Telefonica, network neutrality and billing

Telefonica is a company that tends to release news to measure the position of the market and then move forward (or not) depending on the feedback that they get. This is specially true when talking about bad news for customers.

Another speciality of Telefonica is to mix concepts.

Let’s go step by step.

First, Telefonica started last week suggestion that those who download more, should pay more because the present billing model was unsustainable, specially with the deployment of NGNs. But… when this will happen? Because later last week Telefonica announced that they may hold investment in NGNs until there are applications that take advantage of them. The egg or the hen?

This debate about flat rates and data traffic is something that has been discussed cyclically and I believe that this will change in the mid to long term (and in the short term in countries like the UK, where Telefonica announced that flat rates have a download limit). The issue is that when flat rates where released in the last decade, the network was dimensioned to cope with them without problems. Thus, they could offer them and this was good from the commercial point of view.

However, I believe that the tendency is to move towards billing models similar to the broadband mobile ones in order to reduce the fact that a very limited number of users consumes most of the network resources. This means that some people pay less and most of the people pay more than they should. To balance this, there are several ways:

  • to pay when a specific volume is exceeded
  • to reduce the line rate when a specific volume is exceeded
  • to pay depending on your average traffic consumption

We are happy to pay other services this way…

This is one point that has nothing to do with network neutrality, but with the commercial strategies of network operators and their marketing policies.

Another debate that is gaining momentum is traffic prioritization and service differentiation. This does affect network neutrality and should be very carefully analyzed in order to find the best compromise.

Now telco operators, specially incumbents, see that the value that they are adding to the value chain is relatively low and that business models that generate a lot of revenue are based on top of OSI network layers: applications. Thus, they want to make content providers pay to use their infrastructures to serve to their final customers and prioritize or limit traffic depending on how much they pay… This is bad news for network neutrality and is something that the entire society should fight against, because the Internet has been until today application independent.

To end up this entry about the difference between the flat rates commercial strategy and network neutrality, here you have a link if you want to comment about network neutrality:

http://commons.oreilly.com/wiki/index.php/Network_Neutrality:_Classification_of_Arguments_For_and_Against

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