Doing the math on “net neutrality”

I’ll try to keep this simple to avoid getting confused.

There was a time when men were men and signed Internet peering agreements in bars over a beer: they wrote the terms and conditions on a napkin with a handshake. Decentralization through UUnet and PSINet and the old MCI etc. & etc., these protected arrays remain the backbone of the Internet.

As a result, in addition to Internet transit providers unwisely bowing to competitive pressures, the wholesale cost to connect to the backbone (Internet Transit) today is around $1 per Mega, perhaps less time. Winners? YouTube, Hulu, Netflix, Internet TV massively using the highway at a price/Meg that can connect them to the consumer, but has no connection to reality. Netflix alone occupies 40% of the internet capacity, reflect on that.

At the other end of the Internet, where the wholesale network ends and customer delivery begins, cable companies and mobile operators (MNOs) have to keep upgrading, increasing performance and lowering costs to keep up with the onslaught of content that reaches the wholesale network. network to meet customer demand. Meanwhile, the video content provider is paying a dollar per mega to their ISP and nothing to the cable provider or MNO that carries their content.

Additional irony: Cable operators and MNOs that don’t directly interact with content providers pay their ISP to flood their network with content, and then pay more to augment the network to handle the flood. The only way to get the cost back is from the end user who has reached the end of their tether anyway. ability to pay. MNOs were told last year that their mobile Internet costs had to drop to 0.1 US cents per MB to remain profitable. This is when Netflix and Hulu and Internet TV video have yet to become a major part of the mobile Internet stream, as they will be in a few years. In a few years, users will no longer want to be tethered to WiFi to watch their movies, but instead will insist on doing so while on the go. Best of luck, Mr. MNO.

Now I am not a fan of cable monopolies or any monopoly and as a consumer I am supporting real net neutrality. However, net neutrality should not amount to a subsidy. Merging Comcast and Time Warner is potentially more damaging to net neutrality than Comcast charging Netflix to stream its content, and thereby removing some of that burden from the landline consumer (that’s me!).

Similarly, AT&T’s sponsored data service offers a broader avenue for the video gang as well as RT apps in exchange for payment, rather than passing that cost on to the mobile consumer (that’s me again!)

So, if the FCC is really serious about consumer protection, here’s what it can do: Allow the ISP, cable operator, or MNO to charge the content provider. However, once a content provider is charged for access, then there should be no double dipping and Comcast or AT&T cannot charge the consumer more for viewing the same content.