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.