No such thing as free Internet bandwidth

Today, we weigh in with our opinion on the net neutrality debate — and we begin by saying we have not changed our original opinion in favor of net neutrality even in a wireless environment. However, we'd also like to qualify what we think is fair and what isn't — and offer a suggestion on an alternative that may help solve the looming bandwidth shortages we expect as more consumers download more video and other bandwidth intensive content and applications.

We begin emphatically by saying that there is no such thing as free Internet bandwidth — somebody has to pay for it. In some cases, the consumer pays through subscription fees to a content service, through Internet access fees to a network service provider, or both. Advertisers may pay content providers (think hulu.com) or applications providers (think google.com) and in turn these applications and content providers also pay for network access and Internet infrastructure. We believe this model works well to everyone's benefit on today's Internet world.

We also maintain that network service providers should not discriminate in favor or against content and applications providers — provided the content or service is legal. For example, an ISP should not give Google preferred access or higher network traffic prioritization over Yahoo or Microsoft when an Internet subscriber is performing using an Internet search engine.

So in general we support the FCC's move to codify the six principles set forward to assure net neutrality. However, we also think the FCC must take care not to craft regulation that stifles technology advances, that prevents ISPs and network operators from making a fair profit, or that solves a problem already solved by a competitive market.

Consider, for example, that today many ISPs enforce a usage cap to prevent “bandwidth hogs” from monopolizing Internet access. (Bandwidth hogs are usually heavy video users.) In other cases, service providers enforce congestion management techniques to assure fair access during peak usage periods. If a consumer doesn't like the usage cap then he is usually free to choose another ISP that has a larger usage cap or no usage cap at all. In this case, a competitive market may address bandwidth hogs who face a usage cap.

But what happens when the bandwidth hog has slower downloads between 3 p.m. and 5 p.m. because of peak traffic and congestion management techniques? How can the user be guaranteed a steady video stream that guarantees a high-definition movie doesn't pause for buffering? The answer: he can't. Lest we forget, regardless of the connection speeds available, Internet access is still a best effort service. Always has been, and we believe it should remain so — giving everyone a fair and equal (if slightly degraded) shot at distant content and applications.

So how do we solve the problem of the Netflix user who wants a guarantee of uninterrupted video stream while watching a movie over the Internet? And what about the user who wants to watch the same movie on a mobile device? We'll cover that next time.

Also, we should also note that our opinions expressed in this newsletter do not necessarily reflect those of Current Analysis (Larry's employer) and we reserve the right to change our opinions in the future.