Maintaining Net Neutrality Makes Good Business Sense

Many of the north american telcos have recently announced (google "Canadian telcos push for Web control" for the Globe and Mail article that has the details) that they're exploring avenues that will allow them to discriminate with respect to the content delivered through their internet pipes. This discrimination today focuses on the delivery speed for traffic for specific sites (and selling quicker access to sites that are willing to pay for it) but it's not a stretch to see this extending into full censorship by blocking content from any site that doesn't want to pay for the telco's bandwidth. (Sounds like a Sopranos episode where the pizza parlor wouldn't pay for protection from Tony.) These announcements have naturally generated a lot of kickback from the technical community. The topic of debate is net neutrality. Many of the arguments that I've read focus on the idealistic notion that the internet should be open and available to all (both in terms of availability for consumers and as a level playing field for businesses). While I think this is an interesting discussion I'd like to take a look at this issue with respect to the business case for providing internet access.

Let's start with the question, what makes the internet valuable to consumers? Due to the evolving nature of the internet the answer to this question is ever changing. Today I'd say that consumers want access to internet in order to obtain information from a variety of sources, participate in e-commerce by shopping online and, the most recent desire, participate in interactive multimedia including posting and viewing audio and video through such mechanisms as podcasts and youtube. In our ever more on demand society, waiting to participate is not desirable and slow internet connections are unacceptable. In order to participate in all of these activities consumers want and pay telcos for high speed access to the internet.

So what does this discrimination of sites based on the amount they pay to a telco mean to the internet as a product that is sold to consumers? It means some information will no longer be available as quickly. It means shopping from certain sites will be a slow and painful process that may no longer be worth taking part in. (At some point it just becomes easier to go back to the mall.) It means streaming audio and video may have to come from specific sources if they are to be delivered in a timely manner. This will likely exclude personal podcasts and startup sites like the youtube of one year ago from the market. Combine all of these new restrictions together and you have less choice, less flexibility and less new content in terms of new sites for consumers. All of this translates into an inferior product (remember, internet access is the product) from the consumer perspective as the limitations imposed reduce the ability of consumers to interact online. What this means at the end of the day is a lot of unhappy customers.

I currently pay ~$50 CAD for high speed internet access. (Technically, I pay for Rogers Express service.) The price has gone up a few dollars in the last year, which did bother me, but at the end of the day I'm still pretty satisfied with the service I'm receiving. An argument I recently heard from Eugene Roman (Group President, Systems and Technology Bell Canada) is that bandwidth isn't free and telcos such as Bell cannot continue to cover the cost of their consumer's bandwidth as they have been doing. Of course the one way that he stated that telcos such as Bell can offload this cost is to provide better access for sites that pay a premium, and this is something that, as the article I listed above stated, Bell is investigating. Essentially, it seems to me that Bell wants to offload the cost of bandwidth to content providers, many of whom will not be able to afford the required fees.

I have three suggested better ways to manage the cost of high volume consumers than charging content providers a fee for providing timely access to their sites. To wrap up, here are my three suggestions:

1. Apply a bandwidth cap to internet accounts and charge more for those consumers that consume extremely large amounts of data. While some consumers won't like this suggestion I think it's clear that charging by volume is an accepted business practice (just look at cell phone plans). Rogers currently has bandwidth caps on all of their internet accounts. I'm currently capped at 60 gigs per month and, although I don't know my actual usage, I haven't noticed the cap or been charged anything extra to this point.
2. Charge more monthly. I asked a few friends informally if given the choice between restricted access for certain sites (I didn't say which sites) or a higher monthly fee for internet access which option they would choose and the unanimous result was the higher monthly fee.
3. Merge option 2 with the restricted access the telcos have suggested. Provide a basic internet plan that has restricted access to certain sites. This would serve as an introductory plan similar to the many free, ad supported dial-up plans that existed a few years back. Provide a second more expensive plan for consumers that do not want any limitations imposed on the content they browse online.