Chapell & Associates

Thursday, March 16, 2006

Debate Heats up Over Net Neutrality

NY Times - March 15, 2006
Speculation that the two biggest phone companies in the country, AT&T and Verizon Communications, are planning to create a tiered Internet system that would require big bandwidth hogs like Google or Yahoo to pay more for their access has become a hot-button issue in the tech industry. Increasingly, it's also an issue on Capitol Hill, where some lawmakers are developing rules to maintain so-called Net neutrality--also called network neutrality--and prevent the emergence of a tiered system.

The Chapell View
I've spoken with many in the Online Retail space about this issue. Many retailers have coalesced around these and other issues into the Online Retail Alliance, which is a subset of the better known Electronic Retailers Association. Led by Bill McClellan, who directs Governmental Affairs for the ERA and ORA, the group has vigorously championed the concept of Net Neutrality.

The fear behind Net Neutrality is that the ISPs are the "keepers of the pipe" that facilitates all Internet traffic. As such, they are in a position to view and potentially exercise control over the data that passes through their pipes. Traditionally, access to those pipes has for the most part, operated under a "one size fits all" approach. So someone like my neighbor, who only checks his email, and once in a while looks at the, doesn't use up much of his ISP's bandwidth. Someone like me, who is looking at streaming video and sending MP3's (of my own original tunes) to friends takes up much more bandwidth. Now the flip side of that equation is that some websites (i.e., the ones that engage in streaming video, audio and other cool stuff) tend to use more bandwidth than others.

The ISPs have started to make noise about charging more for businesses that use more of their bandwidth. So rather than a "one size fits all" model, the ISPs are pushing towards metered approach. Sounds fairly reasonable on its face, right? If you USE more, you PAY more.

The problem with the tiered model is that it puts the ISPs in an even greater position to control the content that comes through their pipes by creating a "pay to play" model. And that has significant implications for the consumer internet economy. If you think this whole AOL/Goodmail system is problematic, wait until you see what happens when that principle is applied to ALL Internet traffic, and not just email.
posted by Alan on Thursday, March 16, 2006

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