September 2008 Archives
Leave it to the Australians to point out -- once again -- that the emporer isn't wearing any clothes.
Or, in our case, that the whole issue of Network Neutrality is an American fiction based on a bad business model that has devalued the megabyte. The point our that no where else in the world is "network neutrality" an issue, except perhaps among ISPs in the UK who attempt to follow the flawed American model.
A widely quoted article from ZDNet offers advice from three leading Australian ISPs, who note that the root of the problem is that our ISPs tried to offer unlimited bandwidth for a low flat price. While this was possible in the market of a few years ago, the advent of video streaming and P2P have rendered the business model unworkable. And the rest of the world, which has already lived with data caps, bandwidth throttling and other forms of controls, has not expectation that you can have all the bandwidth you want for next to nothing. They live in a pay-for-what-you-use Internet world.
It doesn't take a psychic to read the subtext that labels us Americans as greedy gluttons, or the panderers of network neturality laws to be standard-bearers for entitlements and hand-outs at the expense of our Internet Service Providers. The Aussies note that it is ridiculous to expect that our network operators should expand the networks without limit, at their own expense and with no hope of ever seeing a return on their investment.
Two other bits of data factor into this discussion. The first is a recent survey reported over on Gigaom showing that 81 percent of consumers reject the idea of data caps, and only five percent support a pay-for-what-you-use business model for Internet bandwidth. (The survey also found that 83 percent have no idea what a gigbyte is, or how many gigabytes of data they currently download, but that's fodder for another day.)
The second data bit is the economy. With the current meltdown, most observers believe that we have come to the end of the era of expanding entitlements and hand-outs. That may or may not be true to government, but the reality is that the wounded capital markets in the US won't sustain unlimited investments in bandwidth with no return on investment. The markets simply won't have the funds to lend.
So in one sense the Australians are right. We've painted ourselves into a corner in which we have created a consumer expectation of unlimited bandwidth based on a business model in which NO ONE PAYS. Content owners don't pay for delivery of their content, consumers don't pay for the bandwidth they use, and network operators are prohibited from implementing any kind of new service that would foot the bill. Instead, the whole thing is subsidized by investors and the government -- neither of which, as of today, can any longer afford to foot the bill.
It will be interesting to see how this works out as the fairy tale of network neutrality meets the reality of a downturned market. The whole point of network neutrality legislation seems to be to force consumers to foot the bill for the content they download, so that content providers can show a greater rate of return. But consumers have their own voice, and their own tight pocketbooks to watch in the current economic downturn.
I'm betting that one good thing to come out of the current economic crisis is that consumers will vote their pocketbooks. In which case the whole issue of network neutrality will slink back under the rock it came from.
