dslreports logo
site
 
    All Forums Hot Topics Gallery
spc

spacer




how-to block ads


Search Topic:
uniqs
338
share rss forum feed

iansltx

join:2007-02-19
Austin, TX
kudos:2
Reviews:
·Time Warner Cable
·Verizon Online DSL

Technically possible...and decent if done right

I think I need to finish the blog post I was going to write on this awhile back.

AT&T can basically sell app developers "free to user" traffic to a certain IP address or range. Then, if a user access an app that uses that connection, the data used gets billed to the app developer instead of the user. Kind of like 1-800 numbers.

As for provider choice with 1-800 numbers, I guarantee that AT&T will allow "toll free traffic" providers to resell services, just like 1-800 providers provide various packages for their services. In the days of 1-800 numbers, the 1-800 provider still had to pay the originating telephone company's long distances fees; they were just billed at a different rate than standard customer-billed long distance. If I called a 1-800 number from a Hill Country Telephone Cooperative line, HCTC would bill ABC 1800 or whoever for X cents per minute for the call. Likewise, AT&T would bill the toll-free data provider for any data transferred between their mobile network (and I guarantee that this would at least start as mobile-network only; WiFi hotspots would be exempt) and the content provider's IP space.

This is a win for everyone (believe it or not) if AT&T offers a standardized rate structure to everyone asking to do toll-free data, based on the volume of data that they transmit. My bet is that AT&T won't want to deal with anyone transferring less than 1,000 GB per month to their subscribers, but at that point they'd be willing to give some nice discounts compared to the $15 per GB that theyll charge for overages. Heck, the rates will probably even be nice compared to the rates on their 20GB plan. I'd expect $3-$5 per GB depending on volume per month...low enough that CDNs and other such providers could resell services to smaller app developers and still leave those developers with rates lower than their customers would pay to AT&T directly. I this case, it's all about billing simplicity...it's easier to collect $5000 per month from one account than $8000 per month from 800 accounts.

Also, most content providers won't need to do this. Facebook has worked with some cellular providers to do what they call "Facebook 0" (no cost to the subscriber for a very stripped down version of FB's mobile site), however last I checked Facebook doesn't do a ton of video streaming, and it's in their interest to transfer as little data as possible anyway. Point is, unless you're pushing tons of photos to their site via your phone (or videos for that matter), you're using very little of your monthly bandwidth cap on Facebook...though they might participate in this program anyway.

By contrast, Netflix (and other streaming video sites) use a lot of bandwidth, and they're parties that AT&T would love to bill from a content provider perspective. They'd probably offer some nice rates, too...think a few dollars per gig...money that AT&T can use to get their LTE network built out just a little faster, or with a bit more capacity. Users would probably end up with the choice of paying for Netflix streaming with their own mobile data plans, or picking pay-per-view so that Netflix pays for the data, then bils the Netflix customer. Of course, Netflix will fight this tooth and nail because that decreases the number of users who are willing to pay for Netflix, but at that point Netflix should just start recommending that everyone go buy Sprint phones...if Sprint's okay with that

One huge issue here is Net Neutrality, of course. AT&T should not be able to provide any content whatsoever that is exempted from its own data plans, because that's a common carrier conflict of interest; AT&T would be able to subsidize its stuff with fees paid by its competitors. But if AT&T can keep its hand out of that cookie jar (and this is something that can...and maybe should...be regulared), the "toll free data" model works for mobile. Though if AT&T tries it for DSL, customers should vote with their wallets.

rradina

join:2000-08-08
Chesterfield, MO
I'm impossibly thick so help me understand this statement.

said by iansltx:

I this case, it's all about billing simplicity...it's easier to collect $5000 per month from one account than $8000 per month from 800 accounts.

No app provider is going to trust a $5,000 charge without having details (who, when and quantity). Nothing easier here.

The carrier still has to bill the consumer for their plan and other fees. That money still needs to be collected whether it's $100 or $110 ($8000/800 = $10/user). Nothing easier here.

If I was a carrier, why wouldn't I just collect the $8,000? Where is my incentive to give away $3,000 in profit?

<cynic>
Does Mr. Carrier look better if they hide the fees behind someone else? For instance, if NetFlix charges me $30 a month for mobile streaming so it can cover a $10/month charge from Mr. Carrier, he still gets his jack but it's hidden. Next year Mr. Carrier gets to raise the data rates and NetFlix gets to explain why I have to pay $35 every month instead of $30. NetFlix will claim their costs increased but Mr. Carrier is smart. The fine print says that NetFlix cannot divulge the details of their deal. Information can leak but with no hard evidence, the money is still going to NetFlix and they are forced to justify it. Plus, Mr. Carrier doesn't have to deal with angry customers who balk at seeing overage fees on their bill.
</cynic>

iansltx

join:2007-02-19
Austin, TX
kudos:2
Reviews:
·Time Warner Cable
·Verizon Online DSL
IP tracking etc. is easy; AT&T can already do data by session, and doing data collection by source/destination is just one additional small step. If content providers want fine-grained information, AT&T can give it to them (even though the content providers could just as easily do such audits from their side...actually it would be easier to do it on the content provider side).

rradina

join:2000-08-08
Chesterfield, MO
Assuming the app accesses only their content. What if it accesses other data such as map data from Google or Microsoft? What about content from Akamai cached content servers?

Regardless, you still haven't supported your assertion as to why an ISP would settle for $5000 when they could get $8000.

iansltx

join:2007-02-19
Austin, TX
kudos:2
Reviews:
·Time Warner Cable
·Verizon Online DSL
On the "only their content" issue, my guess is that AT&T would have contracts with the upstream data providers rather than the app makers whose content isn't being pulled. Also, remember that this sort of thing only makes sense on data-intensive applications; people aren't going to go over their caps pulling down maps. On the Akamai side, I guarantee that there will be certain Akamai IPs where Akamai will bundle CDN services and toll-free data into one product, if this catches on. Same for other CDNs.

As for why the ISP would leave money on the table, they wouldn't be. Billing efficiencies are one reason. Another is that cheaper data will stimulate demand, possibly to above (in revenue terms) what they would be if a user had to pay for the data directly (at a higher rate). Call it the Southwest Effect of data.

rradina

join:2000-08-08
Chesterfield, MO
I already disputed the billing efficiencies. Read earlier reply to your post.

How is this cheaper for the consumer? It's a big game where the consumers gets to pay more for something that should just be included in the ridiculous price we already pay.

iansltx

join:2007-02-19
Austin, TX
kudos:2
Reviews:
·Time Warner Cable
·Verizon Online DSL
*shrugs* It all comes down to how a private corporation wants to run their network and allocate scarce resources (spectrum) to subscribers. Toll-free data, where the content provider pays, is one way of doing this in a net-neutral way (if it is done according to certain specific parameters). Remember that telco-grade network equipment for licensed spectrum is expensive...

rradina

join:2000-08-08
Chesterfield, MO
And every report I read says the price keeps dropping to deliver the same amount year over year. So much for that expensive telco gear.

iansltx

join:2007-02-19
Austin, TX
kudos:2
Reviews:
·Time Warner Cable
·Verizon Online DSL
At the backbone level, sure. I can get a 10-gigabit backbone line for $7500 now, whereas it was $10000 under the same terms last year. However that bandwidth is delivered to a data center in Dallas. There's a lot of middle- and last-mile gear between that point and the subscriber.