Capt. Video and I had a discussion a few weeks ago about how service providers handle over-the-top providers such as Vonage. Service providers are in a sticky situation as many of these services may compete with their existing products. Vonage and Skype take away phone customers. Hulu and iTunes take away video customers. So what should a service provider do about it? I see only three options open to them.
The first and obvious option is to try and prevent usage of the network by these providers or degrade their services. This would seem like an obvious choice, but it comes with a steep price. When Comcast was intentionally blocking bitTorrent traffic, the backlash was swift and fierce. Users, the media, and even Congress blasted the company for interfering in network neutrality. The bad PR hurt a company already wallowing in the mud with Charter for last place in the ACSI and now, almost two years later, they’re just starting to pull themselves out of the mess. Fighting the over-the-top providers doesn’t seem like a viable long-term option.
The second option is to work with the over-the-top providers and users to sell new QoS services. A user, for instance, may appreciate being able to pay $5 a month to ensure that their Vonage adapter’s traffic always has highest priority on the network. Business customers hosting services may gladly pay extra to ensure that e-mail going to, say, their Exchange server is always given top billing. Service providers already have the infrastructure to do QoS, so why not put it to use to make an extra buck and provide the services customers want?
The last option is probably the best, but it’s also a tough sell: the future dumb pipe. Sprint has already started embracing this new reality by outsourcing network management and choosing to operate over Clearwire’s WiMax network instead of building it themselves. They’ve made their focus on the services, not the connection. Cable could do the same thing with IPTV. Think about it: cable companies could sell video service not only to customers with a competing data connection, but also to mobile devices, PCs, portable STBs… the list goes on. Paired with investments in WiMax, it expands their market nationwide. Telcos can do the same thing with voice service, using their extensive experience in telecom to deliver features beyond Google Voice and Vonage on a national or even global scale.
What is obvious is that the over-the-top model is not going away. It’s what the Internet was inherently designed for, pushing bits of data here and there without regard for what they do when reassembled. It’s past time for service providers to figure out what to do about it.