Phil Sim

Web, media, PR and… footy

Google wants net neutrality but will everyone else

This ‘net neutrality’ issue is my hobby horse of the moment, so you’ll excuse me if I stay on the topic for just a little while longer. If you haven’t caught up on the subject yet, it’s been described as a two-tier interne whereby telcos give paying application/content providers a fast-lane on the information superhighway.

Today I noticed a couple of interesting articles on the topic.

VC Fred Wilson thinks the concept has no legs. “Dream on”, he tells the telcos. Meanwhile, the Register quoted Google’s Larry Page at CES as saying such a two-tier internet “would really stifle innovation and be a horrible thing for the world”. Google would probably never have got off the ground if such a thing existed back in its day, according to Page.

Now, Page has to say such a thing. He’s the “no evil” guy, after all. However, we wonder if all the other bigshot application/content providers are going to feel the same way. A few million bucks to a couple of telcos is loose change for a big media or software company while your start-ups would have very little hope of being able to ante up. So by supporting the initiative, it might cost the big boys a bit of cash but it would create barriers to entry or at least give them a clear advantage over your three-guys-or-gals-in-a-garage.

Remember Web 1.0? The big media companies all scrambled to form partnerships with whatever IT companies could be seen to given them a competitive advantage. Why is this time round going to be any different?

Filed under: Broadband, Net Neutrality

IP TV buzz shows up ‘two-tier Internet’ issues

I was chatting to a friend who works in the FMCG industry a few days ago and he was talking about the marketing costs in that sector and he reminded me of the big dollars that companies in that space pay retailers for product positioning in stores.

It struck me that if you extended that concept to the Internet space, then you have something not all that different to Om Malik’s two-tier Internet (which posits that telcos will charge content/app providers a fee to get preferential treatment on their networks).

Om has just updated his thoughts on the topic following comments from Verizon’s CEO, which once again seem to suggest that carriers are very serious about introducing this additional revenue stream into their business.

The Wall Street Journal article quotes the US Federal Communications Commission as saying that it was keeping a very close eye on “net neutrality” issues and it’s certainly an issue the ACCC needs to be keep an eye on in Australia because the oligopolistic nature of our comms sector would make it even easier for Telstra and Optus to slyly introduce the concept down here.

If you go back to my original analogy, it’s not easy for a new company to break into the FMCG business. The kind of payments that grocery stores ask for, for preferential product positioning, introduces artificial costs that increase the barriers-to-entry in that space. Surely, that’s the last thing we want to see on the Internet and it’s something regulators need to rail against.

BTW, if you think reducing latency for apps like VoIP and video streaming isn’t a major issue, then check out what Cringely thinks Google is up to. And of course you only have to look to Yahoo’s announcement at CES of Yahoo Go TV and Google’s rumoured-announcement of similiar initiatives to realise this kind of content is on the verge of exploding. Oh, and Cringely’s extrapolation of what he thinks is Google’s IP-TV strategy is a must-read in light of all this.

Filed under: Broadband, IP-TV

Telstra will be driven to tiers too

In his most recent podcast with Niall Kennedy, Om Malik tips that the ‘Two-tier Internet‘ is going to be a massive issue to watch in 2006 and what he says makes an awful lot of sense. Especially in Australia.

Briefly, what Malik calls the ‘two-tier internet’ refers to carrier’s and ISP’s abilities to shape wide area traffic and prioritise certain traffic. You don’t have to think very hard to realise how this could massively advantage Telstra.

While Telstra’s forays into content have for the most part been lampooned, it could end up being their single biggest point-of-advantage in the carrier/ISP wars if two-tier internet is allowed to become a reality.

Consider this. I have a 1.5Mbps connection. Why? So my Gmail loads faster? No, even at 256Kbit/sec, GMail works pretty fine thankyou. Rather I upgraded my connection, specifically so I could watch streamed NRL replays and streaming horse racing. They’re both Big Pond video feeds. Now, if Telstra could offer me a competitive 512Kbit/sec plan but when I come to watch Big Pond video content, Telstra opens up a great big 6Mbit/sec pipe that lets me watch full-screen, television quality then sign me up, I’m hooked. While, I’m there, you can upsell me to your VoIP service and movies-on-demand (there’s got to be a Foxtel conflict somewhere down the road).

Meanwhile, I’m an independent content/app provider and I want to make sure my users get big fat pipes too. So, I have to pay off the carriers to ensure my traffic gets prioritised. Who’s the first carrier I’m going to fork up my payola to. Telstra, of course, because it still dominates the market. In turn, the user has more reason to subscribe to Telstra because more apps/content go faster.

To ensure this advantage, Telstra has to do its best to make sure that bandwidth doesn’t get too cheap. When basic broadband rates get up to a couple of Mbit/sec, most of your streaming services are going to start performing pretty well.

At a Christmas party last year, I was chatting to Steve Dixon, the local head of Riverbed, a networking company that specialises in optimising wide area traffic, and he claimed he was almost drowning in interest for his kit. Optimising wide area traffic is certainly shaping up as the hot area of communications in 2006 and the picture I’ve painted above gives you some indication as to the kinds of reasons why.

BTW, as this issue crops up in 2006, the ACCC is certain to look very deeply into it, but it’s going to be a tough argument to stop a carrier prioritising traffic (as opposed to limiting traffic). Recently, Mark Jones and Brett Winterford published a piece in the Australian Financial Review, where they questioned carriers as to the possibility of Skype traffic being throttled. In our Epitome review of the story, we questioned the value of the story, based on the fact that no carrrier was going to get away with throttling certain applications. Prioritising traffic is a whole ‘nother kettle of fish, though.

Filed under: Broadband

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