Telco’s, VoIP & Online Majors & Two Tiered Internet

Tech Memeorandum points to a very timely article on the Telco's move to setup a two tiered internet. The article points out that the telco majors wants the right to create a two-tiered Internet, where the telecom carriers' own Internet services would be transmitted faster and more efficiently than those of their competitors - earlier it was speculated that QoS could be used to assign different priorities based on the source carrier/media.The online majors fear such a move would give telecommunications companies too much control over a fast-growing part of the Internet.Telcos are working on ways to deliver broadcast-quality television over the Internet. Telco’s are offering their own advanced Internet video services to their customers, & wanting to charge consumers a premium fee to connect to the higher-speed Internet. Telco’s also want websites to be charged a premium to offer their video to consumers on the higher-speed Internet. That could mean that a company like Yahoo might have to pay AT&T to send high-quality video to AT&T subscribers. Telcos think that since they are spending billions of dollars to build new fiber-optic networks that can carry more data, they are entitled to give their own offerings the bulk of Internet bandwidth, and to charge others for higher-speed access. Through DSL currently they telcos provide internet access but cable TV companies are providing stiff competition. Telcos now want to provide Internet-based television. They want to offer all the programs now available on cable, as well as movie and game trailers, and full-length films. Through new technical solutions they want to overcome limitations in providing such services and they need to build additional network capacity to handle these. The heart of the matter is that most content providers want equal access to the premium, higher-speed bandwidth, while telecom carriers want the right to treat this premium pipeline as a private Internet. The range of services that could thus be offered could alarm the online majors.
As we saw earlier, Comcast sees the future of the company hinging on the success of video on demand, which lets customers choose what they want to watch and when to watch it. "The personalization of TV is the future," said Roberts,CEO of Comcast recently. He believes that a tipping point for digital cable may come next year when he thinks interactive TV will start to take off.
Four large industries - computer makers, consumer-electronics companies, telecommunications providers and entertainment creatorswill feel the shock waves of rapidly developing change in the way the world consumes home entertainment. Telco's are making bold moves, ranging from multibillion-dollar projects to compete with their cable rivals in video distribution, to a flurry of mergers with cellular and long-distance outfits. Both cable and phone companies now offer a "triple play" - phone, video and broadband 'Net access - bundled into a single bill. Add wireless, and you have a quadruple play. Ultimately, consumers will reap the rewards of digital convergence, the ability to gain access to any type of media - music, movies, photographs, television - at the push of a button. Today, for the average cable or satellite TV subscriber, the set-top box provides access to, well, just TV. ISP's may begin to provide add-on services, such as higher speed movie downloads, or enhanced online gaming, for additional fees paid by consumer.As subscribers increase their use of latency sensitive and graphic rich traffic, broadband and cable providers could give network precedence to their own revenue-generating services. I earlier wrote that unless VoIP players pay fees to the network provider, there is no reason the operator should not make the service a lower priority on the network.Network neutrality is the answer but enforcing this may be fraught with difficulties – Broadband and cable players are beginning to offer several services and may claim that their configurations may be optimized for this which by the way also has this tagging built –in. The online majors have raised the issue of preferential treatment - This non-discrimination principle works by recognizing a distinction between local network restrictions, which are generally allowable, and inter-network restrictions,which should be viewed as suspect - More on this topic can be found here. The issue looks tricky with logic and reason telling that telecom and cable players may prevail but history tells that innovators and swift players move fastly and more cleverly and establish themselves.