Who pays for Internet infrastructure?

You plug in your computer or connect your phone to 3G or 4G and you are online – the information flows. But have you ever thought about who is providing the infrastructure that allows information to flow around the world globally in an instant?

It involves satellites, fibre networks, undersea cables – all extremely complex and expensive and yet the average end user of an online service has little awareness of just how much infrastructure is needed to ensure there is a global flow of data.

In general, most of the network infrastructure is provided by the Internet Service Providers (ISPs). They are usually the companies we all pay for access to the net. These companies invest millions each year to improve and maintain the network, but everyone is using more information so the networks are straining to cope.

In particular, users are now demanding more video services than ever. Most new televisions today are Internet-ready. This means that they can hook up to your home Internet service and immediately offer video content from providers such as NetFlix, YouTube, and the BBC iPlayer.

This ease of use – as opposed to having to open a laptop to use YouTube – is dramatically increasing the amount of users that expect a quality video streaming service. But now the ISPs are fighting back and insisting that companies such as NetFlix need to contribute to the cost of the network, because they are the main driver of increased data traffic.

However, the concept of ‘net neutrality’ existed long before this ever became a problem. In short, net neutrality ensures that all ISPs need to handle all data equally. It is not possible to discriminate against certain types of data, or to favour certain users when routing data traffic.

Clearly these rules were introduced to maintain the democratic ideals of the Internet and the Internet Protocol (IP) that the data uses to get ferried around the world, however the networks are finding it increasingly difficult to operate in a world where all data is equal.

I believe that as we move forward, the concept of net neutrality has to change. Some customers will be prepared to pay a lower price for a lower service and some customers will be prepared to pay more to ensure their movies stream flawlessly. This is not discrimination; it is just competition and the functioning of a free market.

Airlines are the same. Passengers who are focused on getting to their destination alone will pay for a budget airline, with extra fees to board first, check baggage, or enjoy a glass of wine on board. Passengers who want reserved seats, a generous luggage allowance, and a free glass of wine choose an airline that offers all these features – at a different price point to the budget service.

With companies like Netflix I believe there is a logical outcome that should work for Netflix, the ISPs, and the end consumer. Netflix pays a premium to the ISP to ensure their services are delivered flawlessly. The ISP receives these extra funds and invests in greater capacity to support Netflix. The end consumer is given the option to pay more for the flawless delivery of high bandwidth content.

The end consumer should really be the person deciding whether they want to pay more to get a better service – that’s the best solution for every party in the supply chain.

The Listening Planet


Photo by Onno Bruins licensed under Creative Commons

This entry was posted in Current Affairs, Strategy, Technology, Telecoms, Utilities and tagged , , , , , , , , , , , , . Bookmark the permalink.

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