The “Net Neutrality” debate has taken a interesting turn this week, triggered by Verizon and Google’s joint statement to move toward more tiered services on the Internet.
Here’s where I am on net neutrality: It’s not black or white. It’s gray. Yes, we need to preserve an element of freedom to access applications over broadband. But also, the definition of net neutraility needs to leave some wiggle room to help telecom and media companies roll out some newer premium appications that make money.
I think the recent developments are actually exciting, because there is now a catalyst for change and the debate is out on the table. Verizon and Google getting together is kind of like the executives of the Boston Red Sox and New York Yankees coming to the table on a stadium-sharing deal. But this shows how crucial the issue is, if two of the most powerful corporations in the world are willing to come to the table to talk about it.
As the net neutraility fanatics grab their pitchforks and fire up their blogs, ready the roast the big evil corporations that are trying to swipe away their YouTube Internet, they’re being naive if they think things can stay as they are. Stuff’s gonna change.
Yes, that startup and “garage” market needs to be protected. But, that’s happening, and the Internet is about to expand to millions of more devices and terabytes of more video data and services. The media and telecom companies also need a pathway to profits on the Internet.
Telcos and media conglomerates see their futures as enormously threatend by a free and open Internet in which they don’t get paid, or worse yet, are frozen in time because they believe regulations prohibit them from innovating. They are not that stupid. They see the existing Internet platform as essentially subsidized by telecom companies to help startups defeat them.
Do you think in the global business-political hierarchy, this would be allowed to progress indefinitely? The fact is that for the telecom industry, this trend is going to get worse. With 4G coming, data traffic is likely to expand by a factor of 10 or more in the coming 2-4 years. Revenue will certainly not increase that much. Telecom profit margins are about to bet massively squeezed.
Verizon sees the writing on the wall: In five years, data services will exceed voice services by an order of magnitude, ARPU will be down, mobile subscriptions will be flattening out, and they will be paying to allow millions of Internet users to scarf huges amounts of video cilps off of their smartphones and fiber connections.
What about the media companies? Well, the Internet hasn’t been a huge gravy train for them, either. Folks rip-off content, or go for lower margin services such as Pandora. Digital media sales have not kept up with the decline in traditional media sales. They need more premium services. But for premium services, you need a premium pipe.
So, the telecom and media companies have a point, whether you like it or not. Somebody’s got to pay for the voracious, bandwidth chowing comsumption of free YouTube clips. That’s why they’re at the bargaining table with Google and the Internet world.
But does it mean you have to kill freedom to enable new premium services to be developed? No.
There has to be some framework of net neutraility that allows both the startups and the big telecom/media conglomerates to innovate at the same time, yeah?
Free beer really is great, but when the party’s over, you’ve got to ask yourself, who paid for it?