Wednesday, February 13, 2008

Net neutrality, without it, broadband takes a giant step back

There once was a day, not long ago, that consumers paid their phone bills based on the length and distance for each call. Wanted to call NY to CA, wait till night to get the lower rate. Start the timer and don't talk too long. I recall a Brady Bunch episode where the dad installs a pay phone in the family room to offset the costs for all the phone usage and to teach the kids that the phone calls cost money to make. Today, we get charged one low fee per month, unlimited calls across the US and Canada.

Broadband access never asked for a per byte usage charge; rather, it asked for a low fee for unlimited access for broadband use. But as demand grows and file sizes grow expedentially, cable is concerned that it can't handle the flow of traffic. Comcast's solution was to restrict high volume downloads from sites like Bit Torrent; Time Warner's idea was to charge consumers on the usage levels of their broadband activity. Both plans may cause consumers to seek competitors willing to provide unlimited service. While higher download and upload speeds can be priced at a premium, usage pricing and restictive access would be a huge step back.

The telcos must be hoping though that the cable companies push the usage model; telcos would have the competitive edge to push that their systems do not interfere with the flow of internet traffic. Rationally, it does not seem wise for cable to push against net neutrality or usage pricing as it could widen the competitive gap between cable and telco. Unfortunately, no one ever said this was a rational business.