May 1, 2008

Reality Check: Net Neutrality - or Squatters Rights?

By Louise Wasilewski

How did the debate about the return on investment in our networks get this name of "Net Neutrality"? With that name, it's no wonder politicians support it. Why didn't we explain earlier that it's really about squatters' rights - parties that use more than they've paid for? Any red-blooded American knows property rights trump squatters' rights.

Consider: I buy a coffee at Panera at 6 a.m. and use the Wi-Fi before going to a meeting. That's fine. If I'm still there at 9 p.m., with an inch of coffee, after interviewing 15 candidates there, is that OK? I've rented an office for $1.29 a day! This is like heavy users absorbing all our bandwidth. If I rent a room in a hotel, I may use that one room, not every room in the hotel. We're facing an environment where everyone thinks they can use the jacuzzi in the presidential suite, even if they've only paid for a room with a shared bathroom. It is like users believing they should have high quality of service (QoS) when they've only paid for best-effort service.

I am in favor of fair and equal access to the Internet. But "fair" means consistent service at a standard price. That used to be called a rate card and can vary with market, volume, bundling, etc. Fair generally also means buyers are not being gouged, and since both broadband access and long haul prices drop, that case is clear. "Equal" means you don't discriminate among purchasers. No problem.

We do have a problem with being expected to deliver applications that demand high QoS of a network whose economics were build around over-subscription. We have a problem with the 15 people who buy one cup of coffee each and occupy the cafe all day - i.e., the few who clog the pipes - deterring the people who want to buy a sandwich at lunch. The proprietor's revenue suffers, and other diners receive poorer service, too. Incidentally, we share this challenge with our telco peers. They just happen to be getting dinged over illegal wiretaps at the moment, but don't worry, their time will come.

Comcast has started to articulate why traffic management is good and necessary. Without deep packet inspection (DPI), where would your wire-taps be? Let's use our superior marketing and restate the terms of reference around value. We increased ARPU when digital TV launched, but eventually, 500 channels felt like 300 channels because everyone only watches 10 channels anyway. With high definition (HD) and video on demand (VOD), we again raised ARPU and satisfaction. Similarly, dialup once cost $50-$70, then eroded to $25, and broadband came out and pushed the top tier back up to $50+. Now dialup is $10, broadband is $25-$35, and more speed provides little benefit because the server at the other end can't keep up. 50 Mbps feels like 5 Mbps when you have the Internet in between.

Now would be a good time to redefine the top tier and push the ARPU back up to $70, or even higher for heavy users. Consider offering a committed minimum access bandwidth for a premium. We will do it for business services, so why not for residential? Maybe we offer the consumer influence over prioritization: Xbox Live over browsing? Let peer-to-peer have all of my "fair share"? It's just like Favorites. If we publish volume caps and charge for excess usage, the allegations of unfairness dissolve. Time Warner does us all a favor experimenting this way.

Before we characterize this as a battle between squatting content guys and exploited network guys, remember, we're content, too. Large MSOs have content interests. We're thinking about going out of franchise with online offerings. Let's get this debate resolved before the Family Bell throws us out because we can't agree on rent.

Louise Wasilewski is senior manager, Cable TME for Capgemini Atlanta. Reach her at louise.wasilewski@capgemini.com.