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Tuesday, September 22, 2009

Net Neutrality in wireless

Another quick post.

I generally find it too hard to get worked-up about net neutrality, as in competitive markets everything tends to sort itself out. In the UK I have a choice of mobile broadband providers - some open to all content/apps, some more restrictive, with an array of price plans, coverage and customer service. I choose which I like.

The US tends to be more complex, because of the relative lack of true nationwide competition, and the barriers to consumers having (or trialling) multiple service providers, because of a lack of contract-free prepaid offers. It's much more difficult to exercise choice if you're locked into a 2-year monthly contract with onerous penalty exit clauses.

One solution may be for the FCC to impose a trial region (state?) for true open-access, let it run for 24 months and scrutinise the impact on user behaviour, network management, congestion and so forth. However, this would need to be imposed *after* network build-out, to give a true apples-for-apples comparison with differentiated-service territories. Even then, it would be necessary to monitor ongoing opex and operations to ensure a "fair fight".

The observation I'd make is that there appears to be clear consumer appetite for broadband pipes, even if they sometimes get congested. Another option could be that some form of naked and unmanaged pipe should be made available on a mandatory basis - perhaps as a % of total capacity in the air & backhaul, so customers could opt for best-efforts if they wanted, versus a fully-managed virtual partition of the rest of the network.


Jane Montgomery said...

While I would agree with you that everything tends to sort itself out, US legislative efforts to promote a free and fair market have sometimes created more problems than they've solved. Corporate responses to (and circumvention of) FCC and/or SEC policy has impacted all aspects of network operation and, as a result, consumer behavior.

Your second suggestion is much more promising than the first; I don't see how a trial region would be effective unless it were covering the entire country. (Even California, which is as good a microcosm of the US as any, would probably not be sufficiently representative of the whole.) On the other hand, the portion of users who want more mobile broadband would certainly pay for extra pipe.

There is also, unfortunately enough, a notion in the US that associates prepaid plans with lower-class living. It would be interesting to see if prepaid plans could be made attractive to urban professionals.

Anonymous said...

"Onerous" penalty exit clauses?

What planet are you from?

In the UK, if you want to upgrade from a 3G iphone to the 3Gs iphone --- you have to pay the rest of your iphone contract off.

Quite a few European countries are like that --- they don't have ETF's.

Dean Bubley said...

Jane - I think part of the problem in North America is around consumer perception of prepaid, but it's also down to a lack of willingness by the carriers to promote it.

This is understandable - I'd rather have a subscription business than one based on one-off transactions, but at a certain point it's necessary to grow the market. I was having this argument the other day with a North American WiFi operator, which fails to understand that many customers *want* one-off transactions.

In other services businesses, you get a choice - you can have an ongoing account with a local taxi firm, or just hail one a cab the street.

The way to promote this to "urban professionals" is similar to the way you see 3G modems sold here: You get a USB dongle and say 10GB "preloaded" in a box in the store - no contract, no messing-about, it's just "broadband on a stick", sold shrink-wrapped.

It's also important to have very easy & accessible methods for topping up prepaid, eg at every supermarket & ATM machine.

Anonymous - nobody forced you to buy a subsidised iPhone on a long contract (18/24 months). O2 sell them prepaid as well, currently £342 for the 3G and £440 for the 3GS, both with 12 months data included.

Although I'd agree that O2 should offer a 12-month contract option as well, for people who are likely to want to upgrade as soon as the new ones come out.

But think that's bad? In Canada, Rogers sell phones on a 3-year term....

Anonymous said...


As you stated it, nobody forces you to sign a contract.

So if you sign a contract in the US, you have 30 days to get out without penalty and pay a pro-rated ETF after the initial 30 days to get out of contract.

In other countries, you may have to pay off the rest of your contract in order to get out of your mobile contract.

I am a Canadian, I know about 3 year contracts and I know that on a max scale you can get nailed with $700-800 to get out of mobile contract. That's onerous indeed.

So tell me how do you justify your claim that the American system has onerous penalty exit clauses.

Örn Orrason said...

Net neutrality in the air will be of no benefit to anyone. It will change users behaviour and the air will become like the congested roads. There is a limit to the capacity that the spectrum can carry and if users and application providers don't learn to use it in an efficient way we will all have bad QoS. Now the service providers will expand and densify the networks like crazy and the high investment cost will have to be paid by the users. This will raise subscription prices and these services will not be affordable by everyone.

Believe me, I have have run a network, both fixed and wireless and can see this from the inside and out as well as from outside in.

Plastic Card said...

This is a very good idea for the different devices.In my point of view the America have a lot of technology like this as well.

But you are also talking about to the sign contract so i think you never do it when you don't have full knowledge about this, that how you survive this.