Net Neutrality is a Serious Compromise

Predictably, some policy advocates have said the Google-Verizon agreement on network neutrality does not go far enough, as it exempts wireless networks from the agreed-upon rules, namely the reservation of any quality-of-service features to Google, and barring Verizon from applying them.

In the past, though, many have argued that network neutrality rules that forbid any packet discrimination, even when users may want it, would impair network investment and prevent service providers from innovating in the access business.

The Google-Verizon agreement essentially creates this situation for Verizon, though exempting the wireless network, which has more technically-challenging network management issues. Some observers have opposed network neutrality rules precisely because they would remove incentives for continued investment in the network.

But that is what Verizon has agreed to. It cannot offer enhanced services beyond the plain-vanilla Internet access service to content providers at any price. Some will note that this is a form of price regulation, and that one should expect the normal response to price regulation, which is a shift of attention and investment elsewhere, where prices are not regulated, and where growth prospects are not constrained.

The point is that Verizon has made serious compromises, as has Google. That's generally what happens in such policy debates when industry contestants face a major change in regulation and they want to have some say in shaping the outcome.

The compromise agreement is not a disaster, or an unqualified win, for either Verizon or Google. Google might face some constraints in the wireless realm as Verizon faces constraints in the fixed network realm.

All initiative now rests with Google as far as creation of real-time Internet services whose value can be captured financially, on Verizon's fixed-broadband network. Verizon has had to trade away initiative on fixed networks to keep its options for wireless services.

The agreement also means Google is free to innovate in the realm of Internet services, while Verizon has to concentrate on managed services not part of the Internet. You might argue that allows each company to play to its historic strength. It also might be fair to say neither company was forced to play in realms where it has no natural advantages. That's a compromise, maybe even a grand compromise.

Why Business Should Oppose Net Neutrality - Robert E. Litan and Hal J. Singer - The Conversation - Harvard Business Review

Chrome to Phone Launches

Google has officially launched "Chrome to Phone" to the public. The extension allows you to push web pages, phone numbers and maps directly from your Chrome browser to your Android phone.

On the roadmap? An update that will provide push capabilities in the other direction, from phone to browser.

download the extension here

"Nothing Bad Happens If Net Neutrality Fails"

There's a missing element in discussions about network neutrality, says Dan Frommer, Deputy Editor of Business Insider. "No one has convincingly and realistically explained what would happen that's so bad if ISPs were not forced to observe net neutrality, and if they were allowed to sell faster access to the highest bidders," Frommer says.

"The reality is that nothing really bad would happen," he maintains. Some think the internet access providers cannot be trusted. To be fair, everybody agrees with that, up to a point. The reason Adam Smith said we can rely on markets is that greedy, avaricious behavior by any actor is met in the market by offers from competitors who will offer a better deal. "Greed" is met by competition, and competition restrains greed.

Any ISP that behaves badly will quickly be met by a rival response from competitors eager to take that ISP's business and customers.

"If anything, things could get even more expensive for consumers if net neutrality is enforced," Frommer maintains. Why?

ISPs operate in competitive markets. They aren't perfectly competitive, only workably so, given the high barriers to entry.  If ISPs lose revenue opportunities because of net neutrality, they certainly will look elsewhere for new revenues, and raising effective prices is an obvious path to take.

There is an argument that if quality-assured tiers of service are allowed (something the Google-Verizon deal precludes), better-capitalized firms will be able to pay, and start-ups will not. That's mostly true.

But bandwidth costs are not the major cost item for new software upstarts. To the extent that "more bandwidth" fixes some latency issues, even real-time services can continue to use the best-effort Internet as bandwidths continue to climb.

The vast majority of Internet businesses won't pay for priority bandwidth, if it's ever available. And the ones who do will figure it into their costs of doing business, the same way they do with rent, staff and health insurance, for example.

Some will not agree. Market power is an issue in business. But competition is the natural restraint. Innovation will occur in the presence of, or despite, network neutrality rules. And the Google-Verizon agreement ensures that all application providers have exactly the same prospects in the Internet access part of the ecosystem.

If other ISPs adopt the same framework, fixed network access will remain a "best effort" service offering no advantages to any single application provider.

link

iPad Users Change Reading, Browsing, Gaming Habits

If results of a U.K. consumer poll are any indication, tablet PCs are about to change Web browsing, gaming and reading preferences.

According to survey conducted by Cooper Murphy Webb, Apple’s iPad is the preferred method of reading newspapers and magazines among consumers already owning the device.

The poll also found that a plurality of iPad owners prefer the device for reading books and gaming. Perhaps surprisingly, respondents indicated they used their dedicated gaming consoles and iPads about equally when gaming. If that holds up, it could mean trouble for game console suppliers. 

And a significant percentage prefer the iPad for Web browsing as well. That finding is less surprising, if one assumes the tablet device is designed to be used as a content consumption device.

Cooper Murphy Webb  polled 1034 U.K. iPad owners.


It's hard to tell at the moment whether the behavior of early adopters will be the same, or similar to, habits of more mainstream users.


The results, if they are replicated by other surveys, suggest the tablet has potential to disrupt and replace user behaviors for any number of other consumer electronics devices. Mobile phones and MP3 players are probably safest. PCs, notebooks, netbooks, ebook readers and game consoles would seem to be most at risk.


That's a rather broad base of devices threatened by tablet devices.

iPad Consumer Usage Study | Cooper Murphy Webb

Skype Files For IPO, Only 6 Percent Of Users Pay

Skype’s proposed initial public offering may offer a bit of insight on the future of international voice revenue. According to TeleGeography, Skype represents about 13 percent of global long distance traffic.

As of June 30, Skype was averaging 124 million users a month, with only 8.1 million of those paying users (out of a total of 560 million registered users). So 6.5 percent of Skype users are paying for services.

As a rough calculation, free Skype minutes of use therefore represent about 12 percent of global traffic. If the ratio of paid to non-paid use does not change, and if Skype keeps growing, the percentage of non-paid international calling, texting and video sessions will keep growing as well.

Paying Skype users, however, pay an average of $96 a year. Skype’s strategy is to keep growing its overall number of users and convert more of them to paying customers.

At least for the moment, most international trafiic represents a revenue stream for some service providers. But the percentage of non-paid traffic seems bound to increase. At the same time, the average revenue any single session represents likely will keep falling.

This implies that voice revenues will get cheaper, on a per-minute basis, while more traffic will move to the "free" category.

Skype revenues for the first six months of 2010 were $406 million, with a net income of $13 million. But a big portion of that was from interest income. That is a three percent net margin, overall.

Its income from operations was only $1.4 million for the six months, though margins on that business are 51 percent.

Skype Files For IPO, Only 6 Percent Of Users Pay

Typical Smartphone User Consumes 230 Mbytes of Data a Month

Us wireless market q2 2010 update   aug 2010 - chetan sharma consulting

View more presentations from Chetan Sharma.

 

The typical U.S. smartphone user consumes about 230 megabytes of data in a month, up about 50 percent over the last six months, says wireless consultant Chetan Sharma. 

Also, although it often is said that the U.S. lags some other world markets in terms of adoption of advanced services, this is not true for mobile broadband, where the U.S. market has become the hothouse observers in other markets are tracking, says Sharma. 

U.S. consumers will be among the very first to test, in volume, fourth-generation networks and the most-advanced 3G networks as well. 

Cox Launches 50/5 Internet Speeds in Connecticut

Cox Communications has launched residential "Ultimate Internet" service in Connecticut, providing customers three unique IP addresses, 10 e-mail addresses, and 50 hours per month of remote dial access for $99.99 per month.

Cox Launches 50/5 Internet Speeds in Connecticut