A Boston Globe story by Hiawatha Bray highlights the intensifying lobbying fight over issues related to “network neutrality.”
AT&T Inc. and BellSouth Corp. are lobbying Capitol Hill for the right to create a two-tiered Internet, where the telecom carriers’ own Internet services would be transmitted faster and more efficiently than those of their competitors…In addition to exclusive voice and video services, telecom carriers could also use it to offer their own Internet services like search and e-mail, delivering them more quickly and with richer features than rival services that could only use the “regular” Internet.
AT&T and other telecoms want to charge consumers a premium fee to connect to the higher-speed Internet. The companies could also charge websites a premium to offer their video to consumers on the higher-speed Internet.
“When costs are being driven into an equation, they have to be recovered somewhere,” said Bill Smith, chief technology officer of BellSouth. “Why do fundamental business economics not apply to the Internet?”
Smith’s comment may be reasonable from his perspective, but it appears to ignore the public policy question of whether local telephone and cable companies have so much market power in today’s duopoly broadband access market that business decisions their executives make to maximize their company’s value (which is their primary job), will erode the overall health of Internet-based markets, which are arguably the key driver of our nation’s future economic growth. To the extent this is the case, David Isenberg is correct in claiming that “Network Neutrality is a clear case of public good versus private benefit [and] that’s what regulation is for.”
Bill McCluskey, BellSouth’s director of media relations, offers the telcos’ longstanding response on this kind of issue. The basic argument is that the “public good” will benefit from pipe-owners generating enough profits to invest more quickly and heavily in network upgrades and expansion.
McCluskey…said the premium plan would boost profits and encourage higher-speed broadband network deployment. “The more we are able to make, the faster we will be able to roll out high-speed Internet to 100 percent of our customers,” he said.
Trusting unregulated monopolists (especially those with relatively high fixed costs and low variable costs) to serve the public interest has never struck me as a policy grounded in basic economics or common sense. Doing the same for unregulated duopolists is a somewhat different question, but not one that justifies public policy that fails to seriously consider real-world economic dynamics and incentives…whether these policies be faith-based, laissez-faire proposals or knee-jerk, heavy-handed regulatory regimes. As I’ve argued in a previous post, the Internet is important enough to our nation’s future that issues related to network neutrality should be viewed as central to the future health of our economic, political and social systems, not simply as an inter-industry squabble best settled behind closed doors by lobbyists and horse-trading politicians facing reelection.
The good news is that the corporate lobbying on this issue is not limited to the local access pipe owners. Fighting largely on the opposing side are Internet-based giants with enough cash to put some balance in the flow of lobbying funds.
Google is fighting the proposal, along with other large Internet companies including Amazon.com Inc. and eBay Inc. They fear they may have to pay telecoms millions of dollars to gain access to customers who use the premium Internet services. In addition, they argue, many small Internet start-ups would be unable to pay the fees, which could reduce consumer choice.
A change along these lines would be different from the way the Internet has operated. “The Internet model has been that carriers cannot interfere with the choices that consumers make,” said Alan Davidson, Google’s Washington policy counsel…”The consumer’s paying for 20 megabits coming into their home,” Davidson said. “They should be able to use that 20 megabits to use whatever services they want.”
Davidson has an ally in US Representative Edward J. Markey, Democrat of Malden. “I don’t understand why we would tinker with the model that has been so wildly successful,” Markey said. Markey said he’s engaged in “intense private negotiations” with telecom companies and congressional colleagues in search of a compromise.Posted by Mitch Shapiro at 3:43 PM | Print | Comments (7)
John Battelle has an impassioned posting about Alexa’s blow-us-all-away announcement that it is opening up its 5 billion-document index to anybody that wants to use it. Alexa, owned by Amazon.com, will also offer up for a fee ($1/gig of storage, $1/50 gigs of data processed, $1/gig of data uploaded) its servers and processing power to mine its index and create all kinds of new applications, including specialized search engines.
Due to an embargo, Battelle couldn’t bounce this big news off of anyone and wonders what it all means. He’s certain of one thing:
I am quite sure this means that Yahoo and Google will have to stare hard at their own (somewhat limited) search services and APIs, and think what they might do to compete, that much is certain.
While this is a major development in the whole field of search, I’m not so sure that Google and Yahoo have much to worry about yet. For one thing, it’s not easy for anybody to handle massive amounts of data, to figure out how to scan it, how to interpret it and how to display it. That requires specialized, expensive expertise and a little company in Mountain View is buying up all the best engineers capable of doing this work.
Secondly, as Battelle points out, Alexa is best known for its tool-bar based traffic and site stats. These stats are so off-the-mark at times as to be laughable — and I wonder if Alexa’s index is any better. Quality counts when it comes to search, and this is Google’s secret sauce: Google’s results are remarkably accurate and thorough and up-to-date. If folks spend a lot of money (most of it in personnel costs) and time fiddling with Alexa’s data only to discover their work has been undermined by the GIGO (garbage-in, garbage-out) effect, Google (and Yahoo) still come out on top.
Posted by Cynthia Brumfield at 8:42 AM | Print | Comments (0)
The Berkman Center for Internet & Society at Harvard Law School and Gartner Inc. are expected to release a study today that shows how music file sharing increases record sales, according to this piece in the Boston Globe.
Based on a study of 475 frequent music-downloaders, the research shows
Nearly one quarter of frequent online music users say that the ability to share music with others is a key factor when selecting an online music service. And a third were interested in technology that helps them discover and recommend music, such as tools that allow Internet users to publish and rank lists of their favorite songs. Perhaps most important for the recording industry, a tenth of those surveyed said they frequently make music purchases based on others’ recommendations.
The study’s authors also conclude that by 2010 25% of online sales will be driven by recommendations of other users via music sharing, but only if the music industry allows users to easily publish playlists or include music in their podcasts or blogs.
Posted by Cynthia Brumfield at 8:28 AM | Print | Comments (0)
On the heels of Yahoo’s announcement that it will offer a $.01/minute VoIP service, comes archrival Microsoft’s announcement today that it has joined hands with MCI (soon to be a part of Verizon) to offer PC-to-Phone service. Dubbed MCI Web Calling for Windows Live, the service, like Yahoo’s, will work through IM, with MSN Messenger’s 185 million active users able to make calls by clicking on and entry into Windows Live Messenger or typing a phone number into the
Windows Live Call softphone.
Not as cheap as Yahoo’s offering, the MCI-Microsoft VoIP option will cost $.023/minute with customers able to buy MCI calling cards in $5, $10 or $25 increments.
Backed by its purchase of Teleo earlier this year, Microsoft is entering an already highly competitive market — Om Malik says that SIPhone is expected to announce a $.01/minute VoIP service today. While not as cheap, but also not as limited as the PC-to-PSTN services planned by Yahoo and Microsoft, Vonage is expected to announce today a Wi-Fi phone, according to Marguerite Reardon at CNET.
The new phone, the F1000 handset manufactured by UTStarcom, will allow Vonage customers to use their VoIP service over any public Wi-Fi network, sort of bridging the gap between landline and mobile service.
Posted by Cynthia Brumfield at 7:59 AM | Print | Comments (0)
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