed in ways that "underprovision" resources ranging from radio ports to multiplexers to backhaul bandwidth. Based on experience, network designers engineer networks to work without blocking or degradation most of the time, but not necessarily always. Unusual events that place unexpected load on any part of the access network will cause blocking.
Blocking, in other words, is a network management technique. And that's the problem the Federal Communications Commission is going to have as it looks at additional "network freedoms" rules commonly known as "network neutrality." The term itself is imprecise and in fact already covered by the existing FCC rules. One might argue the issue is more the definitions and applications of existing rules that require clarification.
The ostensible purpose of the new rules is to prevent access provider blocking or slowing of any lawful applications, but a rule exists for that. Instead, it appears a primary effect of the rules will be to extend wired network rules to wired providers.
Beyond that, policymakers will have to contend with tragedy of the commons effects. If, in forbidding any traffic shaping (a network management technique) in the guise of "permitting the free flow of bits," rulemakers might set the stage for dramatic changes in industry packaging and prices of Internet access and other applications and services.
U.S. consumers prefer "flat rate billing" in large part because of its predictability of cost. But highly differentiated usage, in a scenario where networks cannot be technically managed by any traffic prioritization rules, will lead to some form of metered billing.
If metered billing is not instituted, and if service providers cannot shape traffic at peak hours to preserve network access for all users, then heavy users either have to pay more for their usage patterns, they will have to change their usage patterns, or they might experience some equivalent of "busy hour blocking."
Application providers and "public policy advocates" seem to be happy that new network neutrality rules might be adopted. They might not be so happy if ISPs lose the ability to deny or slow access to network resources. On the voice networks, some actual call blocking is allowed at times of peak usage. Forcing users to redial might be considered a form of traffic shaping, allowing access, but at the cost of additional time, or time-shifted connections.
To the extent that such blocking rules already are impermissible, some other network management techniques must be used. And one way to manage demand is to raise its price, either by increases in flat-rate package prices, by instituting usage-based billing or some other functionally-similar policy.
To avoid the tragedy of the commons problem, in other words, requires raising the end user's understanding of cost to use the shared resource.
Prioritized traffic handling, which assigns users a lower priority in the network once they have reached their fair use level, might be a preferable traffic management technique to slowing any single user's connection, once their individual usage caps have been reached.
When that is done, heavy users experience degradation in service only when competing for resources in a congested situation. For peer-to-peer users, the experienced reduction in throughput will be limited over time.
Only in heavily loaded cells or areas will a peer-to-peer user experience serious issues. Prioritized traffic handling enables operators to focus on dimensioning their networks for normal usage, while still permitting unlimited or "all you can eat" traffic.
Perhaps there are other ways of handling the "rationing," but on a shared network with network congestion, available to users paying a relatively modest amount of money, while a highly-differentiated load being placed on the network by a small number of users, some form of rationing is going to happen.
Perhaps flat rate packaging might still be possible if rationing affects end user credentials, rather than bits and applications or protocols. In other words, instead of "throttling" a user's bandwidth when a pre-set usage cap is exceeded, what is throttled is access to the network itself.
