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The WSJ had an excellent
article this morning on the plans
of the telcos to discriminate among content on the Internet based on
who pays
them the most money. As many of us predicted after the Brand X
decision awarded
broadband providers this right and power to discriminate, the Internet
will
become a very different place -- far more closed, proprietary, and
consumer
un-friendly -- than it is today unless we act. Given that so much of
our
media will eventually be delivered via the broadband Internet, Net
Neutrality
is a critical and immediate issue. I hope this coalition will make it
one
of its highest priorities as it lays out its agenda for 2006. Many are already familiar
with this issue, but if you’d
like to read more, we wrote an article in fairly non-wonky prose for
the Best, JR -- Center for Creative
Voices in Media 202.448.1517 (v) 202.318.9183 (f) www.creativevoices.typepad.com
(blog) Phone
Companies Set Off Content
Providers May Face By Large
phone companies, setting the stage for a big battle ahead, hope to
start
charging Google Inc.,
Vonage Holdings
Corp. and other Internet content providers for high-quality delivery of
music,
movies and the like over their telecommunications networks. BellSouth
Corp. said it is in early
talks with Internet movie companies and at least one gaming company
with the
aim of striking agreements on fees to guarantee fast content delivery
over the
Internet. Movielink LLC, a joint-venture of five major movie studios
that
offers movies to consumers over the Internet, said it has discussed the
issue
with BellSouth. Meanwhile, AT&T
Corp. executives have expressed support for charging companies to
ensure that
their content gets priority delivery, and The
phone companies envision a system whereby Internet companies would
agree to pay
a fee for their content to receive priority treatment as it moves
across
increasingly crowded networks. Those that don't pay the fee would find
their
transactions with Internet users -- for games, movies and software
downloads,
for example -- moving across networks at the normal but comparatively
slower pace.
Consumers could benefit through faster access to content from companies
that
agree to pay the fees.
"They
want to charge us for the bandwidth the customer has already paid for,"
said Smaller
companies say they may not be able to afford paying for premium network
access.
And as the phone companies start to offer their own Internet-based
content such
as video and Internet-based phone services, they could gain an unfair
advantage
over rivals who are paying them fees to offer the same services. The
phone companies are motivated by a need to find new ways to make money
from
their networks as more and more customers turn to cable or
Internet-based
companies for less-expensive phone service. Further, the telecom
companies
argue that they have spent billions of dollars through the years to
upgrade
their networks so that users can effortlessly download content from Web
sites
such as Google and Yahoo -- with little benefit to the phone companies
themselves. "During
the hurricanes, Google didn't pay to have the DSL restored," said
BellSouth spokesman Indeed,
the phone companies' share prices have sunk as investors have fretted
over the
costs of network upgrades even as they have snapped up the shares of
companies
using those same upgraded networks. Verizon's market capitalization is
about
$88 billion today, compared with $111 billion a year ago. Google, which
relies
in part on Verizon's network to deliver services to its many users, has
seen
its market capitalization balloon to about $133 billion from $53
billion a year
ago. Whether
Wall Street will welcome the phone companies' effort to find new
sources of
revenue remains to be seen. But it has already sent ripples of concern
through "We
need a watchful eye to ensure that network providers do not become
Internet
gatekeepers, with the ability to dictate who can use the Internet and
for what
purposes," said The
looming battle between phone companies and Internet content providers
has
parallels with the fight between local and long-distance phone
companies of the
1990s, when upstarts sought free access to the regional phone
companies'
networks. Until recently, phone companies were required to treat all
data sent
across their high-speed networks equally and without discrimination.
But last
year, a Supreme Court decision cemented the FCC's authority to decide
the rules
for broadband Internet lines. The agency promptly deregulated Internet
services, dropping rules that prevented the type of pricing plans now
being
proposed. Historically,
network providers have agreed to deliver Internet traffic on a "best
efforts" basis without guaranteeing various levels of quality of
service.
That hasn't been a problem for the most popular Internet services, like
email
and Web surfing, because they aren't dependent on uninterrupted streams
of
data. Real-time videogames, phone service and video, however, demand
more
reliable quality, and network operators are trying to prioritize
Internet
traffic to meet increasing demand for those services. Under
a two-tier Internet system, the phone companies would be under pressure
to
provide an even higher-quality of service because paying for premium
access
would demand more than a "best efforts" guarantee. Cable and phone
companies have already started offering multitiered pricing of
broadband for
consumers. And some cable companies have looked into ways of curtailing
individual broadband customers from using too much bandwidth. BellSouth
said it has floated the idea of seeking a small percentage of the $2 to
$5 that
Movielink, the consortium of five studios, charges for every movie
download. In
exchange, customers could download the movies faster. "What we're
saying
is the application you want requires performance, and we'll make that
available," Movielink
thinks it could benefit from high-quality delivery of its products.
"Movielink is certainly interested in increasing the quality of service
to
customers," said Critics
of these ideas say that smaller Internet companies will be squeezed out
of
being able to offer their products at all. "They want to radically
change
the way they sell telecommunications service," said ----
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![[Value Shift]](gifNW6V71Nb7v.gif)
The size and structure of the fee
systems remain to be
worked out, and the regulatory implications aren't clear. But already,
the
phone companies are meeting heavy resistance from companies that say
making
them pay for priority delivery of their content amounts to holding them
ransom,
thus hurting competition and, ultimately, the consumer.