International Telecommunications Union Suggests New Ties Between Internet Service Providers, Third-Party App Developers

By Gary Kim September 11, 2012

Conflict within any business ecosystem is normal, and the Internet ecosystem is no exception. Access providers argue that immense value creation within the ecosystem does not flow in sufficient measure to access providers who have to supply the infrastructure that makes all the other businesses possible.

Sending party pays” is at the heart of proposals by the European Telecommunications Network Operators Association (ETNO) to create a new charging regime for quality-assured Internet access, alongside the current “best effort” Internet.

The proposal, submitted to the International Telecommunications Union, would create new forms of interconnection agreements for over-the-top service providers who wish to purchase quality of service mechanisms from access providers.

The proposal is obviously contentious since it essentially means third parties would opt to pay service providers for assured service delivery, rather than using the current best effort only model.

Such proposals always raise concerns about network neutrality, two-tiered Internet and competitive concerns.

For starters, though assured delivery is precisely what a content delivery network provides, there is resistance to the notion that such quality of service mechanisms should also be available as a paid service in the access network.

In other words, should a third-party application provider, for example, be able to buy an assured quality service that can prioritize some packets for delivery, to support real-time services? Such a managed service would be functionally similar to an enterprise prioritizing its own traffic so that some applications deemed to have higher value get preferential access to available bandwidth.

An example might be that a salesperson, in the field, working with a prospect, should have priority to the “quoting” engine and inventory databases, compared to a worker who wants to surf the Web or use e-mail.

Service providers like the idea because it creates new revenue. Third-party app providers do not like it because it potentially represents new costs. Some policy advocates worry that such managed services will favor well-heeled providers. The bigger fear is that service providers could favor their own managed services at the expense of third-party providers.

The controversial proposal, it should be noted, does not change the availability of best effort Internet access. It would add a new quality of service feature, essentially a new managed service, which any app provider could purchase.

From a service provider perspective, the QoS service would obviously add to service provider revenue. It would also mean that big users of access bandwidth might become customers of those managed services, generating at least some incremental revenue for service providers.

That would address the perceived disproportionate creation of value and revenue within the broader Internet ecosystem, from an access provider perspective. Suppliers of high-bandwidth apps, such as video streaming services, naturally oppose the notion.

Should such services become available, it might be necessary for streaming services suppliers to spend more money on their own quality-assured services, if key competitors decide to do so. Just as obviously, should all key streaming competitors decide to supply the quality-assured services, any app supplier that does not do so would be at a potential competitive disadvantage.

But that, in the end, only raises operating costs for all video streaming suppliers, for example, while providing no competitive advantage. So the opposition to even optional quality of service capabilities is no surprise.

Edited by Braden Becker

Contributing Editor

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