Consumers and Broadband Providers Are Bound to Tangle

Opinion: Cable companies and telcos have interests in VOIP and the sharing of large files that clash with consumers' priorities, and regulators are bound to get caught in the middle.

You can lead a horse to water, goes the saying, but you cant make him drink.

The online corollary might be: Lead a computer user to broadband Internet access and you might never stop him from sucking down everything he can.

A story in last weeks Wall Street Journal outlines the beginnings of what promises to be an interesting business and political dilemma for broadband providers. Although customers will pay more for broadband—which makes cable and phone companies happy—they are also demanding more from their high-speed access. Whats worse, once on the network, customers often take advantage of online services that bypass traditional phone and video offerings that have long been cable and telephone companies bread and butter.

Providers are trying to figure out if they can determine the quality of service they give for bandwidth-hogging services like video file-sharing or Internet phone service. Or theyre varying the quality of such services, slowing them down for heavy users or during busy times of day. In business terms, this may eventually mean asking customers to pay more for access to services like Internet phone calling or video file-sharing.

That seems fair. But many are worried that the phone and cable outfits, which provide most of the broadband access in the U.S., will use capacity arguments as an excuse to block potential competitors.

After all, cable companies dont like to provide Internet access so customers can use BitTorrent, the video file-sharing service. Its not hard to see how it could replace their TV business. And since one of the nations largest cable companies also makes movies, its not hard to see that happening. Phone companies arent crazy about the fact that Internet phone calls are cheaper than what they provide over twisted copper wire or cellular service. Blocking voice-over-IP is in their business interest.

The answer to this state of affairs isnt clear. And that, depending on your point of view, is either the problem or the solution. Earlier this year, the Federal Communications Commission fined an Internet service provide, Madison River, for blocking the use of voice-over-IP service provided by Vonage. But there doesnt appear to be anything in the law saying that providers cant control how their service is used. SBC, for instance, blocks a port that inhibits e-mail traffic for its customers (Im one of them). Thats a minor example but its the sort of thing that might become more commonplace.

Now, if this were the bad old good old days before the Internet, the Telcos would just go to Congress and ask for permission to block these services. After all, who needs video file-sharing? A lot of it is pornography. And why do I—a residential SBC user—need to use port 25 for my e-mail? That was a typical attitude back in 1996 when the nations telecom laws were overhauled. Today, well, today, Congress is probably going to listen to consumers, not just to the corporations. And those consumers are wired; they can talk to Congress and to each other much more quickly these days.

What does this mean, politically? It means that access issues like these are—like wireless Internet access—going to increase consumers interest in the 1996 Telecom rewrite.

/zimages/4/28571.gifCable TV providers square up against telcos as new technology brings on an evolution in regulation. Click here to read more.

Cable TV providers square up against telcos as new technology brings on an evolution in regulation.

If youre a cable or phone company, thats not necessarily a good thing. Consumers are voters, and a block of outspoken consumers get attention from politicians. What might have been a situation worked out quietly between lawmakers and association lobbyists gets harder to manage—politically and publicly—when consumers are around. Because no matter how you slice it, asking customers to pay more for service they already use—or slowing down their service to discourage use of a particular technology—strikes many people as somehow underhanded.

One thing is increasingly clear: Consumers are getting hip to this Internet thing. They like it. Many of them have come to need it. Others rely on it for a range of services. And many of those consumers are demanding a high-quality level of service as they—like folks in the tech business—think of the network as an extension of their daily lives. Its taken only 10 years for this to happen; imagine how much more quickly things are going to move from here.

In the long run, this is all good for tech. Its good for anyone doing business on the Internet. But its going to make rewriting the nations telecom laws a whole lot more complicated than things were last time around.

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