Net Neutrality Friday

So, we have examined a bit about how we got here. Now I want to talk about what the ISPs want. As I said, they want more money. The real challenge is how they want to go about earning more money. I posted about how Netflix challenges the ongoing economic model.

So, here is what they ISPs want to do. They want to find profitable or highly used services. Then, they want to charge either the source of the content/service or they want to charge the users of the same services. Things tend to bounce around a bit. The reason for that is simple. The mechanisms that they have thought of to date have not worked or been bought into.

The ISPs really want to only bill for services that cause them issues. So, in the case of Netflix they would like to charge Netflix money for terminating service at their customers. The challenge is that they this charge is to a carrier/ISP that actually has no business relationship with Netflix. They are also (to date) offering nothing to Netflix in return. Why would Netflix pay for this? To date, there is no reason and the ISPs have not come up with an effective reason for them to do so.

So, the ISPs have turned to the other end of the wire and have worked on billing the customers. This has been a lot more successful - especially in wireless. The way this has worked is the introduction of bandwidth caps. Now the traffic is not discriminated but its a start. I know an IT Support guy who uses his phone constantly. He even uses it to stream music in his car, but no video. And he only uses, 300 Mbytes in a month. That means that video is the thing that is likely to throw you over the top on your bandwidth cap.

So, can the ISPs find a way to charge you just for video? Hey wait a minute...would you really keep up the service that you buy if you have to start paying for video? Would you stop subscribing to Netflix if the ISP doubled or tripled the cost to use it? Would you consider using an intermediate proxy if you could avoid that charge?

Next week...we talk a bit about GPON and the UMC. Wednesday, I will comment on the Cyan earnings for sure and maybe Calix as well.

Have a great weekend....remember next Thursday is my Lunch and Learn!

Jim Sackman
FocalPoint Business Coaching
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