Showing posts with label Telecommunication. Show all posts
Showing posts with label Telecommunication. Show all posts

May 2, 2010

Pitting the Web's Users Against Its Gatekeepers - NYTimes.com

Logo for NetNeutralityImage via Wikipedia

BERLIN — With the majority of Internet traffic expected to shift to congestion-prone mobile networks, there is growing debate on both sides of the Atlantic about whether operators of the networks should be allowed to treat Web users differently, based on the users’ consumption.

Proponents of the current system — called network neutrality — see that principle as a kind of civil rights declaration of the digital age, one that requires the gatekeepers of the global Internet to treat all users equally, regardless of application, source or download limit.

While operators have never been required to maintain neutrality, the industry has created that expectation largely by charging users a flat rate for unlimited Internet access.

But there is a big flaw in the concept, according to the operators: Networks have never been neutral. They have always been actively managed to some extent since their inception in the 1980s to ensure that all customers get a basic “best effort” level of service.

If an operator could not restrain bandwidth hogs, who typically make up 15 percent of customers but who generate 80 percent of the traffic, most Internet users would experience poor service.

“The Internet has never been a neutral environment left to develop freely on a first-come, first-serve basis,” said Stuart Orr, the head of the telecommunications group in Europe, Africa and Latin America for Accenture, a U.S. software services consultant.

The arcane issue of network management, and the free speech and competition issues it raises, has taken on broader political importance as operators have increasingly micromanaged the flow of data, favoring some users over others as they have sought to handle exploding levels of traffic or deliver premium broadband service at guaranteed speeds to heavy users and businesses.

In the United States, users of the BitTorrent file-sharing service, a large generator of broadband traffic, last year challenged a cable operator, Comcast, that had blocked the service by identifying and disabling a common protocol used by BitTorrent users.

The Federal Communications Commission ordered Comcast to stop the blocking. Comcast challenged the ruling. On April 6, an appeals court in Washington sided with the operator, saying the F.C.C. could not tell Comcast how to manage its network.

In Brussels, the European commissioner for the digital agenda, Neelie Kroes, plans to hold a public consultation on net neutrality this summer, which could lead to a push for new laws or regulations for operators.

Earlier this year, Ms. Kroes warned mobile operators not to block or hinder Internet voice services like Skype from their networks.

Operators are worried that any rigid legal mandate that forced them to observe net neutrality standards would be unworkable and make the economics of high-speed wireless broadband less attractive, which could limit future investment and improvement to the networks.

“We have no interest as an industry in policing individual surfing habits or acting as the gatekeeper for information,” said Frederic Gastaldo, the head of strategy and innovation at Swisscom. “Historically, our industry has resisted attempts to force operators to act as the personal gatekeepers of information. That would be a very negative marketing approach. However, customers who do excessively use our data network are a big challenge for us.”

Congestion is more problematic for mobile than landline broadband operators because wireless broadband capacity is limited by the ability of individual base stations to process the Web activities of hundreds of users simultaneously. The more users per station, the less performance for each user.

To avoid bottlenecks, operators use techniques like “traffic shaping,” which sorts traffic to ensure basic service for all, or “throttling,” which applies a general brake on large streams of data.

Kabel Deutschland, the largest German cable TV operator, has one million broadband customers. Its coaxial and glass-fiber network is so far able to satisfy all customers without restrictions, said Georg Merdian, director of the company’s infrastructure regulation.

But he said that the number of its broadband customers was doubling each year. “We anticipate we will soon have to use some kind of management techniques,” Mr. Merdian said.

For most mobile operators, traffic management is a fact of life.

Vodafone, one of the largest mobile operators in Europe and a part owner of Verizon Wireless, the No.1 wireless operator in America, routinely alerts its customers when they exceed the download limits of their service packages.Like all other operators, Vodafone uses sophisticated software that can pluck users or applications from the digital clamor.

“We use a form of network management to say, ‘I’m sorry, you are not going to be able to get the same level of service unless you decide to top up,”’ said Richard Feasey, Vodafone’s public policy director in London.

As data traffic levels rise, some executives, like César Alierta, the chairman and chief executive of the Spanish operator Telefónica, and Vittorio Colao, the Vodafone chief executive, have floated the idea of charging not only customers but also Web sites that generate lots of data traffic, like Google, Amazon and Facebook, for faster, guaranteed service.

Web businesses, which depend on fast Internet paid for by individual customers, oppose the idea and have been pushing lawmakers in Brussels and Washington to adopt restrictions preventing operators from making deals with content providers.

Prohibitions like that would make an operator’s business untenable, eventually reducing cable and phone networks to unprofitable, crowded data freeways, said Robert Mourik, the director of Telefónica’s regulatory policy in Europe.

“We have an explosion of traffic, but our revenues have not been growing at the same pace or staying flat,” Mr. Mourik said. “We are not looking at content on the Internet. We are not trying to police the network. What we are looking to do are commercial deals.”

Whether operators can successfully sell preferred Internet access to big Web businesses remains to be seen. Such a move would drastically alter the economics of the Internet, forcing content providers, in effect, to pay a toll, and perhaps a heavy toll, for access.

Naturally, none of the big Web sites are interested in doing that.

In February at an industry convention in Barcelona, Eric Schmidt, the chief executive of Google, was asked to comment on statements made by Mr. Colao of Vodafone, who had called for the right to clinch commercial deals with big Web businesses like Google.

Mr. Schmidt, who during a speech that day had stressed Google’s role in helping network operators build their wireless broadband businesses by attracting consumers to the mobile Web, declined to comment, adding that Mr. Colao was a friend.

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Apr 18, 2010

Getting What You Pay for on the Mobile Internet - NYTimes.com

TeliaSonera ABImage via Wikipedia

BERLIN — When TeliaSonera, the Nordic telecommunications operator, switched on the world’s fastest wireless network last December, customers quickly ratcheted up their consumption of mobile data tenfold.

Besides reaffirming the soundness of the operator’s investment in the new technology, called Long Term Evolution, or L.T.E., the data smorgasbord confirmed another truism: the days of flat-rate mobile data rates are probably drawing to a close.

All-you-can-eat plans — as they are known in the industry — were introduced when the mobile Web was in its infancy and demand was profitable and manageable. But with traffic booming, reflecting the growing popularity of smartphones, social networking and downloading music and video, network operators fear that flat-rate plans will eat into profits or even fail to cover costs.

The result is likely to be higher prices for consumers.

“Finding a way to make mobile profitable in the medium and long term is one of the industry’s big priorities,” said Mike Roberts, an analyst at Informa Telecoms & Media in Chapel Hill, North Carolina. “We are now at the early stages of figuring out a way forward.”

Even before it spent 500 million Swedish kronor, or $70 million, to switch on its L.T.E. network last year, TeliaSonera began introducing pricing plans with download limits as advances in the third-generation technology that preceded L.T.E. led to an explosion in traffic.

“In 2009, the mobile data on our network in Sweden increased by 200 percent but the number of subscribers increased just 60 percent,” said Anna Augustson, vice president for communications mobility services at TeliaSonera in Stockholm. “Clearly, it was not a sustainable model from a business perspective to have a single, flat rate.”

Last year, TeliaSonera began selling a series of 3G mobile broadband data plans with monthly limits ranging from 2 gigabytes to 20 gigabytes a month, for 39 to 319 kronor.

TeliaSonera is selling an introductory L.T.E. network plan with unlimited downloads for 4 kronor a month. But by July, the operator plans to limit downloads to 30 gigabytes and charge 599 kronor for the service, almost twice the cost of its 20-gigabyte 3G plan.

In exchange, TeliaSonera’s L.T.E. users will get download speeds of 20 to 40 megabits a second, about 10 times those on its 3G network.

“We feel it is important for our customers to have a choice,” Ms. Augustson said. Instead of all you can eat, the new industry mantra, she said, is: “You get what you pay for.”

At least one major operator is doing likewise. In Spain last November, Vodafone, the largest European carrier, introduced Calidad Oro — Gold Quality — a premium plan for business users for €49, or $66, a month that guarantees fast service without monthly limits on downloads.

The advent of tiered pricing for mobile broadband is new, but, in a sense, it is also a throwback to the early days of the technology, when operators imposed often unrealistically high download fees that scared off consumers and delayed the development of the mobile Web.

Eventually, operators began selling all-you-can-eat plans, first in the United States and then in Europe, to ease consumer angst about running up big bills. The plans attracted users and helped speed the technology’s development. Now, some operators are moving toward sophisticated forms of metered pricing based on speed and consumption, striving to balance profitability and consumer satisfaction.

Soon, the biggest operators are likely to follow with plans that redefine how most consumers purchase wireless data. Top executives at AT&T, Verizon Wireless, Vodafone, Deutsche Telekom and Telefónica have all recently called on the industry to move away from flat-rate data plans, although only Vodafone so far has attempted a tiered pricing plan.

At AT&T, the No.2 wireless carrier in the United States, after Verizon Wireless, the use of mobile data surged 5,000 percent from 2007 through 2009 after the operator became the exclusive U.S. seller of Apple’s iPhone, which has helped popularize the mobile Web. But it has also strained AT&T’s wireless network at peak times in urban areas in New York and California.

“In light of the limited natural resource of spectrum, we have to look at the ways of conserving spectrum,” said Mark Siegel, an AT&T spokesman in Atlanta. “We have had to invest billions in our network to keep ahead of this demand. This may also require a different way of looking at pricing on the part of the industry.”

Operators do not disclose whether their mobile data services are profitable, although analysts say they are and point to the industrywide move to build L.T.E. networks, which are essentially mobile broadband networks, as the future for a business where revenue from voice services will play an ever-shrinking role.

Mobile data traffic levels are expected to continue climbing as the use of bandwidth-eating smartphones increases and operators around the world follow TeliaSonera’s example and install their own L.T.E. high-speed networks.

The number of mobile broadband users worldwide is forecast to increase 55 percent this year, to 437.8 million from 282.5 million in December 2009, according to Informa, the telecommunications research firm. By the end of 2014, the number of mobile broadband users is projected to reach 2.1 billion.

Over the same period, the level of mobile data traffic on the networks of the world’s carriers is expected to rise 22 times, to 15.1 billion gigabytes from 674 million gigabytes. But without changes in pricing, operator revenue will rise 12 percent a year through 2014, according to Informa, just a fraction of the 49 percent projected annual increase in subscribers or the 86 percent annual increase in data traffic.

Operators are just beginning to link the price of a service — in this case mobile broadband — to the costs to a mobile network, said Kenneth Frank, the president of solutions and marketing for Alcatel-Lucent, a network equipment maker. “There is going to be so much creativity about pricing. We are only seeing the beginning,” Mr. Frank said.

Steve Smith, an analyst at Coda Research Consultancy in Guildford, England, said unlimited flat rates would not disappear but would become much more expensive. “Operators will have to work hard to get their tiers ‘right,”’ Mr. Smith said.

Over time, consumers will have many options for buying customized wireless broadband plans, said Pat McCarthy, a vice president for global marketing at Telcordia, a maker of bandwidth management software for operators based in Piscataway, New Jersey. Those may not mean higher costs for the average user, but heavy users may face higher bills.

“The problem with mobile broadband so far has been most of the revenue it has generated has gone to over-the-top Internet content services, not to the operators,” said Mr. McCarthy, who is based in Galway, Ireland. “That’s what they are trying to change.”

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