“Forget Fast Lanes. the r... Tech News and Analysis”

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TAGS: at&t netflix wi-fi

The net-neutrality provisions adopted by the European Parliament earlier this

month [http://gigaom.com/2014/04/03/european-parliament-passes-strong-net-neutrality-law-along

with-major-roaming-reforms/] ruled that specialized services like fast lanes cant be used by telcos

the detriment of the availability or quality of internet access services. On the other side of the Atlant

Americans are less fortunate. The FCC said this week [https://gigaom.com/2014/04/24/is-net-

neutrality-dying-has-the-fcc-killed-it-what-comes-next-heres-what-you-need-to-know/] that it would

propose new rules that allow companies like Disney, Google or Netflix to pay internet service

providers like Comcast and Verizon for special, faster lanes to send video and other content to thei

customers.

This is the price the U.S. pays for delegating such crucial policy decisions to an unelected ex-lobbyi

rather than delegating to Congress. Meanwhile, the open internet isnt safe yet in Europe: The Coun

hasnt spoken and the devil is in the details.

What zero-rating is and why it matters

/ /

Forget fast lanes. The real threat for net-neutrality is zero-rated

content

by Antonios Drossos, Rewheel

APR. 26, 2014 - 10:30 AM PDT

S U M M A R Y : When telcos zero-rate data used by their apps and their partners apps, they are

engaging in price discrimination and threatening net neutrality. The practice should be banned in U

and Europe.

photo: PeterPhoto123/Shutterstock

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According to Digital Fuel Monitor data, eight incumbent telcos are sabotaging net neutrality with an

orchestrated launch of zero-rated apps over their mobile networks in nine European Union marke

This means theyre favoring their own or their over-the-top partners apps by zero-rating the data

volume not counting it against the end users data volume allowance.

In the U.S., AT&T has flirted with zero-rating with its Sponsored Data, which lets developers and

brands pay [http://gigaom.com/2014/01/06/att-launches-sponsored-data-inviting-content-providers-

pay-consumers-mobile-data-bills/] to deliver content to consumer smartphones outside their datacaps. Earlier this week, AT&T announced a $500 million investment to create a video streaming

service similar to Netflix. Will AT&T zero-rate its video streaming app or let it compete on equal term

with Netflix and the rest?

Zero-rated mobile traffic is blunt anti-competitive price discrimination designed to favor telcos own

their partners apps while placing competing apps at a disadvantage. A zero-rated app is an offer

consumers cant refuse. If consumers choose a third-party app like Dropbox or Netflix, they will eithe

need to use it only over Wi-Fi use or pay telcos hundreds of dollars to use data over 4G networks on

their smartphones or tablets.


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[http://gigaom2.files.wordpress.com/2014/04/shutterstock_110566613.jpg]

Photo by Bruce Rolff/Shutterstock

A problem worsened by volume caps

Zero-rating isnt new. Telcos have been zero-rating their fixed broadband IPTV offerings from day o

The difference is that the overwhelming majority of fixed broadband connections were, and still are

volume uncapped. Deutsche Telekom in Germany tried to cap the volume of fixed broadband while

exempting its IPTV app, but the German courts screamed

foul [http://gigaom.com/2013/04/25/deutsche-telekoms-anti-net-neutrality-plans-alarm-german-

government/].


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Mobile internet connectivity is different from fixed. Firstly, it requires the use of spectrum, which is a

scarce public resource. It is one thing if telcos zero-rate their IPTV app over their cables, but quite

another when they use a licensed, scarce public resource to foreclose the communication, media a

cloud storage markets.

Secondly, contrary to fixed-lines, internet over smartphones and tablets comes with very restrictive

volume caps in most markets. Moreover, in protected markets like the U.S. and Germany where

incumbent telcos face no challengers, the gigabyte price of open internet access is prohibitivelyexpensive. DFMonitor tracking data shows that U.S. and German consumers pay 25 times more per

smartphone GB than Finnish consumers. In Finland and the U.K., you can buy smartphone plans tha

come with truly unlimited data (no tethering or any other application restrictions) for 20. In markets

like the U.S. and Germany, where open mobile internet gigabytes are excessively overpriced by all

telcos, zero-rating bandwidth intensive apps like video streaming is a game changer. Can consume

watch HD movies on a 2GB monthly data allowance?

Zero-rated mobile traffic doesnt need to be delivered at higher speeds and with a higher quality of

service, nor does it need to be prioritized. The European Parliament must, on its second reading,

adopt provisions that explicitly prohibit the practice. The U.S. should not go down the slippery road

and allow the creation of a two-tier internet. Like the EU, it should ensure that fast lanes are not use

to the detriment of open internet access, and should ban zero-rating.

Antonios Drossos is a managing partner at Rewheel [http://www.rewheel.fi/], a Helsinki-based

boutique management consultancy specializing in pro-competitive telecom strategies. At Digital Fu

Monitor [http://dfmonitor.eu/], Rewheel tracks prices, quality, adoption and consumption of open

mobile internet connectivity in EU and OECD countries.

by Antonios Drossos, Rewheel

APR. 26, 2014 - 10:30 AM PDT

Follow @gigaom for more stories like this.

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log out

Fool

Saturday, April 26, 2014

outofsightnews

Saturday, April 26, 2014

Delegating to Congress? Geez, not that Constitution shite again!

Who needs Congress when you have an Executive Branch that just does whatever the hell it wants?

And whom do you think Disney and those folks contributed to in the Presidential campaigns?

Well, thats a new spin on two-tier Internet. All this weeping and gnashing of teeth just means that

companies that have depended on consumer subsidization for their business plans will actually hav

to start INNOVATING in order to attract paying customers willing to pay the additional cost of

streaming their services.

In the US the FCC says it doesnt want the ISPs to give themselves unfair advantages over the big

companies that have, so far, gotten a free ride on the backs of consumers who havent been using

their services.

9 Comments


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Infostack

Sunday, April 27, 2014

nick


Pay-as-you go is the only fair way to pay for the Internets infrastructure.

Outofsight. Thats absolute nonsense. The competitive internet content/app/commerce provider

operating at the core have been paying the bulk of the cost of the core over the past 10 years. As

result they have driven the cost per minute of voice to $0.0000004 vs $0.001 in the non-

competitive last mile. That is the biggest issue. How to reprice the last mile and make it moregenerative. Not how to push the WAN/MAN demarc towards the core as last mile monopolists ha

been wont to do for 100+ years.

A good proxy for how the last mile can be repriced is Google Fiber in KC, which, depending on

ones assumptions for services and demand is moving the decimal 2-3 places to the right; or

$0.00001. This in turn will drop the cost of wireless by 80-90% as 50% of the cost is based on

backhaul and site costs, which are a direct function of how much fiber is in the last mile. We all

know vertically integrated mobile networks are inefficiently setup to meet demand that is both

wanted and expected.

But another major issue is something the author fails to realize: the TCP/IP stack lacks effective

price signals. There is no way (at scale) to clear supply and demand north-south in the

informational stack (between the aforementioned apps/content/commerce cos and the lower lay

access providers) nor east-west between end-users and/or said content/app providers. A perfect

example is the inability to move to IPv6 in concerted fashion and realize the efficiency of jumbo-

frames and jumbo-grams as we move to a 2-way HD video future. The PSTN world had

settlements, which overtime became inefficient subsidies, taxes and takings on the part of

regulators and monopolies.

So both sides are right and both sides are wrong. If, in fact, a grand compromise can be fashione

(more likely in the US than EU) then we will see a world where 4K VoD, 2-way HD collaboration,

mobile BB, and internet of things become universal and inexpensive. The last 3 in particular requ

significantly greater upstream capacity, lower latency, QoS and security that doesnt exist today.

a converged approach taking the best aspects of both models, nearly all parties will will succeed

as ROI can be generated even on rapidly depreciating capex and opex. In todays world there is

clearly wasted capacity and opex leading to inefficient and overpriced services open to inevitablarbitrage.

Hey, the internet is a great thing for our citizens, it empowers them and educates them.


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Bob Jacobson


Bob Jacobson


Infostack

Monday, April 28, 2014

We cant have any of that.

- United States

Unlike in Europe, in the USA with its federal system, state PUCs and regulatory commissions can pla

a countervailing role vis-a-vis the FCC seek and destroy mission and should.

In California in the 80s, as the Reagan FCC was destroying the unitary national telecom network, ou

CPUC and Legislature working together succeeded in repelling its attack, winning substantial

regulatory autonomy in the US Supreme Court. Thus we saved our states most unique and vital

infrastructure, its telecom network, from fracturing. Its since become one the contributors to Silicon

Valleys and Californias prominence dominance in high tech innovation and services as actual or de

facto home to Apple, IBM Google, eBay, Facebook, Wikipedia, Vidyo, PARC, SRI, two dozen great

universities, the media industry, and on and on plus it serves the needs of 35 million residents).

Faced with Wheelers duplicity, the states (including California, still the busiest and most telecom-

dependent economy in the world per capita) should challenge his FCC. Theres no doubt now tha

the FCC is going to throw the game again. The FCCs allegiance will continue to be to the telecom

industry and not its business, government, and consumer customers the 95% rest of us. The

states should pick up the gauntlet and run with it, exercising their power in concert, right up to the U

Supreme Court if necessary. This is one of those times where states rights really matter.

Robert Jacobson, Ph.D.

Principal Policy Consultant

Telecom & Information Policy

Assembly Utilities & Commerce Committee

California Legislature, 1981-1989

Two edits:

Line 9. prominence and dominance

Line 10. IBM Almaden Laboratory, Google

The rest I stand by.


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EDITORIAL TEAM MEDIA KIT

P O W E R E D B Y W O R D P R E S S . C O M V I P

mikegulett


Alicia Levine

Monday, April 28, 2014

Bob, arguably the 1983 divestiture (not an FCC, rather judicial act) was just the thing to sow the

seeds of competition in the WAN and turbo-charge the silicon revolution concentrated in CA. I

would argue that the CPUC (or any state) had little to do with it. Sorry, but network effect (aka

Metcalfes law) wins out all the time. Thats been proved out in the wireless, wired and applicatio

markets.

Value is both concentrated and driven from the core; not the edge. Now that TCP/IP is the

dominant layer 3-4 standard, not sure what an individual state can do. The real power lies withthose that have achieved scale in the control and app layers (Apple, Google, FB, Netflix, etc).

Given the lack of north-south or east-west settlements to replace the byzantine rate-setting of pa

the FCC naively believes they are helping the balkanized edge access providers by pushing the

WAN/MAN demarc closer to the core and extending the moat around last mile layer 1-2 access.

What about the millions of people around the world who cannot afford Internet access mobile or

wired?

Providing low cost, or free, access in exchange for the user accessing certain content providers (or

other businesses) is better than no access at all.

This would accelerate connecting the unconnected which is good for all.

MIke Gulett

FreeBand Technologies

I wrote an article about the impact of zero-rating applications like Facebook and Google in emergin

markets. Take a look here https://medium.com/tech-talk/7136fc3e5925

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“Forget Fast Lanes. the r... Tech News and Analysis”