Monday, June 21, 2010

Unlimited data plans and Network Neutrality. What is the fair deal?

This must be the most fair thing in the world, right?

Well, from an end-user perspective I have seen it from that side many times. Now, that I have spend some time rolling out the largest networks in Brazil, as well as having a user experience, I can see that there are more details to the picture then that.
First of all, the term Network Neutrality is very well chosen. Who can ever be against neutrality? It seem as the prime quality of any system is that should be fair to everybody. The argument could be even stronger when we learn that it is supported by a very large company with the tag-line "Don't be eval" - Google.

The demand for Broadband in Brazil is very big, and operators have accelerated the roll-out to keep up with the demand, but the service is still performing under expectations in many places. Some operators have statistics saying that 20% or less of the subscribers take op more than 80% of the broadband capacity due to the imbalance that the uneven usage causes. This reminds me about the bill for heating the flat when I was living in Denmark. All flats payed according to size and not usage. The bill was sky high, not the mention the carbon footprint, but that was not considered at that time. This means that I was paying for other people leaving their windows open at freezing temperatures at winter. After we get individual metering, the total usage fell to a more reasonable level. Prices in Brazil are already high, among other things, due to taxes, even on SIM cards if they are not used, which makes the business case even harder to solve for serving the low income classes.

Some argue that broad band should be seen as a public service like running water or street illuminations. The Finnish government has even decided that a 100mbps broad band connections shall be a human right in Finland. That could all make sense if we agree on what type of service we are talking about. We do not pay extra for using more street illumination, which makes sense because the cost for providing it is not linked to the usage, but for a public service as water and electricity we pay an amount equal to our usage.

The Net Neutrality discussion has been much centered around the network operators right to charge upstream in the value chain, e.i. to the Internet Companies earning money on the access that people make to their sites. In the mobile content delivery environment this is quite normal, but there, the delivery cost is included in the price we pay for the content. The problem about charging upstream is that, as users, we will not know which Internet sites have paid to get better speeds to what networks. And should all network operators now start to charge Google? To me, this looks like a complex and less transparent eco-system to set up where the end-user will have a hard time knowing what he or she is actually buying. Both the FCC in USA and the Brazilian Government are working on how to regulate this, but looking that the latest industry development, there is a fair change that they do not need to spend much time on discussing this in the future.

It now seem that the industry is betting on solving this in another way. The iPad has apparently made operators see that the tariff concept is not sustainable. Few weeks ago AT&T decided to abandon unlimited data plans, and in the UK the operator 3 claims to have the most attractive plans, and none are unlimited. If the industry can settle around a reasonable price level for the data plans, this could be a way to end the Net Neutrality discussion before it gets nasty. Just like for the heating, metering provides a fair balanced solution.

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