the corner office

I saw some noise about this a while ago, and this Washington Post article has an interesting summary of the situation. Basically telecomms companies in the USA are getting a little antsy about the fact that they carry bandwidth for profitable companies like Google, Yahoo and others, and make no extra profit from it themselves. The impetus behind this comes from the expected increase in high-bandwidth services over the Net, such as streaming media - movies, audio, etc. So, the rumblings are underway that the network providers might start charging premiums for traffic, favouring traffic from content providers who pony up, and the counter-rumblings that the US government needs to legislate and enforce the 'network neutrality' that currently exists.

I'm not sure what I think of this. While this is currently playing out in the USA, the Net's global nature means it affects all of us, and precedents in the USA will start filtering out into other countries' carriers as well.

First, the 'premium content' argument seems bogus to me. Currently, if a truck goes through a toll gate on a highway, the toll is for the size/weight of the truck, not for how valuable its cargo is. The toll operators don't get huffy about whether the truck is carrying worthless junk or super-valuable electronics goods.

Current ISPs, despite 'globbing' bandwidth, do at heart have a variable costing structure for bandwidth usage. If you're hosting a website that incurs ridiculously high traffic, you'll get nailed for it. So one could argue that the network carriers should be happy to charge their tolls per byte or megabyte, and be happy with that. It seems to me like they're effectively trying to charge a premium by holding profitable content providers to ransom. The antidote to that should be other competitors stepping in and not premium-charging. Perhaps the fact that there only a few carriers means they expect to be able to establish a cartel to enforce this premium pricing?

Pushing for regulation is appealing, least of all because on the face of it, doing so appears to be in the interests of end-users. Ultimately any extra profits made by network carriers would come from our pockets.

Having said that, I'm deeply suspicous of any attempts to regulate a market, and this is no exception. South Africa's telecomms industry is proof enough of what regulation does. True, the providers are trying to charge a premium on certain traffic, but shouldn't supply and demand for normal and/or premium services drive pricing? Shouldn't telcos have the right to provide data services on their own terms, and shouldn't customers be allowed to decide whether they're willing to accept that or not? What unseen negative effects would come from forcing the telcos to act in certain ways? Or is the US telecomms industry so regulated and distorted already that one can't rely on a market outcome in this particular case?

It'll be interesting to see what happens over the next few months and years.