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Net Neutrality Officially Becomes Anti-Consumer in 3...2...1....

October 1, 2012, 10:17 am

Consumers should cheer the news that low-cost competitors may be coming to the smartphone data market:

FreedomPop's service, which begins operations on Monday, will offer users half a gigabyte of high-speed wireless data per month free and sell more at cheaper rates than what the big carriers charge: one gigabyte for $10 a month and five gigabytes for $35 a month.

Verizon's new data plans, by comparison, charge $80 a month for six gigabytes of data, plus a smartphone connection fee of $40 a month that also comes with unlimited calls and texts.

FreedomPop says much of its income won't come from selling data. Instead, it will sell additional services, such as a Turboboost feature that for a fee will guarantee the fastest speeds available to a user even when on a congested network.

Ahh, but look at the last sentence.  This looks to me like it could well run afoul of the whole "net neutrality" BS, as they will be charging to put someone's traffic ahead of another's.  Here is my prediction:  Like almost all government regulation, net neutrality laws, which their authors probably imagined would keep large players like Verizon in check, will actually be used by Verizon and AT&T to squash upstart competitors like these guys  (I can't even write the word "FreedomPop" because it seems to be one of the most painfully bad names I have heard in a sector full of bad corporate and product names).

Category: Regulation
  • LoneSnark

    Well, thankfully Verizon and AT&T didn't think far enough ahead and the arbitrary net neutrality rules the FCC adopted exempted wireless services from network management. If these upstarts manage to take off, of course, this oversight will be corrected.

    That said, it would be difficult to correct, as the entire wireless business is built upon charging more for network priority. Nearly all pre-paid network providers operate at a lower packetized network priority compared to the post-paid customers on the same network.

  • morganovich

    it depends how they are doing it. if they are just talking about bandwidth allocation on the cell tower (spectrum, channels etc) that's fine. that's just like selling a higher speed cable modem. but once you are in the network, then they will run afoul of NN the minute they preference packets from a given Ip address or application type (using dpi or whatever).

  • LarryG

    whoever owns the towers will call the shots.

  • fredrick.

    I don't think the argument washes. We already have multi-tiered service from Cell phone companies (you get 2.5 gigs at full speed and beyond that the rate goes down - also 3g speed is less than 4g speed)

    What tiered service is really about is AT&T wanting to get more money out of Google and Comcast to guarantee a higher level of service to the large companies. It has little to do with the end user.

    On the one hand, I say, if you want to tier your service go ahead - on the other, I have to wonder - AT&T (AT&T is the biggest proponent of multi-tier,) if you don't think you are getting enough money from Google for the pipeline(s) you rent them, why not just charge them more, rather than get this multi-tiered service environment going? Seems like that is really AT&T's issue. They want Google to pay them more - so just charge Google more, and see if Google can't find another pipe to go on.

    Another issue, what if Google uses some other company for the backbone, and that other company pays AT&T to use their backbone on some routes (or has a reciprocity agreement). AT&T is now going to deny top tier service to a company (Google) that is not even their customer unless that company pays them more. And Google is going to have to pay their provider and all the other little companies that are also connected to the internet extortion fees to get their data across - seems like that is bad policy. Seems extortion even.

  • fredrick.

    The net neutrality does not affect the end user anyway (look at your DSL or cable provider - they charge you more for different levels of service no?)

    If I contract as a business with Verizon to use their Internet pipes, and some end user - due to monopoly - is getting DSL from AT&T so my data has to go over AT&T should AT&T be able to reduce the rate and quality of my data, unless I pay AT&T a bit extra?

    I don't have a relationship with AT&T currently, I use Verizon which should have a shared data agreement with AT&T. Is it fair for AT&T to hold my data hostage, unless I pay them too? Does that mean that every micro-network that my data travels - the owner can charge me for Tier one service? I think this was what AT&T really wanted with multi-tier service, to be able to charge everyone in the Universe who sends even a byte down their network, no matter the origination or destination.

    I tend to agree with free market principles, but tiered service seems more like extortion to me. Of course over time, if AT&T did this, data companies, like google, would find a way around AT&T and AT&T would be out of the loop- except for those poor end users who have no choice but use AT&T DSL.

  • fredrick.

    I have to say - I am actually neutral on the issues of net neutrality. I don't understand the implications enough either way.

    Google is already starting to make their own network. I wonder if having a parallel network next to Verizon and AT&T to circumvent Tiered service requirements would be good or bad.

    Also wonder how the end user would escape the tyranny of their Cable and DSL providers. So far Wireless has not worked out so well in the cities in which it was tried. - most have already done a Solyndra.

  • a_random_guy

    Not a problem with net neutrality. The most important provision of net neutrality is that a provider cannot provide differing levels of service based on the origin of the content.

    The classic example: You have a data contract with Verizon, and they really, really want you to use their video service, so they make all video content from all of their competitors really slow, delaying and dropping packets, etc. That is a violation of Net Neutrality.

    It gets less clear if they don't offer the service themselves. For example, would it be allowed for Verizon to start a bidding war between Bing and Google: the highest bidder gets their search results presented quickly, the loser's results are artificially slowed down. A strict interpretation of Net Neutrality would also prohibit this, but there are some greedy companies out there...

    Lastly, a strict interpretation of Net Neutrality would prohibit arbitrary distinctions based on data type. It makes sense to give real-time data (like VoIP) priority over other data (like a download). However, as long as the bandwidth is available, the downloads should work. Suppressing torrents, or other data types, just because the provider doesn't like them - that should not be accepted.

    The Turboboost you describe feature distinguishes based on the receiver. Just like you can pay for a high-speed Internet connection in your house, there is every reason to allow people to choose the quality of their mobile data connection. Whether their other plans are also acceptable? I couldn't find any useful information...

  • fredrick.

    Good points and as I mentioned below - Verizon could cause a bidding war, even if the companies are not customers. Say Google contracted with AT&T to send their data, now Verizon is demanding payments from someone they have no contractual relationship with.

    Would we tolerate it if Citibank had their bills printed and sent by a third party bill printing service company and then the post office demanded extra payment for first class mail just because the printing service company's client is Citibank, Citibank is big and Citibank customers need their statements to arrive within 3 days - otherwise the post office will start delivering it 3rd class? It is the same thing.