My eye was cought today on following news item Verizon and Google have reached pact on Netneutrality. Google being a real content provider on the internet is stepping up to give users better performance but then end-user will have to pay for this extra performance. This is a concept that is quite common in the business environment, quality and guarantees come at a price. You cannot expect to be on front row for a low price and receive the best performance and the best uptime.
But you have to take into account that margins with telco’s are quickly declining, on voice but also on data. In order to keep investments up and keep up with innovations, the money has to come from the person that profits from it. Take a look at the iPhone 1 to 4, if something really has added value, an end-user will pay for it and is happy with it. The shareprice of Apple can show this.
However internet is seen as you can get everything for free. Free newspapers, free video, free promotion, free advertisment, free music, free HD movi downloads etc. But in the end there is no such thing as free content. The internet is a collection of networks that is payed by ISP’s making agreements amongst each other with a business model behind it. In the end someone has to pay for the fiber to the home, cable connections, business dsl, t3, e3, 100 mbps ethernet and thousands of mile submarine cables connecting the internet. Yes that is person at the end of the connection or the content providers making money on the content, but need optimal end-user experience and a large crowd.
If you look at a recent report that was recently release by Cisco, market leader in internet infrastructure hardware:
Cisco Visual Networking Index
Some quotes in this report :
- Global IP traffic will quadruple from 2009 to 2014
- Global Internet video traffic will surpass global peer-to-peer (P2P) traffic by the end of 2010
- Internet video is now over one-third of all consumer Internet traffic, and will approach 40 percent of consumer Internet traffic by the end of 2010, not including the amount of video exchanged through P2P file sharing.
There can only be only conclusion. Content and especially peer-to-peer, streaming video, HD Videoconferencing etc is taking a tremendous growth, so most likely service providers aren’t able (or would be difficult) to keep up with the tremendous bandwidth explosions. A good example is AT&T and wireless 3G networks with Apple iPhone. It is a such a success that they are limiting the usage or you have to pay additional fee with high usage. Quality, preference and bandwidth will cost money, even on the internet. It is the same for digital TV, you pay extra if you specific channels or content.
So as an end-user I wouldn’t be that happy if I look at my wallet. But if I am working at home and using my HD desktop video client or remote access solution I would be very happy to have uptime and some decent quality. I cannot permit being offline anymore or connections being slow. This would immediately effect the HD video calls I have with my customers, colleague’s or family.