Double billing as business model

Mark Cuban's touting the tiered pricing model, again. This time, his angle is that without tiered pricing of IP traffic, we won't get the bandwidth we want when we want it. He fails to mention, of course, that by building packet-based pricing into their networks the carriers will be able to close their networks to service providers who refuse to pay the carrier.

The analogy I'd suggest, for those who supportTiered IP pricing is like being billed more for incoming long-distance calls. tiered pricing is this: It's like the carriers want to bill you for an incoming long distance call differently than a local call, even though they are charging the caller extra to make the long haul connection.

Content and service providers already pay enormous amounts to get access to the network at speeds sufficient to support their peak demand. Yet, for some reason, the last-mile carrier wants a premium, too. If I pay a premium for "broadband," which I currently do at $90 a month for 5 Mbps service (that actually runs about two-thirds that speed), I don't want my carrier demanding more for, say, video traffic, too. It will choke off the services that can drive expanded demand for capacity rather than providing incentives for build-outs of fiber by carriers.

Cuban simply wants all of his would-be film and video customers to shoulder the extra costs of on-demand bandwidth rather than building an infrastructure that carries those costs itself. It's a way of turning the distributed computing model upside-down, making the edges pay so the centers don't have to.

Keven Werbach, of The Wharton School and Supernova, cuts through the Cubanese to the real meaning for The Rest of Us:

Thought it's not Mark's point, reading the post made me even more concerned about how telephone companies will behave as they build out fiber networks. If they are over-promising their video capabilities, they are likely to (1) blame users and Web-based content providers for the problem, (2) argue to regulators that they need even more "incentives" to justify their investments, and (3) tilt their networks even more aggressively toward closed, proprietary services, and against Internet-based content and applications they don't control. 

Enough said.