Wednesday, June 15, 2011

Operator points of view on net neutrality

We have made an analysis of net neutrality here, but a closer look at the operator's point of views may add some insights. There are (at least) four arguments put forward by operators who wish to be more flexible in managing their networks, to which we respond below:

1. It's my network, I can do what I like with it.
Fundamentally a good point, but at odds with Net Neutrality. Legislation and regulation are the price of doing business in the telecoms sector. Internet access is a fundamental human right. When anyone buys internet access, he has the right to access the entire internet, not just some sort of walled garden. Access to the entire internet cannot be restricted to more expensive bundles/packages, because that would create a digital divide. It's also about innovation: not only do we want consumers to access the entire internet, we also want innovative companies to be able to access the entire internet population. Without that, they wouldn't be able to come off the ground and fly.

2. We must be protected from those disruptive OTT forces.
Not a very good point. Companies don't live forever, it's a survival of the fittest. Companies need to adapt constantly, or else they will go out of business sooner or later.

3. Our profits are not excessive and we need to invest a lot.
The first part is a good point. Even if tariffs are high, it must be kept in mind that other elements of the service are sometimes free, such as the handset and customer support. On the second part, implying that costs will rise above revenues, we believe that there is not really a problem:
  • Tellabs: 'End of profit' (study, 2011), assuming that flat fees are kept in place.
  • Ericsson: 'Busting the myth of the scissor effect' (Business Review #2 2010).
  • NSN: '... it is possible to provide up to 5 GB of data per month for every existing voice subscriber by using HSPA and LTE radios in existing sites. (...) Monthly network capex + opex can be kept below 3 EUR per subscriber ...' (Mobile broadband with HSPA and LTE, 2010)
4. We will raise our prices.
We fail to see why this is a problem in the first place. Go right ahead - competition will hopefully limit price increases. More generally, the market seems to be moving to a pricing structure that is very much like the way we pay for fixed broadband: tiered pricing based on speed, volume (caps), QoE, VAS.

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