The Over-the-top Genie is out of the bottle. Now what?

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.

Tagged , , , , , , , , , , . Bookmark the permalink.

12 Responses to The Over-the-top Genie is out of the bottle. Now what?

  1. luminous says:

    With any luck the Internet Freedom Preservation Act of 2009 will pass this time….

    DPI and other packet inspection techniques are a violation of Common carrier.
    Qos, filters or Blocking based on source or destination is a violation of network neutrality.

    Network neutrality does not prevent an ISP from using QoS on all packets of a particular type. It would be most reasonable to allow ISP’s to sell this as a service. IPV4 and IPV6 provide a type of service field in the packet header for this type of thing.

    I am fine with exceptions in some cases to perform reasonable network management. When At&t blocked pirate bay to shutdown a DDOS that was a perfect example of reasonable network management.

  2. Capt. Video says:

    I’m not sure the 1st OR 2nd option is or will be available to network owners. Some network neutrality laws may prohibit network owners from charging extra for QoS to sites. Vontage and others of course dislike that plan and believe it is NOT network neutral if you add a fee to insure you get to their site.

    I believe the cost of data service will rise as network owners move to the dumb pipe model.

    I think companies like Comcast could block some sites and accept the complaints and launch their own PR campaign to “explain” the reason for the blockage (or provide access for a cost)….if allowed by the government. But I think they would not be allowed to do so by the government.

    While I’m sure they received complaints about the blockage, the real question is how many disconnects did they receive. Sometime power users are very vocal but are NOT your best customers. I suspect many networks could actually benefit financially by having the top 5% of their users (power users that don’t pay extra for the extra bandwidth they use) disconnect. What if the top 5% of your users use 20% of your bandwidth, but don’t pay a premium?

    Not all customers are created equal.

  3. Jesse says:

    Poorly-crafted net neutrality legislation is a real and growing concern. Most proponents do not seem to differentiate between intentional degrading unless a fee is paid and making no more/less than a best effort unless a fee is paid. There’s a huge difference between the two and yet extremists on both sides like to intentionally blur the lines for their own benefit. I fear that one of the two sides will prevail and we’ll end up with either AOL-style walled gardens or your 2TB backup of lolcats being given the same priority as E911 VoIP traffic.

    Intentionally blocking or degrading a particular site or service for reasons other than protecting network integrity is not really an option. The backlash from attempts to do it has been swift and merciless, often resulting in more bad press and government inquiries than any operator would ever care to deal with. It’s legit, for instance, to block botnets and attempts to use foreign SMTP servers (which is usually for sending spam). It’s not legit, however, to block access to bitTorrent.

    As I have pointed out before, bandwidth usage and net neutrality are separate issues completely unrelated to one another. While customers have gotten used to the all-you-can-eat over-subscription model that allows the large majority of light users to subsidize the small minority of heavy users, they know when they are being taken for a ride. That’s why Time Warner got slapped around silly six ways from Tuesday when they tried to roll out their caps. 40GB a month? Really? That costs them MAYBE a whopping $0.80 in total upstream bandwidth if we’re using an absurdly high wholesale rate. Even Comcast’s rather generous 250GB cap wouldn’t cost them more than $5 in upstream bandwidth costs and, given their volume, is probably more like $2. If you want to charge extra for heavy users, go ahead, but don’t gouge them with 50-100x markups on your costs. The core issue with caps is fairness in pricing, not that the all-you-can-eat model is on the way out.

  4. luminous says:

    I think bandwidth caps would only work in a none monopoly market. Any place that only has a single provider would be to easy to take gross advantage of.

    QoS is most definitely an important function that an ISP can provide. I don’t think the currently proposed legislation would cause any problems with using QoS. QoS can be implemented in a neutral manner by simply using the “Type of Service” field in the ip4/ip6 header. This could be easily setup by the user with their DSL/cable/fiber modem and would allow them to give priority to whatever traffic that liked to while still give the ISP something to make a few extra bucks on.

    I could see a model where the user gets unlimited bulk traffic and $5 per 10gig priority traffic setup. Personally i think everyone would win in this model.

    Outright blocking any site that is not a threat to network integrity should be illegal.

  5. Capt. Video says:

    I too think that would work…but don’t think companies like Vontage would like it.

    As a network owner, I would charge a fee for any VoIP phone type service traffic or IPTV type service traffic. Since I provide those services as stand alone services off the data network, it would not add any cost to the services I offered but would to over the top services.

    I believe that would be fair since my off network services have a cost element built in for the cost of building the network and Over the Top services don’t pay anything toward network construction costs.

    Would you accept legislation that would allow that? I’m betting the Vontages of the world would cry foul.

  6. Anon says:


    Sorry to be a pedant, but you do this all the time. It’s Vonage, not Vontage. There is no “T” in their name.

  7. Capt. Video says:

    Not a problem…thanks for the correction.

    I would have continued making that mistake for who know how long? As it is, I’ll try to catch myself in the future but would not be surprised to see that old habit die hard!

    Thanks again.


  8. Anon says:

    No worries… on the other hand, if you stop saying Vontage, nobody will believe it’s you posting. 😉

  9. luminous says:

    IPTV can be ran without any special treatment from QoS, it can be buffered so latency is not an issue for it. VoIP needs special treatment to keep its latency low, just as FPS games would benefit from lower latency.

    If an ISP can just give you priority traffic for its own services and by extension its partners services, then you effectively have no neutrality on the network. ISP’s already have an advantage by their servers being closer to the user this should be more then enough of an advantage.

    QoS priority needs to be a service that is sold to the end user, can be allocated to whatever the end user wants, and makes no difference to source or destination by only following the ToS field in the ip4/ip6 header.

    I believe that if an ISP can simply give priority QoS to its own traffic for free you would create the network dirt road situation where traffic that is not QoS’ed suffers from such huge latency’s and low bandwidth problems. Why upgrade the network when you can use QoS to push down everything that isn’t high margin?

    Also it is untrue that Vonage does not help pay for the construction of the network. They pay their ISP fee’s for the network transport and peering agreement’s that Comcast or whoever has entered into. If an ISP feels that its peering agreement is unfair then they need to renegotiate their peering agreement and not seek to punish over the top providers.

  10. Capt. Video says:

    I don’t think it’s like ISP’s in their world. ISP DON’T generally build networks in the last (of first, depending upon how you look at it) mile. Really only phone and cable companies (and a few like UTOPIA) build this part of the network.

    ISP’s typically ride someone else’s network. Even long haul networks are different, as they generally go from POP to POP and not the last mile.

    The network owner does typically NOT deliver their IPTV or phone services on the data network. iProvo, UTOPIA, Comcast and Qwest I believe have TV and phone delivered on a separate (data) network that never touches the internet and is not part of the data network in a normal sense.

    So I would treat ALL IPTV and VoIP traffic on the data network the same. I would then deliver MY services “off network” (on the same copper or fiber, but a completely different network structure. I would not give my traffic any priority on the network as that would not be net neutral.

    …and yes, the end used would decide what priority they wanted and pay for it. Not Vonage or the over the top service.

    I don’t believe the over the top provider contributes in any way to the cost of the last mile network….the really costly part of the network. The part that so few pay to build, because it’s so hard to pay off. There is no shortage of fiber or copper from SLC to Denver or Chicago, but there is a shortage of network to your home. I see no way Vonage contributes to pay for that cost by paying AT&T to connect somewhere in another part of the country.

    The local network gets no advantage or cost contribution from a company like Vonage, it’s all down side. Losing business and revenue from services they offer. NO REVENUE from Vonage or the customer that they would not already receive for providing internet service.

    I see over the top providers as leaches that harm the local network whomever paid to build it or owns it. Almost by definition that’s the difference between an “over the top” service provider and just a site you connect too. Over the top providers take revenue away from the network and others don’t.

    I would guess peering agreements are between network owners and it would be hard to have a peering agreement and say “but you can’t deliver Vonage services”. I don’t think you can expect ISP peering agreements to cover this area at all. If peering agreements were between individual services no network would sign a peering agreement with Vonage. They have no up side and lots of down side.

  11. Jesse says:

    Even if an operator runs their service as “over the top”, they can still less bundled QoS as part of the service and not run afoul of any network neutrality principles. Sooner or later, the idea of segregating the network the way it is done now will seem quaint as everything moves to a flow of bits. Phone is already well on the way with VoIP. Give IPTV a few more years and it’ll happen.

    (And what a great selling point to customers: turn off the TV and we’ll give you some extra bandwidth!)

  12. luminous says:

    Qwest ADSL2+,At&t Uverse,Verizon Fios, and Comcast due not sell service through 3rd party providers. So yes modern broadband ISP’s are the ones building the last mile. Yes Utopia runs on a OPN model but they are the exception not the rule.

    In the case of Comcast using a separate part of the cable system for Phone service yes its fine for them to using any form of Qos they want, It won’t interfere with data on the internet portion of the line and makes no difference.

    Their is no reason to QoS IPTV its not a latency dependent service.

    So if we where to separate the pipe into internet and not internet, I would agree the ISP can do whatever the heck they want with the Not internet part of the pipe. I would only want the internet part of the pipe regulated.

Leave a Reply to luminous Cancel reply

Your email address will not be published. Required fields are marked *