EU Looks at Allowing ISPs to Treat"Some" App Providers Unequally

Network neutrality has always been a slippery, impossible to define concept, notable more for its help or hindrance to business models of various participants in the internet ecosystem. Under the rubric of “treating all bits the same,” policymakers and advocates have prevented quality of service mechanisms for consumer internet access; blocked the access equivalent of “toll free” calls and generally imposed effective price regulation on internet access providers. 

All that despite the fact that application providers routinely pay money to ensure that their own bits are “not treated the same,” using content delivery networks to circumvent public internet routing delays and uncertainty. 

Now, in an ironic twist, European Union regulators are looking at imposing just such “unequal treatment of bits” on a handful of large application providers. 

Allowing ISPs to extract fees from some app providers for the privilege of allowing bits to be delivered over ISP access networks. 

One if almost forced to conclude that the network neutrality debate was never about equal treatment; equal access or anything else related to the delivery of bits over ISP access networks. 

It seemingly always was about the perceived revenue and cost advantages and disadvantages faced by various ecosystem participants. It is hard to reach any other conclusion given the extreme range of regulator opinions.

First, “equal treatment” to benefit app providers. Now, “unequal treatment” to benefit ISPs. In addition to all that, there are other political concerns, principally the impact of policies on domestic suppliers of apps, content or access. 

If we are honest we will stop pretending “network neutrality” had much to do with “protecting bits from discrimination,” and recognize it was a political move designed to help or hinder some parts of the internet ecosystem, just as it now--in reverse--is similarly designed to help or hinder ecosystem participants. 

In the latest incarnation, it is ISPs who need “revenue help.” The business simply is not growing in Europe, and ISPs seemingly have won the argument that it is they who need help, not app providers. 

source: ETNO

As often is noted, app providers have enjoyed revenue growth, while ISPs have seen their revenue shrink since the early 2000s. 

 

source: ETNO

The point is that network neutrality is shown to be a sham. The new proposals will impose unequal treatment of bits. It is the exact opposite of “net neutrality,” whatever that was supposed to be, and to some of us the concept never had integrity. 

The same people who argued for “equal treatment of all bits” also agreed that sometimes ISPs would have to treat bits unequally to preserve network performance. 

Maybe the better advice would be to stop picking winners and losers under the charade of some sort of “fairness” or “equal treatment.” It appears to be nothing of the kind. Instead, we have governments picking winners and losers for political reasons.

If You Hate Meeings, Do Not be a CEO

Frustrating though it might be, CEOs of larger organizations spend very little time with customers: about three percent, according to a survey conducted by Harvard Business School professors Michael Porter and Nitin Nohria in 2006. 

About 72 percent of CEO time was spent in meetings.

Broadly speaking, no more than 21 percent of CEO time was spent on anything connected with business strategy. About a quarter of time was spent on function or business unit reviews and another 25 percent on “people and relationships.”

About 16 percent of time dealt with “organization and culture issues.”

source: Harvard Business Review

Does Crypto Intrinsic Value Matter?

Some believe intrinsic value does matter, and crypto currencies do not possess such value. Others make the argument there is intrinsic value. 

It matters as crypto's role and value in coming Web 3.0 and metaverse use cases might hinge, to some extent, on user belief in such intrinsic value. 

The Digital Divide Will Not Always be a Problem

Scarcity--both real and imagined--drives the prices and perceived value of nearly all products and services. “Lack of” also drives the political agendas of virtually all organizations and entities who promote an agenda. 

Those organizations require resources to operate, and resources mean jobs, prestige and power. So what happens when a “problem” is essentially solved? Do organizations disband, or do they find some other “new problem” to work on, thus inviting continued support of the entity?

Almost always, the latter is chosen over the former. So we can virtually predict that, eventually, policy proponents are going to stop talking about the “digital divide” and move on to some other problem related somehow to “inability to buy broadband internet access.”

Already, many point to “digital literacy,” which is a demand issue, not a supply issue, as a substantial remaining problem. In other words, it is not the quality of the available broadband access that limits use, it is the skills of potential users. Faster broadband does not fix that impediment. 

But to the extent that generational differences exist, that problem eventually fixes itself. Younger generations are more comfortable with all new technologies than older generations, and as each generation passes, the “lag” evaporates. 

There will likely always be “differences” in available speed, latency, reliability or price between remote areas and urban areas, to be sure. Summer fruits and vegetables cost more, and are less fresh, in the winter. 

Still, at some point, internet access is going to be good enough that bottlenecks to experience and value will shift elsewhere in the ecosystem and value chain. 

Where servers are located; what customer premises gear is needed; how pricing and packaging models are crafted; which indoor transmission platforms are operating and processing speed and power could well determine whether internet apps, services and devices work at all or work properly. 

Most are now too young to have encountered it, but back in the 1980s global communications policymakers actually were concerned about how to create “voice access” platforms for most people, as “half the people have never made a phone call.” That might have been true in the 1980s or even 1990s. It no longer is true. 

We have “solved” the problem of humans having access to voice communications. We likewise will solve the “digital divide” in a meaningful sense: not defined as absolute parity of speeds, latency or cost per bit, but in the sense of “access” no longer being a barrier to usage. 

And that will lead a whole bunch of people and organizations to find some other new problem to solve.

Will Significant 5G Revenues Come from B2B? Maybe Not

The conventional industry wisdom is that incremental new 5G revenues will come from business customers, not consumers. The bad news is that, in some regions, those new business-related 5G revenues might be quite small, by 2025.

You would be hard pressed to find any observers who do not believe edge computing, private networks and network slicing will lift revenue for mobile operators over the next decade In the Asia-Pacific or any other region.

The only question is the magnitude of those increases. And that is where matters get tricky. Some forecasts suggest sharp drop offs in Asia-Pacific mobile revenue through 2025, compared to trends up to 2019. 

But most forecasts call for revenue in the range of $230 billion to $390 billion by about 2025, with total revenue--fixed and mobile--closer to $500 billion in the region. 

If 5G revenue earned by mobile operators in the Asia-Pacific region by about 2025 reach $24 billion, then 5G would represent between six percent and 10 percent of mobile operator revenues.

If one assumes that consumer mobile connections represent 90 percent of 5G revenue in 2025, and using the higher figures of $24 billion in 5G revenue, then edge computing, network slicing and private networks together would only represent perhaps $2.4 billion in revenue.

That is a small amount contributed by three new revenue sources. 

But some believe 5G might contribute less, perhaps contributing $14 billion in mobile revenues  by about 2025. In that case, 5G would represent between four percent and six percent of mobile operator revenues in 2025. 

In that case network slicing, private networks and edge computing would be negligible revenue contributors, generating perhaps 1.4 percent of mobile operator revenues. 

At such levels, the impact of changes in subscription volume, average revenue per account, increases in internet access revenues and market share changes will have far more impact on mobile operator revenues than network slicing, edge computing and private networks.

How High is Home Broadband Churn?

If we can assume a monthly churn rate for home broadband of about two percent a month, annual churn could reach nearly 25 percent of the installed base. As often is the case for consumer surveys, behavior might not match stated intentions. 

source: TiVo 

Those stated intentions seem out of line with actual monthly churn rates in developed markets, which seem to hover between 0.75 percent and 1.25 percent per month. That suggests annual churn in the range of 12 percent of the installed base. \

source: Analysys Mason 

Metaverse is a Decade Away

Some technology transformations are so prodigious that it takes decades for mass adoption to happen. We might point to artificial intelligence or virtual reality as prime examples. Now we probably can add Web 3.0 and metaverse to that list. 

At a practical level, we might also point to the delay of “new use cases” developing during the 3G and 4G eras. That is likely to happen with 5G as well. Some futuristic apps predicted for 3G did not happen until 4G. Some will not happen until 5G. Likely, many will not mature until 6G. 

The simple fact is that the digital infrastructure will not support metaverse immersive apps, as envisioned, for some time. Latency performance is not there; compute density is not there; bandwidth is not there. 

In fact, it is possible to argue that metaverse is itself digital infrastructure, as much as it might also be viewed as an application supported by a range of other elements and capabilities, including web 3.0, blockchain and decentralized autonomous organizations, artificial intelligence, edge computing, fast access networks and high-performance computing. 

source: Constellation Research 

Scaling persistent, immersive, real-time computing globally to support the metaverse will require computational efficiency 1,000 times greater than today’s state of the art can offer, Intel has argued. 

To reduce latency, computing will have to move to the edge and access networks will have to be upgraded. 

All of that takes time, lots of capital investment and an evolution of business models and company cultures. Metaverse is coming, but it is not here today, and will take a decade or more to fully demonstrate its value. Major technology transformations are like that.