Sunday, September 12, 2010

Dumb pipes and net neutrality

Reading this article about Verizon probably wanting control over content that gets distributed over the iPhone if Apple makes a CDMA-version iPhone brings me back to when I was working at TELUS, a Canadian telecom.  We had just gotten a new VP, and he wanted to meet with our team.  The feeling was mutual, of course.  During the Q&A part of the session, I raised my hand and asked for his thoughts on net neutrality and what TELUS should do about it.  He acknowledged that it was a big issue, especially with market research proving that more and more consumers wanted to watch media on their computer, not TV.  He talked about how frustrating it was that many entities wanted distribute whatever content over TELUS pipes essentially for free, and that TELUS needed to figure out how to best reign in and control traffic so that they could properly profit from it.  In other words, he was against net neutrality, as most Telecoms and ISPs naturally are.  The Verizon-iPhone article isn't about net neutrality, it's about content distribution.  But content distribution and net neutrality is tightly tied together simply because content can be so bandwidth intensive.  So here I am discussing net neutrality.

Now, I myself haven't really decided whether I'm for net neutrality or against it.  Certainly, net neutrality can suck for consumers if the network load exceeds bandwidth capacity.  Everything can slow to a crawl.  Many customers in Vancouver experienced this during the late 90s, and hated the quality of service that various broadband ISPs provided.  However, if bandwidth capacity exceeds network load, you can have some pretty amazing innovation.  The barriers to entry for new Internet-based products are significantly lowered if a new service does not need to pay to get priority in network traffic.  Youtube's perhaps the perfect example.  Youtube would never have been possible back in the 90s, due to the lack of broadband proliferation.  However, now everyone has the ability to upload both silly and insightful videos, and if you're good, you'll hit 6 figures income.  And I don't know a single person who disliked the Old Spice Youtube campaign, especially after the Old Spice man started making videos directed to specific individuals.  Maybe eventually, even Youtube itself will start to add to Google's bottom line; scale is Google's forte, and the cost of running Youtube is simply a scale issue (simply, hah).

Of course, if Youtube ran off a P2P distribution engine, the telcos might be crying bloody murder.  P2P software seems to have this unique ability to maximize your bandwidth usage and strain the network to its limits.  Suddenly, every customer is a distribution and consumption point, having a multiplier effect on traffic volumes.  Well, in Youtube's case, it would depend on Youtube's actual market penetration, as Youtube is a product that's limited in its usage.  Videos have a size limit so the files are small enough that you can watch them on demand; there's no need to queue things up to watch them and lag is generally non-existent.  Consequently, Youtube downloading stops when you stop watching.  But in BitTorrent's case (an example of P2P downloading software), the files are usually gigantic, so it needs to be treated more like a shopping cart.  Put stuff into the shopping cart (queuing), go to checkout (downloading), then come back after your day of work to consume your products.  And you can put more stuff into the shopping cart while you do.  It never stops.  Especially for people who wanted to consume various media but couldn't any other way.  For example:
  • An otaku who just NEEDS to watch that just-released-in-Japan-this-week anime episode, which has no television distribution agreements in North America
  • That rabid fangirl who missed the darn ColdPlay concert, but fortunately found a video recorded by someone who had actually been there
  • Pirates pirating rampantly due to lack of cash and/or ethics (and with eye patches and peg legs)
  • etc, etc
BitTorrent was simply the way to go for many people back in the day.  However, even HD movies these days can be watched via streaming; the bandwidth has simply gotten that good.  For example, I just finished watching Resident Evil 2 on my overpaid 8MB pipe via China Telecom's IPTV service (wow, no plot whatsoever, just guns and zombies).  That's valid proof that bandwidth has caught up for now.  So it's now a totally valid option for consumers if the distribution part of the equation gets figured out (hello Netflix, AppleTV, Google TV, Amazon).  But the telcos are jealous because they don't get any of the money that Netflix, Apple, Google, and Amazon are (or will soon be) making.  As well, data and media are getting bigger, more on-demand, and more in-demand.  So the net neutrality debate is not going to end, which leads to the eternal question: what's an ISP/telco to do?

If a telco decides for net neutrality, their network will naturally clog up to peak capacity with whatever is in vogue, due to Parkinson's Law applied to network bandwidth.  This has the potential (note, potential, it depends on how close to capacity the network load gets) to kill the user experience for most consumers, but anyone will have access to do anything they want.  If the telco decides against net neutrality to give certain products and services priority (eg. dedicated priority for MRIs shared between hospitals to share diagnosis expertise, dedicated priority for live sports events, dedicated priority for same-day movie premiere streaming, etc), then it'll cost money to get anything done.  Privatized health care is maybe a perfect example of what happens when you have a two-tier system.  The pay option becomes amazing (and uber expensive), but the free option kinda sucks if you ever need to get beyond the basics.  And really cool, innovative, new services must get beyond the basics.  If they could run on low-priority bandwidth, would they really be that amazing?  Maybe, maybe not, who's to say?  But certainly, products and services like Youtube, Skype, Google Voice, FaceTime, Pandora, Spotify, and maybe even Facebook Photos would have had trouble launching if net neutrality didn't exist.  What amazing service tomorrow will not be able to launch if net neutrality dies?

OK, through the course of writing this post, I think I've decided.  I'm for net neutrality, if only so that people can have the ability to change the world through their entrepreneurial efforts.  I think that's something every economy absolutely needs to have in order to move forward: the opportunity and ability to innovate.  If you need major cash infusions in order to even try... well, we'll no doubt still have innovations, they just might not always be the best.  Wouldn't you rather have 1,000,000 entities attacking various global problems and opportunities instead of a small 1,000 who were able to attract the major funding necessary for bandwidth?  Of course, this could swamp the telecom networks.  But come on telco guys.  You're in the telecom business.  Invest in your network infrastructure.  Make money off of selling more bandwidth, not optimizing utilization of non-upgraded infrastructure.  Invest in your business and don't stand still.  I realize this is sometimes difficult when it might mean ripping up concrete streets to lay down fibre in busy cities where politics can get in the way.  But it's your business, so invest in it.  And stay away from content distribution.  If anything, I think we've seen over the years (the point in the Verizon-iPhone article only being the latest example) that you suck at content distribution.  Especially in a world where consumers have now tasted the choice offered by long tail economics.  That's just too difficult for you to handle.  Let someone else build amazing software systems for taking care of that piece (again, hello, Netflix, AppleTV, Google TV, Amazon).

OK, I know I have some former colleagues in telcos who read this blog from time to time.  Any of you reading this?  Anybody want to comment?  Please, my comments section is lonely.  :)

And seeing this kind of stuff on Twitter is fun and cool.  That may not have transpired the way it did in a pre-Twitter world.  But we see politicians and other public figures taking shots at each other in public all the time.  So I don't think this is exactly new.  Fun, but still only another example of, "if the news is important (or interesting, noteworthy, funny, etc), it will find me."

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