The telcos want change the way the internet works

There have been several posts lately talking about how telcos want to change the way the internet works. Having providers pay for tiered access systems. If you pay the extortion fee, you’re traffic gets a higher priority than the rest. This breaks the way that the internet is designed to work. The network is designed to be a very dumb beast. There are packets and these packets are routed from start to destination. That’s about all of the logic that is supposed to be there.

There was a lot of worry when networking companies created the ability to provide QOS (Quality of Service) and allow some packets to be delivered ahead of other packets. Turns out that that worry was not unfounded. It appears it’s going to be the telcos causing the problems.

The telcos argue that they have to be able to make more money on the infrastructure that they supply and that this tiered system is how they will go about doing it. The telco companies realize that the individual user isn’t going to pay higher prices so they feel they can go after the internet companies which do have money and require network access to survive. It would seem that providing interenet access is the epitomy of a commoditized product, which is really bad for companies trying to make a product. As a customer, you need a certain amount of bandwith to run your business. There really isn’t a whole lot of difference in quality between different providers. There are some differences in guarantees of availablity and service contracts, but beyond that it’s not like one provider is noticeably faster than other providers. So it really comes down to a very simple equation, ( Bits / Second ) * ( $ ). And usually whoever is able to provide the cheapest price wins. If you’re a decent sized web company you’re hosted in a large colo that is peered with multiple bandwith providers and it’s fairly painless to switch when a competitor provides a cheaper price.

When I was with Webshots, bandwith was the highest monthly expense, ahead of the usual expense for small companies, payroll. But, over the two years that I was there, bandwith costs dropped dramatically as competition brought the prices crashing down.

So, what I don’t understand, is how a telco can feel that with this very simple equation it can create value by trying to enforce penalties on customers that aren’t necessary. They’re trying to remove the commodity status of bandwith by applying artificial layers to the network. As long as company will go with the simple model it will always win. No sane business would pay the extortion fee as long as it has a choice. And if a telco were to intentionally slow down a packet from another provider it’s opening itself up for a lawsuit.

The only way this would work is if the telcos built a seperate network on top of the internet that they controlled and charged for access to. Think of it like the private toll roads in LA that are inbetween the public highways. You pay for access to a special road that has less traffic, but the only way this is beneficial is if the public road is so crowded that it has become unusable. It would be business suicide for a telco to allow this to happen to its networks, it can’t supply both networks at the same time without intentionally killing the lower cost one. The only reason it can happen in LA is because the main highways are supported by the government and not a private company. If the government were to try and launch a tiered system there would be a huge uproar against it with the logical argument that the money should be put into improving the main highway and not building a second highway.

In the end I think this model will go down in flames. I personally pay 2-3 times the going rate for my personal internet connection because I don’t want to deal with any restrictions. I use because they have the most liberal policies and take the approach that you’ve paid for the bandwith, as long as you’re not breaking any laws, it’s all yours to use as you wish. As long as there are companies like speakeasy out there, this push by the telcos won’t work.