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NEW ORLEANS–It was Verizon CTO Tony Melone’s turn today to talk about adopting an 1-800-like service for over-the-top media providers.
During a panel here at the CTIA trade show, Melone said that there is a more than 50-50 chance that carriers will adopt a business model that allows destination services, such as Google or Netflix, to pay for clear access for their customers.
“As we move away from flat rate pricing, there is room for an 1-800-type of service where certain destinations could offset the cost of the network to get customers to those destinations,” he said. “There are Net neutrality issues that have to be addressed, too.”
He added that there is interest from some sites to offer such a service. But he wouldn’t talk specifics about how far along those talks have gone or who specifically is interested in such a model.
“Net neutrality issues aside, there are still many things that have to happen to make it reality,” he said. “But do I think it will happen? There’s a better than 50-50 chance it will. I’ll say 51-49.”
The idea of broadband providers selling priority to a particular service or Web site is controversial. Consumer advocates and others who have supported the notion of Net neutrality say that selling priority offers an unfair advantage to companies that are large enough and have enough money to pay for such preferential access for its customers.
AT&T CTO John Donovan had talked about a similar plan that AT&T was considering earlier this year. And the company was sharply criticized by Net neutrality supporters. Donovan, who joined Melone on today’s panel, declined to comment on this topic.
In general, broadband services providers, such as AT&T and Verizon, argue that a 1-800-type service that would allow Web sites to pay extra for better access to their customers, is just another creative business model for keeping up with growing demand on networks. Broadband providers argue that the demand for rich services both on the wired broadband side and the wireless side are immense and the companies must invest billions of dollars to keep up with this demand. So they believe new business models could help offset the expense of building the networks to support the growing traffic demands.
“We don’t want the service to be too expensive for our customers,” Melone said. “But we have to balance that with keeping up with demand for services. Technology can help. But the demand side will have to be moderated.”
Melone added that customers understand this balance. For example, they may watch video on their mobile devices on Wi-Fi rather than on the 3G or 4G cellular network to keep their cost down and also not overburden the network.
Donovan said it’s tricky to balance the deployment of new technology to satisfy demand for new services from customers with the cost of deploying such services. He said that picking new technologies is easy, but what’s tricky for broadband providers is the timing.
“If you’re late to the market, customers will punish you and they’ll go elsewhere,” he said. “If you go too early shareholders penalize you, because you aren’t using the network. The hardest task is not selecting the technology, but picking the window of time to deploy it.”
