My thoughts on this whole issue are basically a response to an article I read in PC magazine.
The big telecoms such as AT&T and Verizon want to distinguish between types of packets. The PR cover story is that they merely wish to distinguish high priority packets (such as video or phone) from low priority (email - if it arrives a second later we customers really don't care). However, they told their shareholders that they want to distinguish between, for example, Google's packets and Yahoo's packets, and charge them different rates. The legal power to charge different rates is the legal power to destroy or help a business, and that is the heart of the net neutrality issue.
It is the difference in rates that is the problem, not really the rates themselves. Don’t get me wrong, none of us want to pay higher rates. But the real problems start when a company is charged higher rates just to put them at a disadvantage or out of business.
Example: Netflix has streaming movies now, and if you have a Netflix account there is no additional charge per month, just a $99 converter box to plug in between your Ethernet and your TV. Comcast has streaming movies too, at $4 per movie. If you watch more than four movies per month, which would you rather have, the Comcast account or the $17 per month Netflix account?
Now consider what happens if Comcast tells Netflix “we won’t carry your movies unless you pay us the equivalent of $20 per user per month.” Comcast, Verizon and AT&T have proposed to Congress to be allowed to do exactly that, and this is why net neutrality legislation is so important.
Or imagine a scenario where Google wants to promote YouTube, so it approaches AT&T and proposes a grand scheme: AT&T will charge Yahoo $1 for every video that Yahoo downloads. Google will pay AT&T for any lost Yahoo revenue over what AT&T currently gets from Yahoo plus a premium. Yahoo’s video business will disappear, Google wins. And once Yahoo loses, Google can simply raise its prices to more than cover any additional outlay. Or perhaps it would be the other way around, and Yahoo schemes with AT&T to win.
The result is that the incumbent telecoms become kingmakers. They will decide which businesses succeed. Big players like Google, Amazon and MSFT will play Machiavelli games in backroom deals. Little companies don’t have a chance.
This isn’t a result of my fertile imagination. These very scenarios have played out before: Imagine the year is 1900. I run a steel company, and you run a railroad. I sell steel for, say $50 per ton and you carry it on your railroad to various places for a metered rate of $3 per ton. I have two major competitors. I come to you and tell you that I will give you $10 per ton if you agree not to carry steel for the other two. You know that number will give you far more profit for far less effort, so you say yes. You're happy. My two competitors cannot move steel from Pittsburg to Kansas any other way (what, by horse and wagon?) so they go out of business, or a least their business is limited to local purchasers or those on water routes.
What happens next is that I raise my price of steel from $50 per ton to $75 per ton. What choice do the consumers have? I make huge profits. I'm happy. You make huge profits. You’re happy. The consumers and my competitors aren't happy, but who gives a flying f*** about them?
This is the history of the railroad business in the late 1800s. This scenario played out again in the 1920s in trucking. Congress stepped at both times and mandated that any shipping company must charge the same amount for all customers, based only on size of goods or weight. These laws are still with us today.
Shipping internet packets isn't conceptually different from shipping freight. Rather than size and weight we now have megabytes and bandwidth speed. The U.S. has had 100 years of history and success with "net neutrality" so far. The major telecommunications carriers want to go back to the days of the robber barons, where they can make or break companies with backroom deals.
I am amazed that there even is a debate in Congress about this. The only people who don't want net neutrality are telecom execs, their employees and shareholders. For the other 299 million of us the issue is a no-brainer.
So, metering itself won’t make the net neutrality issues go away. The net neutrality debate is about whether everyone gets to pay the same rates.
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False assumption
This article begins with the (false) assumption that "the solutions being proposed generally will not solve any actual problems that the carriers have." This is simply not true. Backbone bandwidth is expensive. Many ISPs, especially small and independent ones, pay $100 to $300 per Mbps per month for their bandwidth. A customer that hogs bandwidth does not just congest the network; he or she also consumes more of a resource that costs money, just like gasoline or natural gas or electricity. That customer should pay more.
False assumption
This article begins with the (false) assumption that "the solutions being proposed generally will not solve any actual problems that the carriers have." This is simply not true. Backbone bandwidth is expensive. Many ISPs, especially small and independent ones, pay $100 to $300 per Mbps per month for their bandwidth. A customer that hogs bandwidth does not just congest the network; he or she also consumes more of a resource that costs money, just like gasoline or natural gas or electricity. That customer should pay more.
Backbone bandwidth is paid
Backbone bandwidth is paid for whether it is used to capacity or isn't. You can't compare it to gasoline which, if it isn't consumed, is stored for later use. The capacity of a connection isn't stored. It is either utilized or it is wasted. The connection is paid for and maintained in either case.
For this reason, customer consumption only becomes an issue if they are consuming during peak usage times, or as the article put it, if they are contributing to congestion.
If they are consuming during off-peak they are only more fully utilizing the network. They are not driving up costs.
In fact, a person who consumes little bandwidth but consumes during peak hours could be a bigger problem than a person who consumes more, but doesn't consume during peak hours.
From an ISP point of view...
This subject has been getting a lot of attention lately. Some ISPs are charging more for bandwidth "hogs", capping monthly usage, or throttling speeds. We have a different approach and choose instead to just "shape" our available bandwidth. It's two in the morning, and Johnny Terabyte decides to download Rocky 1,2,3,4,5 etc using his Torrent client. Network traffic is light, so Johnny gets pretty much the whole pipe, even though his Torrent client has a lower priority than say 'regular' web traffic, or a streaming video. Now say it's eight in the morning and Johnny tries to download the whole first season of the Sopranos. Johnny still gets his download, but since his traffic has a lower priority than 20 other people reading the news and watching CNN, his traffic will get less of the 'pipe' and move a little slower. Although this system isn't perfect, we have found that it works best for our network and keeps our subscribers pretty happy. Our goal is to please 100% of the people all of the time, but realistically we pretty much settle for 90%. Bandwidth isn't free, nor is it cheap. When you start to complain about that ISP that 'slowed you down', or did something else unpopular, just remember how bad it would be on dial-up.
Hope the big guys out there find a way to keep the customers happy. If not, then the smaller ISPs like ours will probably see an increase in our subscribers. Bigger is usually cheaper, but sometimes you really do get what you pay for...
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