Second Annual Hosting Summit Draws Large Crowd - Net Neutrality and All That
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The Monday evening session on Net neutrality seemed to attract a lot of interest. Analysts Dan Berninger and Dan Golding led the discussion, which took place during the opening reception. With Net neutrality coming up for legislation on Capital Hill (and not winning the first round), and many telecommunications companies putting their lobbies to work arguing against the concept, this turned out to be an important topic.
The Internet has grown up as being more or less open to everyone, with your experience dictated only by the equipment and connection you can afford. Why would some companies want to put extra roadblocks on the Information Superhighway? Both Dans did their best to explain the rationale, while not necessarily agreeing with the telecom companies’ approach.
Berninger saw the issue as a battle between two business models, one used by telecommunications companies and one used by information technology companies. The telecom model, he went on to explain, was suitable for a world in which all of the technology, infrastructure, and customer relationships are owned and controlled by the same company. But the world doesn’t work that way anymore.
Unfortunately, the telecoms don’t seem to see that. According to Berninger, they still get 95 percent of their revenues from old-fashioned phone service, where consumers face price increases without added value. (Some of my own experiences fit that model, but I’m not sure one can make a sweeping generalization in this case). Since telecoms get only five percent of their revenues from DSL, it costs them little if their attempts to make money from the medium end up strangling it.
Golding took out a figurative handkerchief for the telecommunications companies. With Internet traffic increasing, and modern technology such as email, IM and VoIP cutting into their landline-based revenues, telecoms are in an uncomfortable position. Their expenses for maintaining infrastructure remain the same or have even increased, but their revenues have been falling. No wonder they’re trying to extract more money from the Internet.
In any case, it would be difficult to make a profit on non-neutral Net access. How would they do it? A usage-billing system would be too costly, and raise privacy issues to boot. Both Dans agreed that it comes down to a matter of PR.
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