Pure Speculation.

I posted a pretty lengthy discussion on net neutrality at ObWi today, and I figured that in fairness, I should put a bet down on where I expect things to go politically. I don't imagine that my predictions will shape the course of history, so this is more or less for my own edification.


Part I: Selling the "Capacity Crisis"

1. Verizon and AT&T will implement usage-based pricing schemes for their internet service. They're all ready to go.

2. VZ/ATT will continue to push out their fiber infrastructure, subsidizing it as a loss leader. This will be the olive branch -- "we will build FiOS out to you if you get the customers." This offer is already being rolled out nationwide.

3. VZ/ATT will continue to take a hard line against obvious traffic shaping of the sort that Comcast was caught doing. But they'll also argue that this is a symptom of our "national bandwidth capacity crisis"

4. Their solution: use our huge fiber pipes, and with per-byte pricing, pay for what you get!



Reasons:

[Caveat: "Comcast" is a standin here for "last-gen broadband providers," and especially "internet over cable providers"]

1. Comcast is not a Tier 1 ISP, so they pay a premium for their transport that VZ/ATT don't (since they collectively own most of the internet).

2. VZ, and to a lesser extent ATT, are leading the fiber deployment game.

3. Consequently, VZ/ATT's per-byte transport costs are significantly lower than Comcast's (or anyone's, really), so competing on per-byte costs gives them a competitive advantage.

4. Hence, usage-based pricing creates a competitive advantage for VZ/ATT.

5. Usage-based pricing can also be positioned as a "fair" or even net-neutral alternative to traffic shaping (you pay for what you get; traffic-shaping would just reduce bytes exchanged and users would simply pay less).

6. Of course, VZ/ATT don't care about net neutrality in the least. But they can afford to provide per-byte because they have the capacity, and Comcast and everyone else don't.

7. VZ/ATT's DSL and fiber networks are also far more symmetric than Comcast and the other cable providers, and hence much more amenable to swarming protocols like Bittorrent that bottleneck at the local loop in cable networks.

8. So, ultimately this is about putting Comcast in an impossible situation: to provide even minimally acceptable Internet, they can either (a) traffic-shape and become the pariah of the telecom industry, and/or (b) go broke trying to come up with some way to bootstrap their already-repurposed technology into something that will be obsolete the moment VZ lays a fiber line down the block.

9. One of the effects of the new arrangement will be to put VZ/ATT in a position to end-run or even restructure "sender keeps" peering arrangements between the Tier 1 ISPs.

10. The trigger for all of this is that VZ' net-neutrality commitment from their MCI merger expires next month. That's when the gloves come off. More about that when I'm less tired.


NB: As if on cue, VZ announces across-the-board increases in available bandwidth.