With perfect timing, two cellular-service companies are proposing a plan for wireless carriers to monitor usage and charge extra by the kind of site or service visited. The proposal by wireless suppliers Allot Communications and Openet comes right before the Federal Communications Commission meets to vote on the latest plan for Net neutrality.
A private PowerPoint presentation by the companies to an industry seminar was leaked late last week. In it, the companies describe the burden of carrying such sites or services as Facebook, YouTube, Skype or BitTorrent where revenues and traffic are "decoupled." In their scheme, Facebook users would be charged an additional fee of two cents per megabyte, Skype users three euros monthly, YouTube users 50 cents monthly for a limited version, and Vodafone users would not be charged an additional fee. Vodafone is a customer of both Allot and Openet.
The plan also calls for encouraging usage in a off-peak, uncharged "Happy Hour." There's also a provision for "split billing," in which revenue from a streaming movie is split between the Internet service provider and the movie service. Currently, the movie service receives the per-movie or per-month user fee, while the ISP receives a monthly fee for Internet service, regardless of what is watched or used.
The vision offered, which resembles cable TV's tiered pricing arrangement, is exactly the kind of dystopia feared by advocates of Net neutrality. Not only would a carrier be able to pick and choose which sites or services would cost more, but it could favor its partners or subsidiaries in ways that hurt competitors. Vodafone, for instance, could offer a streaming movie service with no additional fees for customers, while YouTube or Netflix users would have to pay more.
The current Net pricing model is not unlike that of a common-carrier utility, such as a phone service, where all traffic is treated the same, although there are pricing differences on speed and, sometimes, on total amount of data delivered.
On Tuesday, a much-anticipated meeting of the FCC is expected to include a vote on a proposal by Chairman Julius Genachowski for his vision of Net neutrality. Although the final language hasn't been released, Genachowski has outlined a plan that would allow fast and slow lanes of traffic in the wired Internet with different pricing schemes, but services or sites would have to be charged at comparable rates for comparable bandwidth use, without discrimination by type or commercial affiliation.
His plan would exempt wireless networks from these rules on the grounds that the wireless industry is still developing, but those companies would have to make their policies known. One of the Democratic commissioners, Mignon Clyburn, recently said Net neutrality rules should include the wireless industry. The two Democratic commissioners on the FCC are expected to vote with Genachowski for the plan, while the two Republicans are opposed.
'Whole Bunch of New Business Models'
Matt Davis, an analyst with IDC, said the plan presented by Allot and Openet is "not surprising." He added that, "after tomorrow, there's going to be a whole bunch of new business models."
Davis said there has been a clear signal that "the market is going to implement metering" of some kind, adding that he "would be very, very surprised if wireless is going to be treated the same as wired." Such metering might not occur in the business market, he added, but it will in the consumer market.
In a recent Genachowski speech, Davis said, "it was pretty clear he indicated that wireless is off the table." Advocates for this approach point out that wireless spectrum is limited, while wired Net providers can always add another pipe.
While metering of some kind might be in store, Davis said a key idea of Genachowski's proposal has been that "like traffic is treated the same," at least for wired connections.
Davis said the key issue comes down to "how much bandwidth you use," because bandwidth costs money. After Tuesday, he said, "they'll set up some business models that seem reasonable, and we'll see some abuses" that will need to be handled by the FCC or others.
"I doubt that this will be a walk in the park," he added.