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Putting the internet into neutral, or neutering the net?

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Putting a cap on profiteering

The idea of charging punitively for all data above a certain cap has been put forward. But like all such suggestions, it ends up hurting the customer. For years cellular operators have been charging ludicrously high roaming charges for calls in neighboring countries and making excess profits on overseas traffic. It has taken years of legislation from Neelie Kroes and others, to stop this profiteering.

Such caps can be brought in, but they will need to be brought in alongside regulation which actually tells the consumer when they have entered the punitive level of payment and offer a paid top-up. Operators will not volunteer this information to consumers without legislation. They will just send out a $500 bill which shows your usual $50 for service and an extra $450 for going 1GB over the limit. That‘s what happened with cellular, so why would it be any different with broadband caps?

Instead of sending out a nice text saying, "You have just gone over your limit, but we can sell you a cheap deal for an extra 1 GB of data, just click Y and send", the cellular operators thought it was clever to just steal money from their customers. They felt safe in doing this because they have in place device subsidies which spread over two years and few consumers could afford to kick out their operator and pay up the penalties on those subsidies.

This is exactly the case with telcos and cable operators – they have offered subsidised DVRs and set tops, and can invoke penalty clauses for early termination. So one way or another, there has to be legislation either for Net Neutrality or for being more open with the consumer.

Kroes reckons Europe now has that legislation, so perhaps that‘s what the US needs, something like the European Telecoms Framework and forget about net neutrality.

Kroes goes as far as saying this, offering the opinion that once member nations of the EU had time to implement the provisions of her Telecommunications Framework we would see both more competition, as well as an obligation for openness with customers and local regulators, making it easy to leave a broadband operator and take their business to a rival. If there are provisions for this and if they become law, then as soon as a breach of network neutrality occurs, although it may not be illegal, it would become obvious and a broadband customer could leave that ISP.

But the idea advanced, for a second time in the US later week, of self-regulation by operators over Network Neutrality, from Comcast this time, from Verizon and Google last time, is of course nonsense. If operators are obligated by law to tell consumers what they have done with their data – ie if they have slowed it down or not, or if they have charged more for it, or are about to charge more for it – then that‘s fine. But if they are left to decide when that‘s a good idea, then they will simply transgress by omission.

You can see it can‘t you: Our software knew that it was a video packet, and it wasn‘t from us, so we put it at the back of the packet queue, because we thought it was piracy, but it turns out that this is done to all packets coming from Netflix identified servers. Customers then form the opinion that the internet, or the Netflix servers, are a bit slow, and video being what it is, will be full of half second pixellation screens, because key I-Frames were cleverly abducted.

Now if an ISP knows that it risks a large fine for doing that, it won‘t do it, but if it risks losing the odd customer, but at the same time freezing out a rival, then it will.

Where were the people who blindly believed in the power of the market when the cellular operators were virtually stealing from the pockets of all international travellers? Where were the people who said that the operators can regulate themselves? Nowhere to be seen. Instead we had 10 years of complaint and obfuscation until finally legislation was brought in.

One of the biggest worries is that by definitively saying that we will not legislate, we can no longer pretend that we might, at a later date. While the issue is in the air, operators will not risk repeating the actions of Comcast when it blocked Vonage. As soon as the prospect of legislation goes off into the distance, as it appears to have done this week, operators will revise their policy, and the internet as we know it is dead.

Finally the idea that you can charge Google to get its packets to customers on time is a non-starter. Google is like the destination in a car journey. It makes no sense to charge the state of New York for the petrol, or the road tax on each journey that ends up at the city. Those charges go to the taxpayers and road users. And the same needs to be true of the internet. Customers using it need to pay their way for enough petrol and road use, or in internet parlance, data and band-width, in order to get the job done.

A sensible way is not to have punitive capping charges, but to have multiple layers of service for each online service a home takes and gradual increases in charges as we go over thresholds. But it makes no sense to charge the destination site under any version of the future.

Kroes said in her speech: "The open character of the internet is a value almost universally recognised, and if we encounter significant and persistent problems, I will not be afraid to change the law in the future to achieve competition and choice consumers deserve…"

So in a way she continues to leave the legislation door half-closed rather than slammed shut. But already, with the UK minister‘s speech, the impression that legislation has now been foregone could infect Europe with the feeling that it‘s okay to pursue insane regimes of traffic-shaping which are purely competitive and not for the health of the network. And the US is likely to follow suit, or overtake Europe, in its zeal to do the same.

Copyright © 2010, Faultline

Faultline is published by Rethink Research, a London-based publishing and consulting firm. This weekly newsletter is an assessment of the impact of the week's events in the world of digital media. Faultline is where media meets technology. Subscription details here.

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