January 06, 2006
Movielink, BellSouth Discuss Two-Tiered Internet Deal
A piece in the Wall Street Journal continues the discussion of a “two-tiered Internet” that would require independent service providers to pay telcos “to receive priority treatment [on] increasingly crowded [broadband access] networks.”
The WSJ story says Movielink “has discussed the issue with BellSouth, and quotes Movielink CEO Jim Ramo as saying that “we’re willing to explore a commercial relationship” that “increas[es] the quality of service to customers” by allowing them to download movies faster. The Journal also reports that BellSouth “has floated the idea of seeking a small percentage of the $2 to $5 that Movielink, the consortium of five studios, charges for every movie download” and “is in early talks” with “at least one gaming company.”
The size and structure of the fee systems remain to be worked out, and the regulatory implications aren’t clear. But already, the phone companies are meeting heavy resistance from companies that say making them pay for priority delivery of their content amounts to holding them ransom, thus hurting competition and, ultimately, the consumer.Vonage CEO Jeffrey Citron is clearly not a fan of the “two-tiered Internet” increasingly favored by telcos:
“They want to charge us for the bandwidth the customer has already paid for,” said Jeffrey Citron, chief executive of Vonage. Customers who already pay a premium for high-speed Internet access, he said, will end up paying even more if online services pass the new access charges to consumers. “The customer has to pay twice. That’s crazy.”
Mr. Citron said he thinks that if the Bells tack on extra charges, cable companies that also provide broadband will soon follow. Vonage said it hasn’t so far held talks with any phone companies about paying Internet access fees.
Smaller companies say they may not be able to afford paying for premium network access. And as the phone companies start to offer their own Internet-based content such as video and Internet-based phone services, they could gain an unfair advantage over rivals who are paying them fees to offer the same services.
Posted by Mitch Shapiro at January 6, 2006 02:37 AM