Net Neutrality: Do You Want Random or Planned Blocking?

Strong forms of "network neutrality" that allow no prioritizing of Internet traffic pose clear issues for real-time services such as video and voice, at times of peak load. Since all real-time services are highly susceptible to congestion, peak hours may not be optimal times to use them. The problem is that "peak hours" are when users most want those services available.

So the issue is simply whether users prefer random disruptions of quality, or planned disruptions of the quality of some applications, in order to provider optimal performance for real-time services. Since no federal rules are going to abolish peak consumption hours, the only practical issue is what methods are used to limit network access at times of peak congestion.

One can specify that no packets are blocked or intentionally slowed. But that only shifts the congestion control mechanism. Users will find their voice and video sessions don't work that well, and will restrict their use of those services at times of peak congestion.

The other approach is to prioritize applications so the burden of congestion is shifted to lower-priority communications or applications; to users with demonstated "very-high usage" profiles; users who already have exceeded fair usage caps or users at congested cell towers.

Some service quality degradation, at peak hours, will happen. The only issue is how the congestion issues are distirbuted.

One might argue that congestion effects also could be distributed based on whether users have opted to buy "best effort" usage plans or "assured access" plans. But higher-quality, assured access is not possible when packets cannot be prioritized.

Congestion issues, despite network upgrades, always will be a fact of life for networks. The only practical issue is how network degradation is handled. It can be random, or it can be planned. How any new network neutrality rules are framed will determine whether planned mechanisms are allowable.

AT&T Launches Picture, Video Communication for iPhone Today

Apple iPhone users likely will be putting strain on the AT&T wireless network today, Sept. 25, 2009,. as multimedia messaging service, which allows iPhone users to send and receive pictures and video, is made available for the first time.

But the issue is going to grow in significance. Pyramid Research estimates mobile video usage will grow at a compound annual growth rate of 28 percent over the next five years. By 2014, more than 500 million users worldwide will subscribe to mobile video services, equal to 8.5 percent of all mobile subscription services.

That might not seem like much, but video requires about one to two orders of magnitude more bandwidth than voice (10 to 100 times).

YouTube says mobile uploads over the last six months have grown 1700 percent. and users have grown 70 percent.

MVNO Business to Grow Outside North America, Europe

The mobile virtual network operator business is headed for growth, and most will come from regions other than North America and Western Europe, says TeleGeography.

Globally, growth in wireless subscribers has been driven predominantly by explosive growth in a small number of developing countries, such as China, India, Russia, Brazil, Indonesia, Vietnam and Pakistan. These are countries in which MVNOs are either prohibited or at a nascent stage of development, so the ultimate impact on the MVNO market is not yet clear.

In 2003 MVNOs accounted for seven percent of subscribers in Western Europe and North America. At the end of June 2009 wireless subscribers had grown by almost 60 percent in these two regions to reach 800 million, and MVNOs’ share had increased to over nine percent.

In contrast, from 2003 to mid-2009 the number of wireless subscribers in regions other than Western Europe and North America more than quadrupled to reach some 3.5 billion. However, MVNOs have yet to make much impact in these higher growth markets: outside of Western Europe and North America, their share of the market remains less than 0.5 percent.

So while MVNOs have been growing strongly in Western Europe and North America, those two regions account for an ever-smaller portion of the world’s wireless subscriber base – it slipped from almost 40 percent to less than 20 percent. That suggests that future MVNO subscriber growth necessarily will come from other regions.

In 2003, Western Europe and North America accounted for well over 90 percent of all MVNO subscribers and, despite some growth elsewhere, these two regions still account for over 80 percent of the total.

TeleGeography’s latest research predicts that MVNO growth will gain momentum all around the world over the coming five years, as MVNOs are legalized in new countries where they are not allowed at present.

Will Net Neutrality Lead to Higher Prices?

One can make some reasonable guesses about likely outcomes as the Federal Communications Commission weighs new network neutrality rules.

If new proposed rules disallow traffic shaping measures such as slowing peer-to-peer or other traffic at times of peak congestion, the problem of alleviating peak-hour congestion will still have to be dealt with.

If the goal is to manage peak traffic load, and service providers cannot shape traffic by slowing some protocols, or slowing all traffic for users who have exceeded their usage caps, then other available mechanisms will be used.

And price is one of the most-likely tools.

Customers might not like it, but it always is possible to discourage usage by raising prices. And it always is possible to boost usage by lowering prices. And it is wireless plans where the price hikes--or user policing of usage--will be most felt.

If usage caps are tightened, consumers will have the option of spending more, or using less.

That doesn't mean "unlimited" service packages will disappear. Some customers will want to buy them. But the price of such packages likely is going to rise. For similar reasons, usage-based charging is likely to increase for most other plans as well. That will encourage users to monitor their usage and make choices that will alleviate peak hour strain on networks.

As a practical matter, wired network operators already refrain from blocking access to lawful applications, and traffic shaping rules already are tweaked so the policies do not constitute "blocking" or "slowing" of lawful traffic.

But wireline operators have more access bandwidth than wireless providers do. So Oppenheimer financial analyst Tim Horan suggests that wireless usage caps will become more stringent.

Among other possible strategies is structuring pricing to encourage more usage off-peak, as is the case for voice plans.

Application blocking is less an issue than most assume on wired networks, and is a relatively minor irritant for most wireless users, but a significnat irritant for some users on wireless networks.

The real trick is how service providers will handle peak hour loading under new conditions where traffic priorities cannot be applied, as typically is the case for many private enterprise networks.

One other observation also is in order. As was the case the last time a major change in communications regulation was made, with the Telecom Act of 1996, there will be a period of legal wrangling to test and flesh out the rules.

Though most within the communications business would vastly prefer more predictability of business environment, that is not what they are likely to get.

Broadband Stimulus Bridge to Nowhere?

Since applicants have asked for $28 billion, when the broadband stimulus funds available in the funding round total around $4.3 billion, one already can predict that there will be more entities unhappy than happy about the final awards. Especially unhappy are rural telecom providers who cannot apply because of the definitions used to describe "remote" locations.

For that same reason, it might not be rational to look at where proposals are from, on a state-by-state basis, except for purposes of assuring that some funds are disbursed in every state. Nor will it make sense to evaluate proposals based on ubiquity of platform.

Mobile or satellite networks might have wide footprints. But there still are places where broadband buying lags the national average.

It likely makes more sense to look at proposals at the county level or community level. Even the satellite proposals are specifically targeting a limited number of jurisdications and areas where broadband penetration is low.

Some proposals will be better than others. But most of the proposals seem to ask for relatively small amounts of money. That likely is a good sign, as few small organizations can manage a sudden infusion of money and work very efficiently.

Some proposals do seem weak on the "cost-benefit" front. But that's why the evaluation process is so important. Reviewers are supposed to sort better proposals from weaker ones. Reviewers likely also know their decisions will come under very-close scrutiny. One therefore can hope for a rational outcome.

Publishers Moving to Mobile Distribution

Nearly 52 percent of print executives surveyed by the Audit Bureau of Circulations are distributing or formatting content for viewing on a mobile device. Newspapers are leading the charge, with almost 58 percent already formatting their Web sites for mobile devices. Business and consumer magazines are following closely behind with 45 and 42 percent, respectively.

The changes are driven by a believe that users will be getting more content from mobiles in coming years. More than 80 percent of respondents believe people will rely more heavily on mobile

devices as a primary information source in the next three years, the study finds.

Nearly 70 percent of respondents say that mobile is receiving more attention at their publication this

year than last. Of companies that track mobile impact, 45 percent report that mobility has boosted Web site traffic by up to 10 percent.

Half believe mobile traffic to their Web sites will increase by five to 25 percent in the next two years.

Among senior executive respondents, 56 percent said their publication has plans to develop

a smartphone application in the next 24 months, in addition to the 17 percent of respondents who already have an app in production.

Nearly a third of respondents believe that mobile will have a significant impact on their publication’s revenue in just three years.

What Changes Have Mobile Users Made Because of Recession?

It isn't clear whether users actually followed through with their stated plans and inclinations, but an October 2008 survey by Getjar suggests users were planning significant changes in mobile consumption. So far, we can document the slowdown in replacement phone behavior. Users, at least in Europe, have slowed the pace at which they upgrade their handsets, as 78 percent of respondents to the survey suggested they might.

The suggested parsimony on the usage front remains a bit more difficult to quantify. About 76 percent of mobile phone users who partcipated in the survey suggested they planned to reduce the amount they spend on phone usage as well.

When asked whether they had reduced spending on mobile phones in the last 12 months, more than 50 percent of respondents had not reduced their spending at all, or by as little as 10 percent, during that period.

For those people who had reduced their spending, the economy was the reason given by just over one third of respondents, while 20 percent changed their usage habits to lower expenses, and a further 28 percent had switched to using free applications to avoid charges.

But the planned reductions could have taken any number of forms. Some 35 percent of respondents said SMS accounted for the greatest proportion of their mobile phone bill. So less texting is one possible user response. So is substituting texting for calling when the tariffs favor such choices.

About 18.5 percent said voice services was the biggest cost driver and about 17 percent identified data services as the top usage cost driver. Less calling and less use of data services are other possible responses.

Premium services accounted for the largest part of the monthly mobile spend for 12 percent of the survey participants. For many users, this should have proven the easiest way to reduce spending.