Thursday, March 31, 2011

For Being Neutral, You Sure Are Angry

"And so we have to change the business model. And then we don't need to have net neutrality..."

There are two general models followed in the Internet service business, usage-based and unlimited. Under the usage-based model a customer purchases an allotted amount of data that is permitted to flow through his connection every month; very similar to typical wireless phone service (voice only). Once the limit for a month has been reached, much like your wireless phone service, the customer is charged for the excess data transerred over his connection. The usage-based model is used by larger business customers, institutions, web hosting companies, and web service companies (like Google and Yahoo).

Consumers' access to the Internet, on the other hand, mostly follows the unlimited model. Using this model the average consumer pays a flat, monthly fee (it may vary by level of "speed") for access to an unlimited amount of data usage. And until recently this model has worked. Consumers received a speedy connection and the ISPs earned enough of a margin to fund improvements to their networks, which were being increasingly taxed by usage-based customers.

What happened? Youtube, Skype, Google Docs, DropBox, iTunes, [Insert data-rich web service here] happened. Consumer Internet traffic transformed from text, images and email to movies, music, documents and video chats. Did the unlimited data model change? Nope.

The net neutrality debate could quickly fade away if the business model serving the consumers were to change. Think about it, if consumers were to pay for their access based on actual usage ISPs would not have any incentive to throttle access to high-traffic, data-rich sites as those sites would become revenue producers. On the consumer end of things, low data users could see their access costs drop and regions with high-data users could see improvements to network infrastructure as the ISPs work to make it easier for you to use more data.


  1. I'm not really sure I follow your post Levi. You make some interesting points but let me see if I understand what you are trying to argue. Are you suggesting that consumers would benefit from a usage-based internet system rather than an unlimited access sytem as we have now? How exactly would this figure into the debate on net neutrality? I'm not criticizing your post it's just that the concept of Net Neutrality has been confusing for me for some reason and I'm trying to make sure I understand it. I thought that the debate centered around whether or not businesses should be allowed to restrict and/or charge for certain Internet applications not how they should provide their service. Regardless of whether or not consumers were provided web access on an unlimited or usage-based basis, wouldn't they still be able to access the Internet and it's applications freely and therefore the Internet would remain neutral either way?

  2. "I'm not really sure I follow your post Levi."

    Sorry about that, reading over it again I realize I danced around my point without every making it.

    I think that if consumers were to accept a usage-based access model, ISPs would no longer have a need to limit/block/charge for access to data-rich Internet sites and services. Eliminating agruments for an "open" or "closed" Internet.

    The infrastructure used to connect everyday Internet users to the Internet is built on the existing telephone and/or cable television networks (this part of the Internet is known as the "last mile"). Much like public infrastructure (roads, bridges, sewers, etc.), these networks were not designed for current usages levels and were built decades ago for earlier communications like landline telephone or television. Just like public infrastructure, the "last mile" is in desparate need of repairs and upgrades.

    When public infrastructure needs to be repaired or replaced, taxpayer money is used to complete the projects. However, the infrastruture supporting the Internet is not a public good and is built and maintained by private enterprise. When that infrastructure needs repairs, upgrades, or replacing ISPs must solicit money from investors to fund the projects and then pay those investors back over time with interest. In order to pay their investors businesses must increase revenues either through acquiring more customers (the U.S. market for Internet access is saturated) or create to revenue sources.

    I believe that plans by ISPs to charge for access to certain sites or to block access and sell their own similar service is a move to create new revenue sources for this investment in infrastructure. A usage-based access model, I believe, would provide ISPs with the revenue source they need to fund future investment and would democratically spread the costs of that investment among users.

  3. i think u took this in a very business savy way. which is different and interesting. I guess looking at it in your perspective makes some sense. But i feel like internet providers are raping us with how much they charge for even the lowest speed. I just think the costs would really suck for us consumers to begin with, while their long term benefits await.

  4. Thank you for the clarification Levi! Your idea does seem to make sense. Basically, it's pay for what you get right? That way, all consumers still have access to all aspects of the Internet without being charged separately for certain features. As you can tell I'm not super tech savvy but I find this stuff facsinating!

  5. Sumaiah, I agree that costs do seem to be pretty high for the service that some of us get. I live in an area where we don't even have broadband service. We don't even have cable tv because there aren't enough people per square mile! (wow this makes me feel like I live in the stoneage but I'm only about 20 miles outside a city!) Our prices are still about the same for dial up Internet as those who live in the city and have the "fastest" Internet. It's crazy! I don't know how much it costs to provide this service to people but it sure seems to me that they make enough money just on monthly charges that they don't need to charge for specific applications too!