dslreports logo

story category
Verizon Joins AT&T in Wanting Troll Toll to Bypass Cap
A 1-800 Number to a Net Neutrality Nightmare
by Karl Bode 08:20AM Thursday May 10 2012
Earlier this year AT&T turned more than a few heads by announcing plans for a new wireless pricing scheme that would allow app developers to pay an extra fee to have their content steer clear of the AT&T cap. While AT&T tried to sell the idea as a toll free "1-800" number or "free shipping" for data -- what it really was is a power and cash grab where AT&T gets paid to select content losers and winners. Since that's the exact kind of idea that started the neutrality debate to begin with, it rightfully set off neutrality supporter alarm bells.

Click for full size
Speaking at CTIA, Verizon stated they're exploring the option as well:
During a panel here at the CTIA trade show, Melone said that there is a more than 50-50 chance that carriers will adopt a business model that allows destination services, such as Google or Netflix, to pay for clear access for their customers. "As we move away from flat rate pricing, there is room for an 1-800-type of service where certain destinations could offset the cost of the network to get customers to those destinations," he said. "There are Net neutrality issues that have to be addressed, too."
While the carriers are trying to frame this idea positively to make it palatable, what they're doing is setting a completely arbitrary cap on usage -- then charging competitors an extra fee (which will be passed on to you) to bypass it. Keep in mind that a company like Netflix is a direct competitor to Verizon's upcoming RedBox streaming joint venture. Forcing competitors to pay more if they want to bypass the cap does have major anti-competitive ramifications Verizon's CTO just sort of floats over like road kill on the way to revenue heaven. T-Mobile executives at CTIA stated they too find the idea appealing.

The reason they find it appealing is that it's the very idea that got so many of these carriers in neutrality hot water to begin with, dressed up in a new coat of public relations paint. Carriers are still trying to offload the everyday cost of doing business on to content providers, who'll then pass those costs on to you. Trying to magically get someone else to pay for your network obligations has been the dream of telco executives for years. At this point they're just trying to dress it up as different ideas in the hopes the public and press won't notice. It's still the same ridiculous concept, whatever it's called.

You'd hope no content companies sign off on this, but picture this: Amazon pays Verizon an extra fee to bypass their cap to get "preferred" status, forcing Netflix to follow suit if they want to compete with Amazon. Meanwhile, Verizon's Redbox venture, unsaddled by any such restrictions, takes those funds (which again, come from your wallet) and uses them to crush both companies. Carriers would be leveraging their position as network gatekeeper to create an unfair competitive advantage for their content arms.

Companies like Verizon and AT&T get to add completely unnecessary new cost burdens (tied to no real world economics) onto the back of competitors while retaining artificial power in the face of their natural devolution toward existence as "dumb pipes." But yeah, other than all of that it's just like a 1-800 number.