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Summary:

Update: Jeff Pulver has advice for Eric Schmidt, Google CEO. Turn Off Bell South and writes, “Welcome to the game of Internet Chicken and the race to mutually assured destruction. Who will flinch first before it is too late?” Pulver is even more disappointed with Mark […]

Update: Jeff Pulver has advice for Eric Schmidt, Google CEO. Turn Off Bell South and writes, “Welcome to the game of Internet Chicken and the race to mutually assured destruction. Who will flinch first before it is too late?” Pulver is even more disappointed with Mark Cuban’s stance on network neutrality.


Marketwatch reports that BellSouth is in talks with some Internet content companies and will levy charges to deliver premium tier services. Bill Smith, chief technology officer at BellSouth told the online publication that, “Higher usage for broadband services drives more costs that we have to recover.”

Smith points out that Apple maybe asked to pay a nickel or a dime to deliver the song. Yahoo will have to do the same for its reality TV streams. I wonder what is the ramification of this? Will it mean increased price of songs on the iTunes store, hence slower sales of iPod, and hence the slowdown of that ecosystem. As I said earlier, if there is no money out of consumer pocket, fine. Silicon Valley is still going to pay the price! Not that Washington is paying any attention!

While we are on the topic of the much ballyhooed QoS, can the incumbents who propose to charge for better and faster delivery of content deliver an optimum and consistent 3 Mbps every minute of the day to the consumer who coughs up hard earned $40 a month? After all that consumer, not Yahoo or Apple is their first and primary customer.

  1. Ah, the always-alive “free, public peering” vs. “private or settlement peering” issue! For as long as I can remember, at least since 1994, networks want to tier themselves based on some definitions and force the lower tier ones to pay for peering at the exchange points. After a lot of dooomsday posturing, the bigger network guy switches off the peering — in this case BellSouth with a Yahoo, most of the network’s customers find alternate ways of reaching the content, a few see degradation or loss of connectivity, the paying customers complain and the network blinks. I’d expect the same here. The networks are too late in the game to start paying hardball with the content providers now.

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  2. I think the RICCO act should apply hear.

    And after that, its time to break up the Bells again, but this time do it right! Break them up horizontally not verticall.

    One regulated layer 1 company with open access to all the plant and then any number of unregulated competitive service providers on layer 2/3 on up.

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  3. I spoke to the heads of some major wireless companies locally. From what i’ve been told this is just the first step in a long process they have planed. Most likely they will do what they have done for wireless, unless you pay them a large amount of your earnings they will simply block access to your content. What these companies do would land you in jail if it was any other industry.

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  4. There is growing interest from industry as well as academics with regards to the growing gap between revenues earned and usage costs. The Broadband Working Group at MIT has an interesting paper on how the Korean broadband market has already seen this gap. KT went ahead and started charging a usage based fee, which was not taken very well. Many of you might have already heard of this, called the broadband incentive problem. This paper (http://cfp.mit.edu/groups/internet/qos_docs/Watlington-BBWG-Oct.pdf) gives many ways that it could be solved, one of these is recovering costs from non access based revenues. As the paper says the time to act is now!

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  5. Sorry, that was the link to the presentation, here is the link to the paper.

    http://cfp.mit.edu/groups/broadband/docs/2005/IncentiveWhitepaper09-28-05.pdf

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  6. Why don’t the content companies just pass on the charge to the customer, fully open book.
    “I’m sorry Mr Customer, but your purchase has a 10cent additional charge because your access is through Bell South. The following other ISPs operate in your area and do not apply this ‘tax’…”
    Of course, there needs to be no monopoly or artificial barrier to entry for other players.
    Then let the bowels of the free market economy deal with this shit.

    We don’t need more legislation, just a removal of the barriers to entry into the market.

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  7. Attention content companies: Please call these guys on this. Let’s say Apple doesn’t pay (because the broadband user already is) and BellSouth cuts off iTunes or the “speed degrades”.Apple can simply let the world know that it’s “not on our end, it’s on Bell South’s end”. Where do you think the rage will be placed? BS of course (hey, great initials for them).

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  8. The companies offering “connectivity” begin to understand that the future IS in the content and the revenues will mostly come from it.
    Why loosing a share of the cake that is going to be bigger and bigger?

    I think that when the customer pays for the leasing of the line has the damn right to do what HE wants with it.
    It is like if the owner of your office would charge you for the revenues you make doing your job.
    Once you pay the rent, the income from what you do is YOURS.
    THEY should be the ONES to pay The content providers.
    If they are able to lease the lines IS because somebody creates content to use those lines.
    In other words, if I have nothing to see, nothing to download, no mail services, no search engines, would I pay for Internet Access?
    They easily forget that the spreading of broadband was mostly due to programs like Napster and P2P.
    How many would still pay for broadband of there was nothing to download or if what offered to download was too expensive?
    Patrizia

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  9. Charlie Sierra Tuesday, January 17, 2006

    Om,

    Aren’t SBC and Yahoo partners? Ditto for VZ and MSN?

    Do those partnership agreements envision distribution fees from their partners, or does SBC and VZ pay money to Yahoo and MSN?

    Is this ploy by BellSouth just sour grapes for being late to the game, without a partner, and without a successor for the CEO position?

    In essense do these machinations tell us more about BLS than they do the market?

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  10. BellSouth drops the gloves on neutrality

    My friend and fellow Canuck blogger Mark Evans points to a story from Marketwatch about BellSouth following through on its promise (threat?) to start charging service providers such as Apple or MovieLink extra to ensure that their content gets through...
    
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