For whom the tolls sound like alarm bells

Summary:There's a lot of talk about tolls taking a bite out of Internet usage and user's pockets. We've been there, done that, and it didn't work the first time around.

Remember when, if you wanted to participate in CompuServe forum, you got a CompuServe account, even if you already had an AOL account and a WELL account? Those bad old days, when access fees for various services that gave you access to different communities totaled $100+ a month may make a comeback with a twist.Welcome to 1994 all over again: Either provide the connectivity on an open basis or be routed out of the game. It won't work, but it is going to be unpleasant whilst the market figures out what will unwind more bandwidth for advanced services.

The remaining Babies Bell, making like their old Ma (or is it Maw?), are trying to negotiate access fees from Internet sites and service providers that deliver their stuff over  carriers' last-mile networks. Instead of charging end-users, carriers are asking service providers to charge end-users on their behalf—some twist, eh? Well, telcos have never been noted for their creative thinking.

For example, AT&T (nee SBC, which has taken the name of its former parent which it bought at a fire-sale price) has reportedly demanded that Apple pay a fee on each iTunes song it delivers to AT&T-SBC customers. Meanwhile, "enlightened" Net persons such as Mark Cuban, are calling for tiering of end-user bandwidth pricing, so that a user wanting to tap broadband content has to pay the extra freight instead of the content provider which, ironically, is Cuban's gig these days.

Someone will provide faster connections to the home if the carriers don't choose to do it. Unfortunately, it will take time. In the interim, we're going to see some stupid schemes to pass costs off to the end-user in vain attempts to make Web services look cheap. 

Russell Shaw pointed to my old buddy The Head Lemur (Alan Herrell), who provides the graphical vision of the worst-case future, a challenge before every click asking if you want to foot the bill for the link. It's an apt and accurate prediction of what could happen, if the syphilitic carrier mentality continues to eat away at everyone's faculties of reason. 

We overcame the spirochetes of greed a decade ago as ISPs realized they had to open their networks or lose customers.

The problem is that, today we have returned to being increasingly dependent on the last-mile carrier, who doles out throughput like a miser. They inject protocols to corrall traffic—it's true even of champions of the Net, like Google, which will saddle its "free" Wi-Fi network services with a virtual private network (VPN) that ties all traffic to Google servers so the content can be reviewed and ads injected along the way.

It seems that every company we connect through sees that bandwidth not just as something we've purchased, but also as a source of continuing revenue from goods and services delivered.

Imagine, for example, having a $0.15 fee attached to each eBay item you purchased to pay the carrier that connected eBay to you. The same is true analogously, whether we're talking about AT&T-SBC charging Mark Cuban for bandwidth to deliver a movie or a Google Wi-Fi user granting unrestricted access to their Net usage so Google can monetize the traffic and pay the "free" Wi-Fi bill.

Nothing has been "free" on the Net, ever, from the very beginning. Someone's always been paying the bills, even if the incremental cost of each new user was virtually nil. The tearing down of walls between different sites, which happened when raw IP services overtook and crushed proprietary online services, such as CompuServe and AOL, simply transferred the costs to a different combination of payers. End-users footed a large part of the bill, but so did content and service providers who forked over huge payments to carriers to get the upstream capacity they needed to serve users whose last-mile connection climbed from 28 Kbps to 1.5 Mbps over just a few years.

The only efficient answer to this challenge is to push all costs to the service provider—an eBay, Vonage, Apple iTunes, Google, etc.—who must accept that they have to price the full cost of their product into the end-user price. That's not to say these companies should buckle to the carriers, far from it, only that they are the sole single-point player in the value chain who can exert influence on carriers.

It will work, and it is working based on the scuttlebutt we're hearing about what Apple, Google, Vonage and others are saying to carriers, because it comes down to a compromise-or-lose proposition for the carriers just as it did for AOL and CompuServe: Either provide the connectivity on an open basis or be routed out of the game. 

The demands of efficiency cut both ways, making it incumbent on content/service providers to price their offering so that it supports the connectivity needed without hitting the end-user with an unexpected surcharge. If a service provider can't offer a product or service at a reasonable fee, they'll fail.

It should not, however, be the end-user's responsiblity to calculate their monthly data download costs, because that's going to choke the life right out of the Net. I, for one, would like to know the real cost of downloading a first-run movie for home viewing, with all the costs included, so I can decide whether seeing it at home is a better deal than going to the theater. It's no fun to sit down and be surprised by a $10 surcharge for a movie you've already paid $29.95 to see.

Reality bites hard when you realize that the Net is actually slower than we'd like it to be. Another round of technical breakthroughs is much needed to accelerate last-mile throughput—the U.S. is already way behind much of Asia and parts of Europe. Bickering with customers over how many pennies they should pay to access spiffy broadband services is the least productive way to reach a profitable online economy.

A publicly owned last-mile, woven out of shared personal connections and publicly financed WiMax might change the game. It sounds like a good idea and would make end-user data capacity a really democratic decision instead of something decided on high by carriers and service providers. But the community networking movement has refused to engage in the business discussions with realistic expectations, because these activists feel they solved the big problem and ignore the backbone problem on the assumption there is plenty of throughput available at no extra cost.

Welcome to 1994 all over again. I wonder when Steve Case will show up with a new network service.... 

Topics: Google

About

Mitch Ratcliffe is a veteran journalist, media executive and entrepreneur. He was editor of the ground-breaking Digital Media newsletter in the 1990s and a frequent contributor to ZDNet over the years. He led development of the first Web audio/video news network at ON24, sat on the board of Electric Classifieds Inc. and Match.com, and wor... Full Bio

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