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Monday, 23 June 2014

The web is a highway; I wanna ride it all night long

Ok I don’t mean literally but, I would like to know that I can access the internet for content, services and socializing, wherever, however and whenever I want. Doesn’t everyone? However, this reality is under threat from the growing relationship between Content and Service Providers in the form of a discussion called Net Neutrality.

Net neutrality is a topic which I don't think is really going to go away and is something that almost everyone has an opinion on. Although, I don’t believe these views are really addressing the core problem. What I mean by that is, they are focused on demand for high capacity content exceeding the network’s monetary ability to supply along with its inability to dynamically scale to match the unpredictable nature of content. What we really need is a new approach, one which protects the customer experience in how they can access the internet both from usability, cost and prioritization, but doesn't get in the way of the education, commercial value and social aspects of the web.

Just recently I read again that video is dominating the web, but what is interesting is video downloads are still not used by everyone. Despite these downloads growing in demand, there are always different profile requirements. People could simply want to read the news, access their online services such as banking, government services or simply communicate with friends. However, with high demand services in the form of online video, gaming and content sharing growing this can place high strains on networks. Now, currently the content owners are happy as they have the ability to monetize their services either through direct payment or subsidized through advertising. You could of course ask the question why now is this a problem? The likes of Google, Microsoft and even Baidu, have been around for a long time. Yes, but it is the acceleration of demand, for high volume video content, that has changed the game and what is elevating the topic of who should have access to the multiple highways making up the web and ultimately who should pay for it?

Network providers would argue that everyone needs to pay for their content. Naturally, one would think, that it is a lot easier for an established player to pay an access fee on networks to reach their customers as compared with startup firms. As expected with startups, every dollar that leaves the company can detract from a dollar invested in their new solution or offering they have created, thus creating a canyon sized gap between the big players and those introducing new concepts and innovations. As you can assess, this then is not a viable option for the ongoing evolution of the web.

The OTT (Over The Top) players would say well let's open the network and force operators to treat all content equally. This of course would leave the operators in a dilemma of trying to balance the scale of required support for the volume of traffic, the costs for managing that network combined with the prices that customers are willing to pay. The OTT option is simply not viable. Either operators would eventually be run into the ground or be faced with expensive customer service costs as best effort becomes synonymous with not good enough.

I would therefore like to propose a third option. Associate price based upon the load on the network. We could do it the same way that many major European roads fees are, paid by drivers, based on the weight of their vehicles. By doing so, we will encourage the right behaviour, as they will all understand that I am getting what I am paying for. If a customer wants to watch something in real time, whether that is video or gaming, they either pay an incremental fee or the content owner allocates parts of its revenues to the operator carrying that traffic. This will encourage content providers to think with operators in solving the problems regarding how they can optimize traffic, avoid expensive replication of Internet live streams and ultimately think through the problem leveraging the creative force of the OTT community. Of course someone will say, there is already a mechanism to pay more when you want to download more, isn’t it as simple as paying a higher price for buying a faster broadband connection? This may be true when it comes to the local connection piece of the equation however, remember this is a mesh of highways and it is those who are pulling down the large files that can clog these highways. I believe we need to provide users with a choice, three choices actually. One, pick the slower lane and you will receive your file when it is ready (paying lower costs), or two, if you simply must have it now, pay for it be downloaded faster (pay higher costs). The third option is to have your content provider subsidize you for the download (costs vary). In the end we will all need to work out a model which protects the user experience whilst not inhibiting the access and personal choice on how to download content. This does not mean that network providers are let off the hook, network providers must be held accountable for the quality of the user experience to whomever is the paying party to ensure they are equally held accountable in driving innovation to improve the network experience for each customer, as well as maintaining healthy diversity in how we access content to ensure competition and therefore choice.

We need to remember that the Internet has become a utility. It is one of our most important commodities and it requires, OTT players and network providers alike, to figure out how we can not only continue to ensure its survival, but also leverage it as a source of innovation and service creation. It is an innovation and resource that everyone can and should benefit from. Bottom line is it shouldn't matter whether you want to read a newspaper, watch a live football game or socialize content with friends. For all of us, the web has become the all important highway for information, collaboration and fun. The web is a highway and well, if you are like me, then you’ll want to continue to ride it all night long too!

6 comments:

JF said...

Nathan, you raise very good and important points. The debate is often too focused on the "last mile" but we really need a robust discussion around how to enable, and be smart, about how to get the origin providers (such as the OTTs) into the network provider eco system(s). The quality of user experience is increasingly impacted far beyond the last mile demarkation line. The technology is, or is getting there, so spending a few cycles trying to figure out business models that make sense is an obvious next step.

Lucky Phill said...

Hi Nathan,

A very common sense approach, how would you see this growing from the idea to it actually happenning, seems to me there are such a range of stakeholders getting them all align is no small task (-:

Nathan Bell said...

Hi JF, agree the time has come for a look at the bigger picture, understand the required end to end user experience as well as the cost and balanced money view, hopefully more of these conversations will encourage that broader approach!

Nathan Bell said...

Hi Phill, The ability for this discussion to happen will depend on whether this community is willing to proactively engage in the conversation or whether we wait for the tipping point when costs exceed revenue and the people that lose are the end users. Hence the Content and Telco community either decide to proactively engage at one of the up and coming Internet forums or we work to pick up the pieces when it falls apart ... hopefully the former in any case!

Darren Scott said...

Nathan, good stuff... i like the debate. I think whatever the solution ends up being, the "Innovation" or "Stiffling of Innovation" needs to be addressed in the conversation. There has been incredible innovation in OTT providers and other internet based business models due partly because of this equal-access laboratory available to them... at the cost of the Service Provider. Why doesn't some of that value created transfer to the SP at some point? While the operational scaling of the infrastructure is one key problem for the SP, it somewhat assumes a passive role in the Innovation process occurring around them. Another question is how can the SP, who are providing the "Innovation laboratory" get compensated as these Innovations start to realise their potential and start to monetise. What role can or do the SP's want to play in the Innovation lifecylce? R&D and investments starts to become a line item on an SP balance sheet but not in the traditional sense.

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