Friday, December 24, 2010

Mobile Carriers Dream of Charging per Page

Mobile Carriers Dream of Charging per Page


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Just a week before the FCC holds a vote on whether to apply fairness rules to some of the nation’s internet service providers, two companies that sell their services to the country’s largest cellular companies showed off a different vision of the future: one where you’ll have to pay extra to watch YouTube or use Facebook.

The companies, Allot Communications and Openetsuppliers to large wireless companies including AT&T and Verizon — showed off a new product in a web seminar Tuesday, which included a PowerPoint presentation (1.5-MB .pdf) that was sent to Wired by a trusted source.

The idea? Make it possible for your wireless provider to monitor everything you do online and charge you extra for using Facebook, Skype or Netflix. For instance, in the seventh slide of the above PowerPoint, a Vodafone user would be charged two cents per MB for using Facebook, three euros a month to use Skype and $0.50 monthly for a speed-limited version of YouTube. But traffic to Vodafone’s services would be free, allowing the mobile carrier to create video services that could undercut NetFlix on price.

In short, you’d have a hard time creating a better graphic of the future that net neutrality advocates warn will be imminent if the federal government does not apply fairness rules to the mobile internet. A court struck down an earlier set of fairness rules in the spring, but it was never clear if those rules applied to wireless carriers.

“It certainly is exactly the thing we have been warning the companies will do if they have the opportunity and explains why AT&T and Verizon are so insistent that the wireless rules be solely about blocking and not anything else,” said Public Knowledge legal director Harold Feld. “If you want the slide deck to show why we need the same rules for wireless and wireline, this is it.”

The FCC is set to adopt some net neutrality provisions Tuesday, but they will not apply to mobile devices.

Feld says the slide shows that the wireless companies’ seemingly successful fight to not have net neutrality rules apply to them is not about a desire to make sure that critical services get priority.

“It’s not about wirelessly monitoring people’s pacemaker data,” Feld said. “Its about charging you extra to access Facebook.”

In fact, it looks suspiciously similar to a graphic created by a net neutrality advocate to satirize the dreams of ISPs.

The ideas don’t look too different from the way cable companies price their video offerings, with different packages of programming at different levels.

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But the model is a radical departure from the current internet model in the United States where the company you pay to connect your computer or mobile device to the internet acts like a utility. You pay for a certain guaranteed throughput and sometimes a maximum amount of monthly data, and the company’s job is just to deliver that content to you, regardless of whether you are using Netflix, Hulu, Yahoo, Google or some small startup few people have ever heard of.

That’s the concept behind net neutrality.

When shown the presentation, Stanford University professor Barbara van Schewick seemed not surprised at all.

“I have been saying that this is where they want to go for a while,” van Schewick wrote to Wired. “The IP Multimedia Subsystem (IMS), a technology that is being deployed in many wireline and wireless networks throughout the country, explicitly envisages this sort of pricing as one of the pricing schemes supported by IMS.”

Van Schewick, who heads the Stanford Center for Internet and Society, argues in her recent book, Internet Architecture and Innovation, that such network models undermine the net’s openness, which has allowed anyone with a computer, a vision and the right skills to create a business, without having to pay anyone extra for the privilege.

And as van Schewick points out, this model is already showing up in European mobile networks, where some networks charge users an extra fee to use internet telephony or to use an e-mail client on their phone.

These models are bad from a public policy perspective. By imposing a higher price on the bandwidth needed for certain applications, the network providers effectively tax these applications, which may lead people to use them less than they normally would. This is bad for users because they cannot use the Internet in the way that is most valuable for them. This is bad for affected application providers because their market shrinks: They lose all those customers who would have used the application at the normal price of Internet transport, but who are not willing to pay the additional tax. But from the network provider’s perspective this pricing scheme increases their profits.

Pro-net neutrality groups have argued that the carriers will try to make more money by breaking that model, creating fast lanes and slow lanes, and discriminating against content they compete with.

For instance, Comcast runs an online video service called FanCast that competes with NetFlix and YouTube, and is trying to buy NBC, which owns more than 30 percent of Hulu.com. And every cable and satellite company offers pay-movie services for an extra monthly fee and a la carte video on demand that compete with third-party streaming video services, like Blockbuster and Amazon.

Allot and Openet also have an idea for how the carriers can make more money off of movies, what they called “split billing” — a way of allowing internet service providers to get a slice of the money that online movies companies are being paid by customers.

In this case, a customer can watch a 15-minute preview of a movie for free. If she doesn’t order the film, the company that served up the film would pay the carrier for the bandwidth used. But if the customer pays to watch the movie, then the ISP gets a cut of the money paid to the online movie service.

Compare that to the current de facto state of affairs for broadband connections, where a customer pays the cable company or wireless provider to connect them to the internet, the online movie service pays to connect to the internet, and the network’s only role is to connect the two.

The FCC’s proposed rules for net neutrality, which come up for a vote by the five-member commission on Tuesday December 21, haven’t been publicly released. But according to the summary provided by the FCC, cable and DSL companies would be prohibited from unfair discrimination, but could create fast and slow lanes.

Wireless carriers would be exempt from the discrimination and blocking rules, but would have to make public how they handle congestion on their networks.

The carriers say that they need the freedom to discriminate because wireless networks can get clogged, but net neutrality advocates say the proper response is simply to dole out equal bandwidth to each user, and not try to pick which applications to put in the fast lane.

The FCC decided against the politically charged route of regulating ISPs as if they were a utility by re-classifying them as “telecom services.” That category applies to the phone company, and if the FCC had taken that step, the same rule that requires phone companies to connect all calls, no matter who you call or who calls you, would have applied to the internet, as well.

Instead, the FCC has seemingly formed a coalition with the nation’s ISPs, getting them to agree not to sue to overturn the rickety legal framework, in exchange for giving the companies wide latitude on how to price the communications infrastructure of the future.

And from the looks of it, the carriers and their vendors have a very good idea of what the future will cost you.

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