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Not Neutrality?: U.S. Weighs Options for Turbo-Boosting Nation's Broadband into the 21st Century

International governments and ISPs gather at Columbia University to discuss speeds and limits of data networks
Internet,IP,network,traffic



© PETER NGUYEN, VIA ISTOCKPHOTO.COM

The Internet has ushered in an era of largely unfettered access to a wide variety of information. Yet, although so much of what the Internet has to offer is gratis, access to the Internet itself has never been free. This dichotomy lies at the heart of the prolonged and hairy "net neutrality" debate over what Internet service providers (ISPs) should charge for their services and what role those companies should play in managing the flow of information over their infrastructures.

Flat-rate versus tiered-pricing structures, data equality versus prioritized content—the arguments rage on in the U.S. with no end in sight, even as other high-tech countries, South Korea in particular, claim to successfully moved beyond the issue.

Full speed ahead in South Korea
South Korea, regarded as the world's leading country in terms of making high-speed broadband Internet access available to its 50 million citizens, offers basic and premium network access to broadband subscribers, Tae-Yol Yoo, executive vice president of Korea Telecom (KT), said October 15 during a telecommunications forum The State of Telecom—2010 at Columbia University in New York City. "If somebody wants to load some premium content (such as a video), they can do it on the premium network," he said. "Of course, they pay for it."

Net neutrality (flat-rate pricing and equal priority status given to all data) was not a successful business model for KT, Yoo said. KT tried usage-based pricing, where subscribers paid for the amount of bandwidth they consumed, but abandoned that effort two years ago, in part because 5 percent of Internet users in that country were hogging 50 percent of all Internet bandwidth. These super users were slowing down traffic for everyone else, making other customers less likely to use (and pay for) Internet access.

Instead KT separated its Internet backbone into a premium service that functions like a fast-paced superhighway for video, multimedia and other heavy traffic, and a basic service for most normal users. As the name would imply, premium customers pay more for use of the service. In return, KT assures them that it will provide data transfers at a particular speed.

The cost of KT's premium service? Roughly $28 per month. Yoo said his company must keep prices low due to competition from the country's two other major telecommunications companies.

South Korea has ranked first for the past three years in global broadband quality surveys conducted jointly by the University of Oxford's Saïd Business School and Cisco Systems, the latest of which was released last week. Nearly 100 percent of the country's 16.7 million households are broadband subscribers. More than 80 percent of the country currently has access to broadband speeds of 100 megabits per second, Yoo said. Average speeds across the country, according to the Saïd–Cisco study, are 33 megabits-per-second for download and about 17 megabits-per-second for uploads.

The South Korean government is promising to deliver one gigabit-per-second network connection speeds for fixed-line (as opposed to wireless) broadband to every home within three years, according to Yoo. One way it plans to meet this lofty goal is to build out its fiber-optic infrastructure. Today, more than half of broadband lines are fiber-optic cable, the rest are slower copper wire. Another important component of South Korea's broadband delivery strategy (for both fixed lines and wireless) is to offload as much data traffic as possible from its main infrastructure onto microcell or femtocell networks located in homes and local businesses.

Stuck in neutral
In the U.S., where the net neutrality debate is still very much alive, about 75 percent of households have a broadband connection and those connections have average download speeds of about 9.6 megabits per second and upload speeds of about two megabits per second, according to the Saïd–Cisco study. (A study released in September by the U.S. Government Accountability Office, or GAO, estimated that more than 90 percent of U.S. households have broadband access.) Either way, both studies rank the U.S. 15th among developed nations in terms of universal broadband access.

The U.S.'s performance is the result of a number of factors, not the least of which is the country's physical size. The U.S. has more broadband subscriber lines than any other country, but it also has a lot more territory to cover than Japan, which is number two in terms of broadband subscriber lines, according to the GAO report. Japan, however, is about the size of California. Likewise, top-ranked South Korea's infrastructure needs to cover a landmass only slightly larger than Indiana.

The greater impediments to the U.S.'s successful delivery of high-speed broadband, however, are political and economic. The Federal Communications Commission has incomplete authority to manage the broadband market—thanks to its 2002 decision to classify the Internet as an "information service" rather "telecommunication service," the latter of which the agency would have been able to control as part of the Telecommunications Act of 1996. This opened up the courts to shoot down the FCC's efforts to enforce net neutrality and keep Internet providers from limiting Web traffic, as the U.S. Court of Appeals for the District of Columbia Circuit did in April when it ruled in favor of Comcast. The FCC had objected to Comcast's blocking of subscribers' access to peer-to-peer software used to view bandwidth-hungry video.

ISP nightmares
What really scares ISPs is the potential that they would have to invest in a more robust infrastructure to support a steep increase in Internet traffic, without any reassurance that they could make more money from implementing new fiber optics. Internet protocol–based traffic will increase 4.3 fold between 2009 and 2014 worldwide, to the point where 750 exabytes (an exabyte is one billion gigabytes) of data per month are coursing through the Net, Robert Pepper, Cisco's vice president of global technology policy, said at the telecommunications forum. North America will generate the most Internet protocol (IP) traffic by 2014—19 exabytes per month, according to Pepper.

Much of this growth will be driven by video downloads. People cannot get enough of Web-based video, whether it is downloaded to their televisions, computers or mobile phones, Pepper said, adding, "Video to the PC is big, and video to the TV is growing."

Such predictions do not sit well with ISPs, which are reluctant to make large investments in infrastructure since the 2001 dot-com meltdown left many of them with lots of capacity to access the Internet but not nearly as many companies to pay for that access. Telecommunications companies are operating at a time when they are struggling to find new means of revenue growth, despite the demand for faster and more reliable fixed and mobile access to the Internet, Yves Gassot, CEO of French telecom research firm IDATE, said at the Columbia forum.

Time Warner Cable and other ISPs want to increase broadband capacity in step with demand. "From our perspective, it has to be driven by what consumers actually want, not what we hope they might want," Steve Teplitz, senior vice president of government relations for Time Warner, the U.S.'s second largest cable operator and third largest ISP, said at the confab.

Also weighing down ISPs is the FCC's National Broadband Plan, mandated by Congress last year as part of the American Recovery and Reinvestment Act. The plan aims to provide 100 million U.S. households with access to 100-megabit-per-second Internet connections by 2020.

"We think the government is ill-suited to make judgments regarding what infrastructure is required and the capacity level," Teplitz said. Whereas 100 megabits per second has widely been touted as a target broadband access speed, "maybe we'll learn that 100 megabits per second isn't enough. The government shouldn't decide what the speeds are."

Not surprisingly, Verizon has the same view as its ISP competitor. Looking even further out, Link Hoewing, Verizon's vice president of Internet and technology policy, said at the Columbia conclave, "Given the usage we're seeing, we can't justify gigabit delivery and the costs that would entail."

But ISP attempts to paint themselves as victims of increased demand for their services are hard to figure. Last year, Verizon's average revenue per user per month (ARPU) for data services grew by 17.9 percent to $15.20 compared with 2008 due to increased use of mobile broadband, e-mail and messaging offerings. The company's wireless data revenue grew 31 percent. (AT&T's wireless data revenue grew 33 percent in 2009.) (pdf) Likewise, Time Warner saw an increase in revenue for both its residential and commercial high-speed data services from 2008 to 2009, according to the company's 2009 annual report (pdf). Time Warner also reported that the costs to deliver high-speed data services decreased during that same time period.

Possible solutions
There are several approaches that government, industry and even Internet and wireless users can take (and in many cases have already taken) to avoid a deadlock over net neutrality and infrastructure investments. These include offloading data traffic from carrier networks onto personal networks, the availability of vacant broadcast spectrum, or "white spaces," over which wireless devices can connect, and more flexible approaches to pricing.

"In most industries, when customers want more of your product, it's better for you," Columbia University Law School professor Tim Wu said during the forum. "Yet carriers complain about demand for their product."

Telecom companies, including KT, AT&T and Verizon, have been pushing customers to install microcell, picocell or femtocell base stations in their homes and offices that that allow subscribers to offload network traffic. "This is probably the most effective way for carriers to meet demand without spending too much on their infrastructure," Nick Karter, a senior director of global business development and product management at Qualcomm, said at the forum. Newer smart phones, including the iPhone, are designed to connect to the Net via wi-fi whenever possible to prevent strain on AT&T's wireless network. This is a practical approach, Cisco's Pepper said, given that more than 90 percent of mobile device use takes place indoors, where wireless access points and personal base stations can be installed.

The FCC is allowing unlicensed smart phones, computers and other wireless devices to connect to the Internet via white spaces, a move that will also help remove traffic from wireless networks. Spectrum is perhaps the most important resource for broadband, Phoebe Yang, senior advisor to the FCC chairman on broadband, said at the gathering. How this works out in practice will take some time. It takes anywhere from six to 13 years to repurpose spectrum from one use to another, Yang added.

Another option is for ISPs to develop pricing models that address both their concerns as well as those of their customers. ISPs might want to allow their customers to choose how their monthly bandwidth is allocated. Those who prioritize access to multimedia-heavy sites such as YouTube or Hulu would be charged accordingly, as would subscribers who mostly use the Internet for e-mail or online shopping. Still another option offered by some software-makers that telecommunications companies use to manage subscriber accounts and billing is to design a "turbo boost" button into different Web pages that users can click when they want to increase their connectivity speed temporarily, for example to watch a streaming video or download a movie. Much like cable companies charge for on-demand programs, turbo-boost use could be added to the subscriber's monthly bill.

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