Net Neutrality: Real Consequences

The Blogosphere has been throwing around the term "Net Neutrality" for a while now, discussing the theoretical morality and practicality of such an edict, and generally discussing it on a very high level that only the Technologists of the world really care to argue about.

Things are about to get ugly.

Ralph de la Vega, CEO of AT&T Mobility and Consumer Markets, recently spoke at UBS (big investment company) conference in NY, and spoke about the possibility of charging heavy data users more than the average  data user. He specifically pointed to the fact that 3% of AT&T smartphone users are responsible for 40% of total data usage. He went on to describe in which AT&T is devising ways for users to be able to track their data usage in real time, hopefully curbing the data usage behaviors of the super-heavy users.

(As a total aside, that's ridiculous. Do they really expect users to stop using data because they feel bad? They bought unlimited plans; unlimited is what they'll get. To expect them to be socially conscious of their data usage is just bad market research)

Market analysts are seeing this announcement as a threat to users: Rein in data usage, or we'll charge you more for it. There's nothing wrong with doing that, only that you'd lose all of your customers. Your status as an "unlimited" user doesn't alleviate the scarcity of data that ISPs have to deal with. There is a finite number that represents the size of total bandwidth, and simple rules of supply and demand require ISPs to charge for demand when supply is scarce. So, why now? Why is AT&T talking about this now when this has been a problem since phones became smart years ago?

Jared Newman, at PC World, has a great theory. He claims that AT&T is bluffing to try and stave off the Net Neutrality movement. Proponents of NN want to impose rehgulations that make ISP bandwidth allocation equal across all legal uses of data communication. One advantage of this is that Comcast would have to stop throttling bandwidth of heavy peer-to-peer file sharing users. This is the kind of behavior that the people behind NN are displaying as reasons to regulate bandwidth. However, it also means that bandwidth will become even scarcer than it already is.

Right now, AT&T users on video chat in Skype are getting a faster connection speed than users checking their email. This makes obvious sense. Why give users connection speeds they don't need? This is a dynamic and fluid allocation, because it is dependent on what you are currently using. The email checker gets a higher speed when he switches to using video chat and the video chatter gets his bandwidth throttled when he checks his mail. This is how ISPs conserve bandwidth and ultimately save money for the consumer.

Newman thinks AT&T is trying to scare off proponents of NN by threatening to raise rates. And they would have no choice but to raise rates if everyone was forced to have equal bandwidth all the time. It would mean that the amount of bandwidth required by the heavy users would have to be equal to the bandwidth given to the light users. AT&T wants to make something very clear: Do this, and the customer will pay. We'll gladly give out more bandwidth, but bandwidth is much more scarce in the wireless industry than in the wired industry, and someone has to foot the bill. Newman thinks we need to call their bluff, and force them to stop throttling bandwidth. He doesn't think they'll follow through and charge more. I disagree.

People take "unlimited plans" for granted. ISPs market it as a golden ticket to infinite data when in reality your speeds are measured and change constantly so that the illusion of unlimited can be maintained. When you sign up for wired internet, you don't ever get an unlimited plan. It's already assumed that you can use as much data as you like. However, there are very clear brackets of download speeds that cost more or less. The speed you get is the speed you pay for, and that's how things have been working for quite some time. There's no reason why AT&T can't start pursuing a similar model. Putting a data rate cap on low-paying users would be no different than Comcast putting a cap on users in their budget cable Internet plan. People are seeing these threats as "against the consumer" and "typical evil corporation" when in reality they are just planning on doing what the rest of the wired Internet world has been doing for years.

So, while Net Neutrality may cause this to happen, it will end up happening regardless of Net Neutrality laws being passed. Data will always be a scarce resource, becuase no matter how fast you manage to get the data to users, someone will build software that requires the full potential of whatever data rate you can dream up. Net Neutrality will just force wireless providers to make an already scarce resource even scarcer, making users who wouldn't need to pay more for speed spend more money just to support the small-time users who won'n need the bandwidth anyways. This just seems like a big waste to me.