Carriers may give some 'Net services an edge

by Stephen Lawson

January 17, 2006 —

Some U.S. broadband providers may be moving toward giving preferential treatment to certain content and services on their networks, raising alarms from some corners that consumers and nonpreferred players could lose out.

Carriers maintain that they can make deals to give better than average quality of service to some providers of Internet applications, such as VOIP (voice over Internet Protocol) or movie downloading companies. But critics say the practice could slow down applications that don't have priority and make the carrier the arbiter of what's most appealing on a consumer's broadband connection. Either way, for business and technology reasons, the idea may not fly at all.

All three major U.S. carriers emphasize that they allow their broadband subscribers access to any legal application they choose. The U.S. Federal Communications Commission spelled that out as a policy last August. But by arranging for some applications (including their own) to work better than others over a finite broadband connection, they could give the favored ones a key advantage, critics say.

BellSouth Corp. has been in talks with providers of content and services for several months, according to spokesman Jeff Battcher. Among the potential customers are online gaming companies and providers of downloadable content, including Movielink LLC and Time Warner Inc.'s Warner Bros. Entertainment division.

Such an arrangement could benefit consumers by, for example, dramatically cutting down the time it takes to download a movie, Battcher said. The carrier, which has about 2.7 million broadband subscribers in the Southeastern U.S., isn't selling priority to anyone yet, but it could start doing that tomorrow if it chose to, Battcher said.

AT&T Inc., the new company formed by the merger of SBC Communications and AT&T, already has a deal with Movielink in which the company can provide movie downloads at increased quality and speed over the carrier's network, said AT&T spokesman Dave Pacholczyk.

Verizon Communications Inc. Chief Executive Officer Ivan Seidenberg said last week that he might seek to have Verizon make similar deals, according to a report in the Wall Street Journal. "Verizon offers open and unfettered access to the Internet on its high-speed DSL (Digital Subscriber Line) and fiber networks. To the extent consumers and applications providers require additional speed or security, our networks can provide that too," Verizon spokesman David Fish said in a prepared statement this week.

BellSouth bears the cost of maintaining the network over which other companies, such as VOIP provider Vonage Holdings Corp., deliver services for profit, Battcher said.

"I didn't see Vonage trucks down in New Orleans ... repairing phone lines" after Hurricane Katrina last year, Battcher said. A vendor of services on the Internet will invest in network priority if it wants to provide a better product, he said. Anyone not using that service wouldn't notice a difference in their Internet access, he added.

"We're not limiting anyone's ability to go to any site they want [or] degrading anybody's speed," Battcher said.

However, BellSouth couldn't sell priority to an unlimited number of service providers, he acknowledged. If demand for enhanced quality of service were high enough, the carrier would have to choose which providers got priority, he said. He would not speculate on whether or when that point might be reached, or how BellSouth would then decide which services got priority.

Bruce Kushnick, a founder of the consumer advocacy group Teletruth and a frequent critic of the incumbent carriers, said the concept turns broadband on its head.

"My service shouldn't have a priority system based on what the phone company wants, it should have a priority system based on what I want," Kushnick said. "I should be able to get any service at the speed that [the provider's] servers work," he said. The carriers' real motivation is to give their own VOIP and multimedia services priority while leaving competitive offerings with nothing but best-effort Internet performance, Kushnick believes.

Helping one application or service run better isn't necessarily the benign benefit the carriers say, according to Ovum Ltd. analyst Mark Seery. It could affect end users even if they aren't using the offering that's getting a boost, he said. That's because even though a DSL connection isn't shared among several neighbors as cable Internet service is, the capacity of other parts of the network is shared. A multimedia stream gobbling up bandwidth in the core of a network could slow down other packets, he said.

"When you're using quality of service to implement a priority-based system, someone is always losing," Seery said.

And although it's mostly a consumer issue, enterprises could start to feel the effects as they switch branch offices from leased lines to less expensive DSL, Seery said.

Cable companies might do the same thing, Seery said, but they have been less vocal about it. In addition, they already deliver their own video services in such a way that they won't interfere with the consumer's Internet bandwidth, he added. For DSL providers, the prospect of carrying both IPTV and any Internet application over one pipe may cause more concern for quality, Seery said.

The FCC has left the door open to worries about these proposals because it's been vague about how it would treat them, Seery said. On the one hand, under former FCC Chairman Michael Powell, the agency responded quickly to complaints by Vonage that a carrier was trying to block its service. However, the FCC hasn't made clear whether it would approach unequal quality of service the same way, Seery said. He believes the major broadband providers in the U.S. will try to sell priority on their networks within the next two years, though they may not be allowed to do it.

One provider of an Internet service, 8x8 Inc. Chief Executive Officer Bryan Martin, doesn't think it's a viable strategy for the carriers because companies like his won't pay extra for priority.

"I think you're going to see, basically, no application providers stepping up to supplement what the high-speed Internet providers are already getting in their user fees," said Martin, whose company offers VOIP and video-calling services.

Technologies that help providers of content and services deliver good quality, such as video compression, are evolving so quickly that they won't need assistance from the carriers, Martin said. For example, 8x8 uses its own technology on both the server and the client end to ensure high quality over broadband connections that are sometimes "atrocious," he said.

Still, he objects to the concept on principle.

"It reeks, to me, of overgreedy and overzealous broadband providers," Martin said.

Ultimately, consumers will decide whether the system makes sense, said David McClure, president and chief executive officer of the U.S. Internet Industry Association, a group of Internet service providers and other entities that counts Verizon among its members.

"If consumers cared deeply about that kind of tiered pricing schedule, it's not going to happen, because no broadband provider in their right mind, at this point, is going to risk a significant part of its audience for a small increase in its revenue," McClure said.

IDG News Service