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Monetizing the Internet

Susan Crawford

What would duopoly providers of internet access really like to have? They'd really like to be paid for providing non-commodity services. They'd really like to be rewarded for running the network, top to bottom.

"But that's not possible," you say. No provider can tell one packet from another. Providers can only block the ports used by applications they don't like, and that's a clumsy, unwinnable arms race. The applications can always switch to common and useful ports, and no provider wants to alienate its subscriber base.

But what if providers could inspect the contents of packets, without using too much computational power, and discriminate among applications? "Naah," you say. "They can't possibly do that."

This article suggests that providers hope to monetize the internet someday, through "deep packet inspection" that would make mammoth walled gardens possible. In a nutshell, the described set of standards (called "IMS," or "IP Multimedia Subsystem") would make circuit-switched-like control possible for packet-switched networks. It's been under development since 1998, and it makes billing and signaling possible for IP networks — it makes it possible to monetize the internet.

IMS is being inserted (somehow, the article isn't clear how) into ITU's overarching plans for the Next Generation Network (NGN). "Hah," you say. "That means it will never happen."

But if you're feeling particularly bleak following the FCC's moves late last week, the idea of the IMS should make you feel even bleaker. If all telecom agencies around the world read their broad statutes to allow for (and, indeed, encourage) customized internet access, and vendors of things like outsourced emergency services and CALEA compliance keep pushing along, then (as the author of the article says) you can see IMS as "part of a huge 3G gamble by the mobile telephony operators around the world, with assistance from traditional telephony vendors, to obtain control of the vast new Internet medium and monetize it."

The author concludes:

This is the emerging, consensus view: That IMS will let broadband industry vendors and operators put a control layer and a cash register over the Internet and creatively charge for it. It is this monetization of the Internet that makes IMS extremely appealing to all communications operators and all but guarantees that it, and its numerous derivatives, are likely to spread.

Audacious. Maybe impossible. But getting incrementally more likely by the day.

Notice what UBS said about the extremely weak and watery network neutrality principles the FCC plans to believe in:

“[N]etwork providers risk being disintermediated,” UBS warned in a research note [issued in response to the neutrality principles]: “We believe that network neutrality could tie the carriers' hands in their efforts to avoid being disintermediated from higher-value services for a portion of their target market.”

UBS is worried about "content providers" "free-riding" on the carriers' networks. In turn, we should be worried about the rest of us getting a chance to use an open, non-monetized internet.

By Susan Crawford, Professor, Cardozo Law School in New York City
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Re: Monetizing the Internet Mark Smith  –  Aug 10, 2005 9:06 PM PDT

"UBS is worried about "content providers" "free-riding" on the carriers' networks. In turn, we should be worried about the rest of us getting a chance to use an open, non-monetized internet."

Is it just me, or is it blatently obvious that a fundamental fact about Telco networks has been or chosen to be ignored.

Content providers pay to have access to the network, and they pay an amount that is in approximate portion to how much traffic they're going to generate on the network.

Customers pay to have access to the network, and they pay an amount in approximate portion to how much traffic they're going to generate on the network.

The network isn't free to use, and nobody is getting a free ride on it.

Re: Monetizing the Internet steggy  –  Aug 29, 2005 12:54 AM PDT

sure, we all pay for the basic privilege to access the network. That does not mean that network providers wouldn't like to charge for 'other' services. Why wouldn't they? The monetization of the internet, for no other purpose than to collect more money from me and you for accessing websites outside the "Walled Garden".

What would prevent network providers from charging for access to specific types of internet services like IM, IRC, online gaming or VOIP services.

Re: Monetizing the Internet Mark Smith  –  Aug 30, 2005 2:48 AM PDT

sure, we all pay for the basic privilege to access the network. That does not mean that network providers wouldn't like to charge for 'other' services.

I didn't say it was. I'd like to be able to charge for every word I say or type too, every breath I breath, and every letter I open. I accept that I can't, or rather that it isn't feasible to, so I don't waste my time trying. UBS seem to be saying that they think it is possible and should be done, as though all telcos are making a loss on selling network capacity. If they are making a loss like that, it is only because they've decided to price their product at less than it costs then to provide it. That's a bad business decision, and not caused by some inherent way the Internet works.

What UBS are saying is like saying that because the second hand car industry is very competitive and a commodity industry, no car dealers are making money, so they only way that they can is to charge the new owner of the car for the milage as well.

I What would prevent network providers from charging for access to specific types of internet services like IM, IRC, online gaming or VOIP services.

IPsec, standard part of IPv6. Once you can't see what the traffic is you can't classify it, and you then can't charge for it. If they say they'll block IPsec, people will change to telcos who don't.

What the carriers don't realise is that they have an old world "application in the network" mentality, and still have this mentality that they must be able to charge for every use of this "application network", rather than just charging for access to it, and an approximate amount based on the average traffic load those customers will use or generate.

The Internet architecture is completely the opposite to the "old world telco" model. Applications don't exist in the network, they only exist at the edge. The web servers that we access are not running on the routers within the network, and neither are the clients. The network is just a dumb packet delivery system, with the goal to attempt to make a best effort at deliverying the packets to the edge sources and sinks.

"Old world" Telcos don't like that architecture because it doesn't make the end users depend on the telco for (or ask "permission to") access the Internet applications. In the past they were able to, and were able to charge for access to each and every one of those applications, probably at a huge profit margin, as the customer was locked in and had no choice, other than the choice of not using the application at all.

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