It has become popular (at least in the US) to start to put bandwidth caps on customers. Technologists are upset, they've seen Star Trek and they know that everyone is going to start video conferencing constantly any time now. These uses would easily go over the paltry limits that network providers have setup. Real consumers won't care, what will actually happen is the economics of connecting to the Internet will change.

We can start to see this with AT&T's recent foray into allowing phone apps to pay for the bandwidth that their app consumes. This would mean that a user could grab the new app from their favorite sports team and not worry that the video highlights will knock them over their cap, the bandwidth is "free." The reality is that the way it's paid for has changed. Instead of being amalgamated over all the users, averaged and sold at a fixed rate for all you can use, it's being paid for out of the money you're paying the application provider. If it's $10/mo to Netflix, they're giving AT&T a kickback of 10% of that to ensure you don't worry about using it.

Consumers will love this! Why? Because what will in turn happen is that the cost of the bandwidth to them will go down. Do you want a gigabit of bandwidth to your house? Sure you do, especially if it's only $20/mo. What other restrictions would you take to get that much bandwidth so cheap? I'm guessing if most people didn't feel the pain of the restrictions, they'd all take that trade. And this is where the "gain" to consumers lies. Most of them aren't doing bit torrents, they're using Hulu and Google and Youtube, all people who can give the DSL provider money to subsidize that bandwidth whether it be from subscriptions or advertising.

Network neutrality in this scenario sadly becomes a moot point. The provider isn't providing any preference to the routing, or deciding which packets to put on which line, they're just adjusting how they bill the customer. You can rest assured that no one (at least in the US) would regulate how they the ISP bills the customer. But, the restrictions would be such that consumers would choose (no mater how manipulated that choice is) one site over another based on their cost, which is effectively a negotiated price by their ISP. Again, the ISP is manipulating and choosing which sites the user is most likely to see and use.

It seems doubtful to me that all bandwidth will go to this model, only consumer level home and mobile bandwidth. Companies and Universities are unlikely to see significant change in how they purchase their own bandwidth as there isn't as much direct billing there. But, I think it might effect how people could work from home. I imagine this will result in the ability to purchase unlimited bandwidth to a single domain for VPN usage.

There is, of course, a lot more to say about this. It's an interesting pivot in how we see the Internet structured today, but was probably inevitable. We continued to squeeze the companies that owned the last miles to our houses, asking for more bandwidth for cheaper. And then we had the gall to actually use it! They're trying to figure out how to recoup those costs, and consumers aren't willing to pay more, so they have to hide it.

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posted Mar 6, 2012 | permanent link