Inside the War for Control over the Mobile Internet

Michael Vizard
Slide Show

Five Tips for Better Bandwidth Management

Quick tips on keeping a closer eye on your data packets.

There's a battle going on between the vested interest of two powerful industry segments that are using consumers and the IT organizations that support them as pawns.

On the one side, we have telecommunications vendors such as AT&T and Verizon that are crying poverty when it comes to investing in the technologies required to deliver mobile computing applications consistently. On the other side, we have providers of digital content that are concerned that the growth of an entire business ecosystem could be artificially limited for want of wireless Internet bandwidth.

Both sides of this debate met this week at the NextWork conference in New York hosted by Wired and The Economist. During the panel sessions it became apparent that telecommunications vendors are caught between a rock and hard place of their own making. They concede that wireless systems need a major upgrade largely because they were originally designed to primarily carry voice rather than data traffic. As the volume of data continues to explode, the existing wireless networking infrastructure is already in danger of being overwhelmed.

There is no shortage of network infrastructure to address the issue, but the carriers claim there is not enough return for them to make the appropriate investments. Of course, that investment as it has in other countries could be made with government assistance, but the carriers decry such an approach as being an unwanted governmental intrusion into the free market.

What the carriers are apparently really angling for is a percentage of the subscription revenue generated by content providers. Unfortunately, most of the providers of this type of content don't have a business model in place that is based on subscriptions. So in a classic chicken-and-egg dilemma, the carriers don't want to invest in wireless infrastructure until the business model of the content providers actually matures. Of course, those business models can't mature unless digital content providers have ready access to enough network bandwidth.

At some point, the U.S. government will probably have to force the issue. No one begrudges any company's right to make profits, but not when preventing an entire digital content industry from developing because it shows a certain amount of reckless disregard at a time when job creation is a major priority. And given the fact that the carriers are highly dependent on the largess of government regulation to create what amounts to a new duopoly, you can see how this might easily become a major political issue in advance of the upcoming elections.

The real problem, noted Tim Wu, a professor at Columbia Law School, during one of the panel sessions at the event, is that carriers are trying to replicate a flawed cellular telephone business model in a new age. Carriers were able to charge customers based on the number of minutes consumed. If the customer didn't use all the minutes, the carrier kept the difference. If the customer went over, the carrier imposed what amounted to penalties. Wu notes that with just about every other industry, such as electricity distribution, that type of business model is illegal because it puts all the risk on the consumer, while creating a constrict where there is no risk for the carrier.

At the end of the day, it's hard to see how a digital content industry will flourish in the age of mobile computing without some direct intervention from the government. That doesn't mean that carriers shouldn't be allowed to make a handsome profit. There just seems to be a difference of opinion between what might be construed as handsome by some versus obscene by others.

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