(this post was last updated at 10:00am EST, July 22, ’06)
1. Telcos and Cable companies in the US are legally disallowed from blocking other carriers’ VoIP traffic. Last year, the FCC fined a North Carolina CLEC for doing that to Vonage.
2. Telcos and Cable companies have been in a turf war ever since cable companies started offering Internet access. This turf war escalated after cable companies started offering VoIP phone service, thus cutting deeply into the telcos’ main revenue stream.
3. The telcos’ response to the Cable companies’ entry into the phone market is to roll out their own TV services, based on IPTV (TV over IP), which are being rolled out at the speed of local and state government bureaucracies. IPTV would be carried on DSL lines, FTTC or FTTH.
4. The telcos’ response to Skype, Vonage, Yahoo IM (with VoIP) as well as their response to YouTube (and Google Video), who combinedly threaten the Telcos’ business model in the phone service and video delivery areas, was their push for a two-tiered internet, where the telcos, who happen to own the Internet backbones, would de-prioritize VoIP and video traffic from Skype, Vonage, YouTube, Google, Yahoo and others.
The telcos already charge the end user (in case they serve the end user directly) and the cable companies (for use of their backbone when traffic has to travel outside of the cable company’s own network.)
So I just don’t see why the telcos would have to charge the cable companies, Google, YouTube, Yahoo, Vonage, Skype, MSN, etc one more time.
The telcos’ backbones are not being used for free. They are either paid for by the telco’s users (if the telco is the ISP) or by the cable companies and CLECs using those backbones, who pass the cost to their users. So it’s us, the end users, who are paying for those backbones, not the telcos as the telcos make it sound like.
But it seems that the telcos are saying that they’re not charging enough for those backbones to ensure continued investment on their part in growing their backbone capacities and instead of increasing how much they charge for traffic, which would increase our monthly access fees, they’re suggesting to charge the heavy content providers (e.g. YouTube, Google, others) for high-priority traffic (e.g. VoIP, video streams) and do the same to the VoIP transport providers (e.g. Skype, Vonage, etc.)
Google, Skype, Yahoo, MSN and others, seeing how that would hurt their business interests and the interest of their users by forcing them to charge users for content and VoIP transport, have sponsored a Net Neutrality bill, which to the best of my knowledge has had a hard time going through Congress and the Senate.
Two Tier Internet
The telcos are struggling against the inevitable: that they will be a commodity industry like the railroad or trucking industries. The telcos, who understand all of the above, do not want to be confined to the transport of traffic because the transport business has become a commodity.
The same argument applies to VoIP transport providers. VoIP transport has become (or is becoming) a commodity business.
And if you ask me, “content” is also becoming a commodity business since the huge and ever-growing number of news, analysis and entertainment blogs, the millions of people who contribute their home videos, the pirates who can always figure out ways to share copyrighted content, and the tons of yet-to-be-explored opportunities for user-generated content all mean that content is now officially commoditized. In fact, content is so commoditized all it costs now is the small monthly fee users pay their ISP to access the net.
The Two-Tier Internet is an attempt by the telcos to attach artificially enhanced value to content once again by making content producers pay them for delivering their content without jitters and delays. It is also an attempt to attach artificially enhanced value to transport by forcing VoIP transport providers like Skype, Vonage, Yahoo etc to pay them to have their VoIP traffic transported without jitters and delays.
The Two-Tier Internet, aka the attempt by the telcos to attach artificially enhanced value to content and transport seems anti-progress and simply going nowhere.
However, the question is who will pay to invest in new backbone capacity? The answer (or part of the answer) is that content providers like Google are investing in building thier own networks (between their data centers) and such efforts can conceivably grow into new backbone investments, where Google, Yahoo, AOL et al would be investing in new network capacity growth.
If Content has Become a Commodity Then How Will Content and Transport Providers Deliver Genuine Enhanced Value?
The answer that I propose is by embedding intelligent findability (forget keyword –and tag– indexed information, think Web 3.0!) into their Ad-supported content layer.
So instead of “dumb search” (which gives us “dumb content”) we would embrace the Web 3.0 model of intelligent findability (i.e. allowing the machines to use information in an intelligent manner to find what we’re looking for.)
No wonder Tim Berners-Lee (the father of the Web and the originator of the “Semantic Web,” which I had popularized as Web 3.0 in the Wikipedia 3.0 article) has come out strongly in favor of net neutrality. Having said that, I’m not sure whether or not he would agree that the the natural commoditization of “dumb content,” which would be assured continuance under Net Neutrality, would help us get to the Web 3.0 model of intelligent findability sooner than if there was to be a two-tier Internet. The latter, in my opinion, would slow down the commoditization of ‘dumb content’, thus giving value-driven innovators less reason to explore the next layer of value in the content business, which I’m proposing is the Web 3.0 model of intelligent findability.
- Towards Intelligent Findability
- Wikipedia 3.0: The End of Google?
- Intelligence (Not Content) is King in Web 3.0