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Analysis: Not all bits of data are equal

By Stewart Mitchell

Posted on 2 Jun 2006 at 12:18

The Internet is built on interoperable foundations - any computer on the network can access all sites and services regardless of ISP or telephone company. It's the travelcard that takes you anywhere.

However, experts are concerned that increasing file sizes for entertainment and a land grab for the living room could put an end to the concept that all bits are created equal. Get ready for 'bit discrimination', or one ticket for trains and another for buses.

Network neutrality is hardly a sexy Internet term, but the topic is emerging as a major battleground for internet citizens, as ISPs and carriers seek to push their own services and protect profits. The neutrality principle holds that ISPs transport bits of data without discrimination, preference, or regard for content, but the concept is already under threat in the US, where telco AT&T says it wants to charge content providers for access to its subscribers.

Chairman Edward Whitacre is just one executive lobbying for a two-tier Internet, because he's tired of content providers taking a free ride.

'They don't have any fibre out there,' Whitacre recently told Business Week. 'They don't have any wires. They use my lines for free - and that's bull. For a Google, Yahoo, Vonage or anybody to expect to use these pipes for free is nuts.'

BellSouth is also on record saying it would consider charging Apple about 5p each time a
customer downloaded a song using iTunes, a charge that Apple would presumably pass on to customers.

With convergence between telecoms and content suppliers - think Sky and Easynet, or BT Vision - the issue is set to intensify on this side of the Atlantic, too.

'ISPs are looking to increase revenue streams. NTL, for example, already has television and telephony, BT has phones - and now BT Vision is trying to move into the television market,' said Jupiter Research chief broadband analyst Ian Fogg. 'These companies are now thinking, "We don't want these services to be a trojan horse". It's all about revenue protection and they don't want to do the groundwork only for a rival to nip in and sell the content to the subscriber, all the time using the ISP's network capacity.'

Experts say that if BT, for example, invests billions putting together a network and content to deliver television over the Internet, it would have to think how it can stop Apple from selling video directly to BT customers on a shoestring.

'There are bandwidth costs of hosting the service and licence costs, but they're relatively low and mean they can sell direct to a broadband customer with the
ISP bearing the cost,' said Fogg.

How could a two-tier model work in practice? Well, how about Rupert Murdoch-owned Easynet throttling downloads from the BBC in favour of Sky's own programming? It wouldn't need to cut the Beeb's content completely, just slow it down, thus pushing surfers back to Sky, which could potentially gain advertising revenue and market share.

This preferential approach is appearing all over the globe, with many telecom operators in the developing world blocking Internet telephony services in order to protect their phone call revenues. According to communications regulator Ofcom, the UK market is
too competitive to allow any one provider to take such a step, but that doesn't mean they won't stop certain traffic.

European ISPs have faced mounting pressure from content suppliers, such as the Motion Picture Association of America, to block access to peer-to-peer systems like BitTorrent. They've even suggested that ISPs limit the supply of bandwidth.

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