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Heavy-handed network throttling 'bad for business'

Telcos may see more control over network access to over-the-top service providers, but face tough balancing act to ensure customer experience doesn't drop and innovation continues among third-party providers.
Written by Ryan Huang, Contributor

Asia's regulators may be open to following South Korea's example of allowing telcos to control network access to over-the-top (OTT) service providers, but industry watchers believe telcos will have a tough balancing act to find the right pricing model while ensuring good network quality and innovation continues.

The Korea Communications Commission (KCC) in mid-July announced it would allow mobile carriers to block access to free Internet calls, if deemed necessary, as part of a wider slew of new guidelines over the use and management of networks, according to a Korea Times report.

This would allow local operators to control the amount of access users have, depending on subscription plans, to OTT services such as mobile voice-over-Internet-Protocol (VoIP) services, it noted.

David Kennedy, research director and principal analyst at Ovum, said the KCC's approach is pragmatic and balanced. "With this approach, we won't see VoIP completely blocked, but operators can arrange their pricing to ensure that VoIP users pay for their use of the network," he said.

He added this would underpin industry investment and be in the long-term interests of customers too.

Free voice service might sound like a good idea but it is not sustainable, and it would be difficult to introduce a revenue model that could support investments if free OTT VoIP services became prevalent, Kennedy stated.

Concurring, Rob Bratby, managing partner at law firm Olswang Asia, felt it was a good decision by South Korean regulators. It is important to make sure that those responsible for driving up network costs should also contribute to paying for the incurred expenditure, he said.

"Net neutrality debates often end up being framed in an emotional 'rights'-based way when it is really about balancing the respective interest of the networks and the content and applications using those networks," Bratby said.

On a regional level, Kennedy believed the KCC's regulations are in line with the international trend of letting the market come up with solutions to the issue of net neutrality and Asia is "not expected to diverge from this trend".

It would be difficult to generalize an approach for the region though, as there are "no harmonizing principles for supra-national rules" such as those in Europe, Bratby said.

"As each regulator faces a different market, [they] will have different policy imperatives influencing where they choose to balance the interests of the networks and the content and application providers," he added.

Tough balancing act
From the operator's perspective, it may not be in its best interest to throttle networks and single out OTT services anyway, said Mark Hukill, senior advisor at Pacific Telecommunications Council.

With a competitive mobile landscape, it is critical for telcos to look at pleasing customers to gain an edge over their competitors and bandwidth throttling would "make them go out of business", Hukill warned.

Kennedy added that while no one knows for sure what traffic management techniques are being used by operators in Asia, quality of experience remains a big issue for customers.

"This means that operators can't avoid using traffic management techniques to manage network loads, but they must use these techniques in a way that improves overall customer access to the services they want."

A heavy-handed approach to throttling or blocking the network would not be well-received by customers, and there is plenty of competition in Asia's markets to provide customers with alternative operator choices, the Ovum analyst added.

Singapore telco M1 told ZDNet Asia that it conducts traffic management of peer-to-peer protocol during peak hours to maintain service quality and to enhance end-user experience. A company spokesperson said: "This network management ensures fair and consistent traffic utilization across our customer base and applications. We do not target OTT services specifically."

One OTT service provider also spoke out against regulations allowing operators to throttle their networks. South Korea's KakaoTalk, makers of a popular VoIP app, believes such regulations will stifle innovation in OTT services and be an obstacle for venture capitalists.

"When we launched our VoIP service in Korea, mobile operators were upset and throttled the data traffic causing quality drops in VoIP service," said a company spokesperson, who added it was still resolving this issue with authorities.

Executives from Ericsson had earlier offered an alternative solution. They called on operators to open up their network application programming interface (APIs) to third-party providers so that the OTT services can be delivered according to their bandwidth requirements, which would improve user experience.

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