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Giant killer bugs from D.C.

Thu, 08/12/2010 - 11:05am
Brian Santo
The latest big salvo in the network neutrality debates is the recent manifesto from Verizon and Google that reiterates the idea that mobile broadband be exempt from network neutrality rules.

In issuing this document, Verizon poses as an advocate for network neutrality. Verizon also takes a stand against the onerous, competition-killing regulations being proposed by the Evil, Antagonistic, Resentful, Wasteful, Inept Government. And who wouldn’t root for somebody standing tall against the EARWIG? Nobody likes earwigs. They even sound gross, let alone seeing one in the flesh. Or chitin. Or whatever earwigs are made out of. Okay, Verizon didn’t refer to the government as an “earwig,” but it could have.

But I digress. The point is that both ways, you’re supposed to cheer. Yay, Verizon!

So: Verizon is against regulations and is for level playing fields. Of course, you can’t have both, because regulations are necessary to keep the field level. The Verizon/Google proposal amounts to tilting the playing field to Verizon’s advantage and calling it level.

Verizon is peddling this nonsense because it has to. Wireless broadband is rapidly increasing in popularity. At the end of the Verizon’s second quarter, data revenue had grown to represent over a third (34.5 percent) of its total service revenues, up from 29.3 percent the year prior. Verizon noted that wireless data was one of the biggest growth drivers for the company.

Verizon’s problem is that it can’t build out wireless broadband infrastructure fast enough, so it isn’t even going to try. The easiest course for Verizon to avoid the type of service disruptions that AT&T experienced when the iPhone took off is to adopt disincentives for its customers to actually use wireless broadband.

How would they do this? There aren’t a lot of options. The suspicion is that Verizon will rely on disincentives it can only institute under a so-called free market. The company could try to squeeze more money out of consumers by metering consumption and imposing usage fees, or it could start giving priority to traffic from those content providers able (and willing) to pony up. Or it could do both.

Both approaches violate what most people conceive of as network neutrality principles.

The thing is, Verizon’s argument might actually work. The vast majority of consumers hate the government more than they hate cable and phone companies, which is saying something, and politicians these days can’t lose playing to that prejudice. Companies can always score points by invoking the free market. Claiming that the substantial and robustly growing wireless broadband market might be materially harmed by the imposition of network neutrality principles is laughable, but plenty of people want to believe it.

Naturally, AT&T thinks a wireless exemption is a good idea.

Cable is already into wireless broadband and is only going to get deeper involved, and letting Verizon and AT&T take the flak for gaining the wireless broadband exemption makes good sense. Not coming out for it publicly remains the proper play.

The wireless exemption might have a fringe benefit for those elements of the cable industry that would love to see usage billing. If customers get used to the idea of one element of the bundle being subject to usage billing, it will be that much easier to migrate the model to other services in the bundle. Yay, Verizon.
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