More noise from the telcos that they want a multi-tiered Internet. Watch this space. Paid Content reports from CES:
Verizon CEO is now on the band(width)wagon…in a Q&A at CES, Verizon CEO Ivan Seidenberg said that providers of bandwith-intensive Internet applications, including Google and Microsoft, should “share the cost” of operating broadband networks. He joins AT&T (then SBC) CEO Ed Whitacre, who last year put his foot in the mouth in a rather harsh interview with BW.
According to Seidenberg, Verizon and Google are already talking about how such compensation might be structured. While Seidenberg said Verizon “intuitively” believes that the Internet should be open to all applications, he also said that “we need to make sure there is the right economic model,” especially in regards to so-called “free” or advertising-supported applications, which generally do not offer any direct compensation to the network service provider.
Update: Good comments starting to flow below, and this Journal story focuses on the issue, though it’s paid walled. From it:
The phone companies envision a system whereby Internet companies would agree to pay a fee for their content to receive priority treatment as it moves across increasingly crowded networks. Those that don’t pay the fee would find their transactions with Internet users — for games, movies and software downloads, for example — moving across networks at the normal but comparatively slower pace. Consumers could benefit through faster access to content from companies that agree to pay the fees.
Er, EXCUSE ME? Am I not already PAYING these companies for HIGH SPEED ACCESS? That’s what the web services companies are saying:
“They want to charge us for the bandwidth the customer has already paid for,” said Jeffrey Citron, chief executive of Vonage. Customers who already pay a premium for high-speed Internet access, he said, will end up paying even more if online services pass the new access charges to consumers. “The customer has to pay twice. That’s crazy.”
Mr. Citron said he thinks that if the Bells tack on extra charges, cable companies that also provide broadband will soon follow.
Google, Yahoo, and others are in discussions with the telcos. I’d love to be a fly on THAT wall.
Update: I got a call from Google saying that the Journal story got it wrong – Google is NOT in talks with Verizon about a two tiered pricing scheme, and Verizon wants to clarify as well, though I await a call from them. This is a TOUCHY issue, and it will only get more interesting. We’ll tackle it at Web 2.0 this year for sure.