The Evolving Economy Of The Web
As user-generated sites soar in popularity, head of strategy at Unique Digital, Richard Dance, discusses how challenges to ‘net neutrality’ Stateside could have implications on the economy of the entire web…
Currently, the internet is seen as neutral, in that your ISP lets you view any website you like. But developments in the US are threatening to change this, and it could have major implications on the entire economy of the web.
Some elements in the net community would have us believe the internet will shortly be stripped of this central principle of equality of communication (or ‘net neutrality’), while Big Business prefers to present the changes as the next exciting step in its development as a full immersive multi-media channel. Predictably, the truth is somewhere in between these two scenarios.
While the full impact of current US legislation (Communications Opportunity, Promotion and Enhancement Act, or Cope Act) is yet to be assessed, one worst case scenario is certainly difficult to accept. The Act could entitle ISPs to reduce the bandwidth allocated to a user if the site they are trying to access is not on the ISP’s ‘approved’ list.
Two possible consequences of this would be to stifle challenger websites which offer a service that is already offered by one of the ISPs portfolio of content, or to oblige sites that are not in the club to pay the ISP for using their optical fibre infrastructure, which will probably require them to pass these costs on to the user. If nobody is prepared to pay to watch YouTube, how long can the site support itself?
The issue has arisen thanks to the duopoly US telco’s AT&T and Verizon seeking to take on cable TV networks with IPTV technology. High speed broadband will allow ISPs to deliver video on demand, or the opportunity to stream sports events at high quality to paying subscribers, and to guarantee the quality of service ISPs need to be legally able to discriminate against different packets of data. Otherwise, bandwidth-heavy services such as BitTorrent will diminish the quality of the service and cable will remain the transmitter of choice in American households.
This situation is frequently called the two-tier internet, and makes many a left-wing net idealist fume. The legal backing ISPs need is currently inching its way through the US government, justifying its claim by saying for Google and Yahoo! to benefit from the optical fibre infrastructure their video service runs on, without contributing, is a subsidy. Google et al are, predictably, against the legislation, and are lobbying just as hard on the other side to the telcos, but are likely to lose the argument, as they simply do not have the money to build their own infrastructure.
Time for a sense check. Doesn’t the speed I connect to the internet depend on which ISP I choose, and what bandwidth I buy? Don’t I have the choice to change ISPs if I don’t like their service? Doesn’t the internet already discriminate against different bits and bytes, depending on if they are viruses or VOIP conversations? Don’t search engines (and search engine optimisers) already seek to control what sites I see?
The answers to these questions are not as clear cut as you might think, especially to a British observer. In the UK, ISP choice is wide open, thanks to the efforts of Ofcom and Oftel before it. In the US, choice is significantly reduced, often as small as two ISPs in a metropolitan area. Secondly, while the internet already discriminates against those unwanted packets of data, these are currently only for the benefit of the user rather than direct and uncompetitive commercial benefit. Lastly, while search engines take commercial listings, they still enforce fairly stringent relevancy criteria to them all. So this development really does represent a new phase in the story of the internet.
What seems likely is that the internet will not have quite the same open-access principle once the legislation passes through the Senate, but that the difference to the internet habits of the vast majority of US citizens will be positive – they will now be able to enjoy internet HDTV programming and super-fast internet access.
We are not going to see an internet landscape where competition is completely stifled, and ultimately the principle of the internet as a series of interconnecting networks will not be consigned to the history books. But if this trend continues, the focus of development might start to gradually shift from the US to other regions such as Europe, where ISPs are kept on their toes by competition and so would find it unrewarding to introduce a two-tier internet, and where furthermore laws that are entirely sympathetic to telcos are harder to pass.