The recent FCC ruling in favor of Net Neutrality is an interesting decision. The Federal Communications Commission (FCC) of the United States passed a rule that the Internet Service Providers should always act in “public interest” – similar to telephone lines. What this means is that the Service Providers such as AT&T can not enter into an agreement with Content Providers such as Netflix, Google, etc. where their content is given preference over other Internet sites. This ultimately translates to a single pricing structure for all end users irrespective of the content that they are accessing over the Internet. The ruling has been touted as a victory for end users and a rap on the knuckles for Service Providers who want to impose a variable pricing scheme for Content Providers.
I don’t see it the same way necessarily. I think it makes sense to make end users pay for the service that they are receiving. Although we do not have Netflix here in India, we do have some kind of variable charge offers from Service Providers (ISP) implemented from time to time. For example, there was an offer from one of the ISP for exclusive Facebook access for a day at Rs. 10/- only. Now when the end user is paying for this service, what is wrong with the ISP having FB pay them for routing their traffic on priority over other content. It is an easy way for FB to ensure more people log in and access it, which in turn will have them attract more advertisers and lead to more revenue for FB. When the end user is paying for the service, why shouldn’t Content Providers do the same?
In the United States, reports suggest that thousands of end users flooded the FCC with requests to maintain Net Neutrality as-is today. I am not sure if the Telecom Regulatory Authority of India (TRAI), which I think is the FCC’s peer in India, has had a say in the matter for this part of the world as yet. In a price sensitive market such as India, I would be surprised if Net Neutrality would win. Although the end users would definitely want it to remain as-is (who wouldn’t want to download movies, watch them online, watch sports live, etc. at the same flat pricing structure that is prevalent today?), I think it makes sense for ISP’s to implement variable pricing models. In many ways, the future of the Internet Protocol (IP) world hinges on the ability for the ISP’s to innovate with their pricing models.
For the market to survive, thrive and evolve, I think the FCC and TRAI should stay out and let it take its own course. At the end of the day, the market will adjust to the needs of the customer. If the pricing structure that the ISPs chose places a burden on the customer at home or at the enterprise, he or she would reject it and thereby force the ISP to change it to service the end user. If there is a Value added service available for the customer, he or she would be willing to pay for it. Fundamentally that is how markets work and this should be no different. Of course, there should be safeguards against monopolization and manipulation of the market by the ISPs but by and large, given how the automotive industry plays out, for example, should be a reference point for the Internet industry too. Portion of the public that can afford to buy expensive cars opt for it and those that can’t afford a car still move around through other means. The value that the vehicle offers for the customer varies and they pay a price consistent with the mode of transport that they choose to use and the value that they derive out of it. Why should it be any different for the Internet?
Mithun's Musings 