Telcos Back Off On Net Neutrality? For A Price.

from the there's-a-fee-for-that-too dept

Telcos are looking at new pricing models that could end the debate over network neutrality — by allowing consumers to access anything they want, just charging different prices for different types of content. Surfing web pages would carry one cost, while, say watching streaming video would cost another (and presumably stuff like downloading movies from BitTorrent would be priced astronomically). It would appear this strategy could be implemented even if new regulations requiring network neutrality are enacted, since it wouldn’t bar people from accessing whatever they want, just making them pay for the privilege. The strategy would fit in nicely with the telcos’ threats of extortion plans to make content providers pay: it’s not hard to see this pricing model go from per-activity to a per-site basis. So, Google, if you pony up, our users will surf for free — if not, it’s gonna be $50 per megabyte. Apart from being a predatory play to inflate revenues, it’s just not a very smart move. Pay-as-you-go pricing really worked wonders for dial-up internet access, and pricing access by the megabyte has really made a success of mobile data, and what the telcos still don’t seem to understand is that the value isn’t in the connection itself, but the content to which it provides access. If that content becomes unaccessible or prohibitively expensive, the connection they sell becomes worthless. BellSouth’s CTO says his parents are getting unfairly charged because they only surf the web and send email, but have to pay the same rate as everybody else. It would seem the obvious answer there would be to charge folks like his parents less for a lower-speed connection, like many companies do, but he’d rather keep them at the baseline and charge everybody else more. I guess it’s not surprising a telco exec’s got no problem ripping off his own parents.


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Comments on “Telcos Back Off On Net Neutrality? For A Price.”

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23 Comments
Andrew Schmitt (user link) says:

What would you do

If Techdirt thinks big Telco is so inept and has such a poor business model why do you continue to spend time writing about them? Why not leave them alone, let them destroy their business, and focus instead on what will take their place? When I was in school, it was the least intelligent people who took the time to kick the weakest and least liked kids while they were down. This behavior looks similar.

I don’t see how this approach on the subject is in line with your corporate objective of providing business intelligence? What business is helped by this analysis?

What exactly would you like to see big Telco do? Seriously?

Mike (profile) says:

Re: What would you do

If Techdirt thinks big Telco is so inept and has such a poor business model why do you continue to spend time writing about them? Why not leave them alone, let them destroy their business, and focus instead on what will take their place?

Because, if you hadn’t noticed (and it appears you haven’t), the telcos are in a bit of a monopoly position. Hopefully, that’s changing — but it’s still the case right now. So, they’re in a position to do things that harm everyone.

And, they’re trying to pull the wool over consumers’ eyes with their claims — so why shouldn’t we stand up and point out what they’re really doing?

I don’t see how this approach on the subject is in line with your corporate objective of providing business intelligence? What business is helped by this analysis?

What we write on Techdirt doesn’t need to be connected to Techdirt Corporate Intelligence. However, the point of our analysis is to make people aware of what telcos are trying to do. And, don’t you think that if the telcos do what’s described above it will impact a TON of companies?

And, honestly, we think that it’s the TELCOS who will benefit most from our analysis. They’re hurting themselves here by shrinking their own market. That’s the point we’re making. It’s not that they’re completely destroying their own market, but the are shrinking it, and taking down a lot of other businesses in the process.


What exactly would you like to see big Telco do? Seriously?

Sell connectivity. That’s all. They can offer additional services on top of it, but it’s the open connectivity that is valuable — and they don’t seem to understand this. If they recognized how valuable open connectivity was, they would be in a much better position to capitalize on that. Instead, they think only about closed connectivity, as that’s how they’ve historically made money.

Andrew Schmitt (user link) says:

Re: Re: What would you do

What exactly would you like to see big Telco do? Seriously?

Mike: Sell connectivity. That’s all. They can offer additional services on top of it, but it’s the open connectivity that is valuable — and they don’t seem to understand this. If they recognized how valuable open connectivity was, they would be in a much better position to capitalize on that. Instead, they think only about closed connectivity, as that’s how they’ve historically made money.

They have been selling open connectivity up until now. Unlimited local calling (federally mandated, but still a fact), unlimited usage of internet access (within reason… 0.01% will always exploit). Businesses buy lease lines with internet access typically provided by whomever you want via frame or IP services. Once the baby bells could sell Long Distance they went to flat rate pricing there. I don’t understand where you get the historical precedent about closed connectivity.

Darrin Freeman says:

Re: Re: Re: What would you do

My problem with this is that I am paying for a connection to the internet at at stated speed. That is all the Telco is providing to my company. The content that I access on this connection is not being produced or provided by the telco, and therefore they should not be able to charge for it. I am already paying for what they provide.

Searcher says:

Re: Re: Re:2 What would you do

Exactly!!! It’s just like the cable company. I used to work technical support and customer service for Time Warner Cable. We’d get the people that’d get upset when they get back from a 2 month vacation and find their normal cable bills for the past 2 months. They felt we shouldn’t be charging them for the past 2 months since they weren’t home. LOL I had to explain that they are paying for a service. We didn’t care how much Tv they actually watched. They were paying for the ability to turn on their Tv and have access. The same applies to the Telco. They have no control over the content. If they want to charge for content then are they willing to take resp for illegal content? I mean hell since they would be making money from illegal activity… LOL!!!

Senny says:

Re: Re: Re:3 What would you do

If they want to charge for content then are they willing to take resp for illegal content?
Strangely, this point is rarely discussed. If telcos charged according to the content (as opposed to merely volume), would they still be considered common carriers? If they were no longer common carriers, then couldn’t they be held liable for any illegal activity that occurs on their system?

Mike (profile) says:

Re: Re: Re: What would you do

They have been selling open connectivity up until now. Unlimited local calling (federally mandated, but still a fact), unlimited usage of internet access (within reason… 0.01% will always exploit). Businesses buy lease lines with internet access typically provided by whomever you want via frame or IP services. Once the baby bells could sell Long Distance they went to flat rate pricing there. I don’t understand where you get the historical precedent about closed connectivity.

Andrew, not really sure how to respond to you if you actually think this is the case.

The telcos have done everything possible to remain as closed as possible for as long as possible. Every bit of opening was pushed on them by the gov’t and resisted.

I think we may just have a very different definition of “open”.

Matt (user link) says:

Re: Re: What would you do

The crux of the issue is choice. I don’t want to subscribe to Time Warner and be stuck with only Yahoo and Fox News content. Nor do I want to then change providers and only get Google and CNN. I want the opportunity to choose. Neither the telcos nor the content providers should get to choose for me.

The back-end of the internet needs to remain the same. If a pricing model has to change, make it on the front-end, where the consumer gets to decide. Paying for your time or which application/service you’re using is worthless. However a tiered access model may be just right. For example, $9.95 for 1Mbps down, $16.95 for 2Mbps down and so on. The telcos could even offer services on top of that: increased QoS $4.95/month, static IP (bad example, I know) $1.95/month. Have us pay for the connection that serves our purposes and then let us choose what content we want.

Joey says:

Re: Re: Re: Conservation what?

I don’t understand what exactly the people insisting on “bandwidth conservation” are talking about. Bandwidth is not something that you collect as a surplus and use it later like oil – it’s just data going from one end of the pipe to the other!!! If you don’t use it and you’re paying for it, you’re wasting your money!

You might argue that it creates congestion for everyone, but talk about the real-world here… I do watch streamed videos, I surf the web, etc. and I’d say 99% of my pages come up within 2-3 sec. on my browser. So… are you concerned about the 1% of the pages that take anywhere from 10-30 sec. to load up? Perhaps you haven’t taken into consideration that many of these slower sites have slow servers or maybe their connection is slow because they’re hosting it for cheap?

Let’s face it, the ISP’s simply want more money and anyone who argues for them to do this clearly makes too much money or works for an ISP. I do however agree with the tiered CONNECTION as suggested above, because I’m paying for the faster service with my ISP now and that is the way they have it setup now.

Mystified says:

I rarely disagree with these posts...

In this case, I think it’s a little off base. Why should all internet users pay the same when some use far more resources than others? I think that pay per volume is a great method of addressing the “common green” issues of internet connectivity. He who useth, payeth.
The prices will be as competitive as they are now, if not more so, because the new transparency will compell bandwidth conservation. $50 a meg would be crippling, but what about $.50 per gig?

Carlo (user link) says:

Re: I rarely disagree with these posts...

The problem isn’t so much in volume pricing, but in the per-application pricing, because it dovetails the telcos’ demands for payments from content providers. Indeed, ISPs in many other countries regularly have data-transfer caps on their broadband plans. But when you start talking about pricing listening to music differently than surfing web pages, it very easily becomes pricing dependent on the content provider, and how much they’ve paid the ISP.

It achieves the same goal of this two-tier Internet that the telcos want, while not techically throwing away network neutrality. The carrier’s not discriminating against any sort of content in terms of delivery, available bandwidth or QoS, just using discriminatory pricing.

Brett says:

Re: Re: I rarely disagree with these posts...

A little off topic here…
IMHO, If we do see everyone being charged per gig we will see somewhat of a backlash against sites with a lot of intensive ads. If I have to pay to ignore your video ad for something I won’t go to that site, the same goes for flash and pop-ups.

Just Another Joe says:

Re: I rarely disagree with these posts...

I understand your point and to some extent agree with it, however as an end user, I don’t want to pay a flat monthly fee for unlimited access to my internet. What is really disturbing about the Telcos and their “pricing models” is that they aren’t doing anything creative or innovative. Instead of spending millions of dollars on new ideas and creating something truly useful, they are spending money creating ideas about how to get me to give them more money. It sounds a bit like extortion, “pays us more money or you get no more iTunes music.”

Furthermore, as an end user, I am not sure how companies such as Google, Yahoo, or iTunes, pay for their bandwidth usage, but I assume that they do pay a variable charge based on the bandwidth used. When someone (or a company) is using hundreds of gigabytes of data bandwidth (if not terabytes) this method of pricing makes sense, for the consumer, however, I think it is a pretty lame idea.

What we all have to remember is that the Telcos have been FEDERALLY subsidized and given billions of yours and my tax dollars to create a network that they have yet to deliver. I am also reminded about a story I read where Verizon was hording 80% (I could be off a bit) of their network’s bandwidth for future TV via IP offerings.

I say to the Telcos and everyone here, the Telcos need to be creative, not greedy. Create something of value, something that I cannot live without and I will happily pay for it, but don’t try and charge me more to use my current service, that?s simply price extortion.

Yoda says:

Re: I rarely disagree with these posts...

I have cable tv, I only watch a certain amount of channels and I maybe watch TV for 2 hours a day. Why do I have to pay for the 175 other channels I don’t watch just to have one channel that is in the highest tier package? Why do I pay the same amount of money as somebody who watches tv 20 hours a day?

Last time I checked, there are bandwith caps on access they provide. I.e I am not going to get 10mbps of bandwith if I am on a 768kbps dsl line right?

Furthermore these providers make just as much money off people who do not use the service fully as those who abuse the service.

This is just a case of these telco companies failing to be innovative enough to find new services to offer the consumers before a 3rd party comes out with a service at a fair price the avg consumer will gobble up. (Read: VOIP).

David says:

Still a double charge (probably)

Faster connections are marketed as the answer to downloading movies, songs, etc., and already command a premium price. Additional cost for specific types of content on top of a premium connection speed fee would probably be considered double dipping. To be *fair*, internet access costs based on content should either include a guaranteed minimum throughput (something ISP’s never guarantee today) or the connection should be free and at the highest possible connect speed the ISP can provide.

The internet is becoming a different beast than it’s early days. As more and more technology moves to packet based digital delivery, things change significantly. TV, phone, computer communications, etc. all potentially come from any number of providers. That means the cosy world of content is no longer pinned to just a few providers. Example, IPTV will eventually eliminate the need for TV over-the-air broadcasts. That means no more need for TV channels or TV network companies. One off content producers could create a TV show and sell it by subscription service (or by ad support). The big networks are cut out (same problem being faced by the RIAA and MPAA). IP based phones that can find each other over the net wouldn’t even need a phone number. Packet based digital delivery is a disruptive technology that is just getting started.

The whole tiered internet idea would only work if all ISP providers had equal access to every potential subscriber. Something I bet the Telcos are not willing to accept.

Anonymous Coward says:

like any big business...

they dont think about the actual amount of profit they make, they only care about increases in profit – they always have to be screwing somebody over so they can see an increase somewhere

“It doesn’t matter that I… err… *we*… made eleventy billion dollars this year! We have to make another billion this year or I cant get my 30th Ferrari!”

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