Net Neutrality Friday

So once again, I get to talk about Net Neutrality. Next week, I will probably rename this day to something a bit broader. But let's stick on this topic today.

I want to talk first about what the ISPs want and why they want it. Since this is about money, I have to go back to how people got paid in the telephone network. When you made a long distance phone call, you paid your local phone company. That phone company paid the long distance carrier and the terminating local company their share of the call revenue.

In the days of the Internet, all of this is done on an aggregate basis at best. You pay your ISP for service. The content provider pays their ISP for service. Both ISPs pay one or more backbone providers for peering. What we don't have is a payment system between the two end ISPs.

Secondly, phone service came with two kinds of charges. First, there was the fee to have a phone. Second, there was a usage fee. This usage fee was waved if a call was made locally. Local calls were free because no significant resource was used to complete the call. From an Internet perspective, we received unlimited service based on the clock rate of the data that we receive.  Resources used, distance, none of that mattered to how much we were billed.

These two differences in the money exchange have caused us all kinds of issues. The first is a focus on Access Networks (the connection between a subscriber and the network) and speed for Internet Services. To increase revenues, Carriers wanted to sell more higher rate services. However, the Metro and Aggregation networks are "free" to use (the bits that connect regional networks). This leads to the dichotomy that a carrier wants you to buy a super fast pipe, and then never use it. Seems like the old days when I would go to IT conferences and the topics would be "How to keep those nasty users off your wonderful networks".  One other distinction between the phone and Internet was that most phone calls were local, most Internet sessions are remote.

In the days of e-mail and static content, that is what the carriers got with the Internet. The connections were used only when people were at their computer. The data that they loaded was generally small and sporadic. People bought faster networks so that their load times were faster and that connectivity was instant.  The pressure on the Metro and Aggregation networks was low.  Even those most traffic flowed across them (unlike with phone service), idle time was so high these networks had plenty of bandwidth.

Fast forward to the days of the streaming services. And by that I really mean streaming video services. In general, audio is not enough bandwidth to worry about (it just adds a bit more to the problem). These services run a "lot" of data over a long period of time from machine to machine. The user will view it and bandwidth is used at a much higher rate. On top of that the idle times between content flowing go away. This is even true for other services. For example, I just had a Skype notification pop up. That is not a lot of data, but add it all up and it adds to the problem.

So, the ISPs want to get back into the business of charging us for usage. They have started this with bandwidth caps. But there is a second element here and that is their view of the people making money from their network. I always struggle with that. If I go back to the phone network analogy, it is like they are trying to charge us for the type of conversations we are having. I have little sympathy for that.

Anyway, Monday back to the Tellabs story. Next week, a bit about the breaking point of this in the ISP mind: Netflix. Have a great weekend!

Jim Sackman
FocalPoint Business Coaching
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