A recent post from Rob at CrabAppleLane pointed me to this Newsweek article on the potential for multi-tier service priority over the Internet. At first it didn't hit me, but here's the money quote from an AT&T rep: "We're building a new capacity, and we have the right to charge people to use it,".
Flashback about four years ago and a comment like that from a telecom rep would be grounds for committing him to a psychiatric ward. In the late '90s there was a huge increase in network infrastructure and capacity. An absurd increase. What drove it was telecom deregulation and the dotcom frenzy. It was a "The future is here baby and it's the Internet and it's gonna be huge and we gotta get in now and we'll make millions" moment.
Except it wasn't, for a number of reasons. Without getting into that, one of the results was a huge glut of capacity in network services, and telecoms that had laid out massive sums of money and expected to have customers beating down the door suddenly were desperate for customers.
I was buying network services at the time and I saw prices drop to from 1/2 to 1/3 of late '90s prices by 2003. I actually felt sorry for the telecom reps that would come through my door. You probably would also as they were really under the gun and the entire industry was downsizing and in turmoil. The company I worked for spent about $25,000 a month with AT&T (not huge, but nothing to sneeze at either) for network services in 2004 and I had eight, count them, eight, sales reps in the span of less than a year. I saw similar turmoil at all the other telecoms. It was truly ugly, for everyone. The promised brave new world hadn't materialized and the financial piper had come a calling. Telecom employees and investors both took one hell of a beating from 2000 to 2004.
Is "We're building a new capacity, and we have the right to charge people to use it," a sign that those days are over? I don't know and I'm going fishing this weekend, so I won't get deeper into it until next week. It's interesting though, a telecom rep using "capacity" and "charge for it" in the same sentence. I've noticed an explosion of audio and video files on websites in the past year and that is being driven by increased broadband access into the home. That has certainly absorbed some (a large?) amount of the excess capacity built in the late '90s. What the AT&T rep is talking about is packet prioritization. Packet prioritization is only needed on networks where congestion or some other delay between nodes is an issue. No delay, no need to prioritize. It seems AT&T is anticipating that demand is going to exceed capacity sometime soon. Talk about things that make you go hmmm...It may be time to start looking at telecom investments again....geez, I can't believe I just wrote that.
As far as the main point of the article goes, I wouldn't want to see a two tier Internet pricing scheme but economics will determine if that comes to be. The last thing we need to see is Congress passing some law determining what telecoms can charge for their part of the Internet. TANSTAAFL, people, TANSTAAFL. We've seen lower and lower costs for telecom services the last 5 years and it had to, at some point, hit bottom and start to creep up again. The Internet may be just an abstract concept to some, but where the rubber meets the road there are expensive (and very cool) routers to be bought, millions of miles of fiber optic and copper to be laid and maintained, and technicians, engineers (and of course, many others) and investors that all expect and deserve to be paid for doing their part.
There may be a role for Congress in what could be coming changes to Internet pricing, but call me skeptical to say the least. Over the last twenty years or so, I've bought more than $50 million in goods and services for companies that I've worked for and if there's one thing I've learned (besides TANSTAAFL), it's you get what you pay for. Want to really kill the Internet? Start dictating to the telecom carriers that make it up, what and how they can charge for it.