Net-Neutrality – Is it a risky business for telecom operators?

For anyone who may not be able to re-collect at one go the term, net-neutrality is about seamless and unrestricted access to the internet irrespective of the mode of communication.if you want to know details ‘here‘ is what Wikipedia has to say. This is being preached by those who think internet is a means to transcend geographical boundaries and create a global workspace and market, and thus should not be restricted to the powers of the dominant few.

The challenge of acceptance for the telecom operators is that of finding a reason good enough to fit the bill of a sustainable business model. What is the benefit the telecom operators would reap out of the same? Well if they do not practice this ‘dogma’ they stand gaining by allowing faster streams to content that pay well, and letting the remaining traffic slog in slower channels until the originators of these traffic start paying well too. This would mean, big houses like Amazon, Google, Yahoo, and the giants would hog the lime light by simply paying more to the telecom operators, whereas the small and medium businesses that have come into being and grown because of the sheer existence of the ‘worldwide web’ and or the internet stand to be perished by the web-giants for they may not be able to pay as hefty sums to divert their business traffic to faster lanes. So for telcos, net-neutrality would mean having to invest in large infrastructures yet get no great benefits out of the humongous costs that would be incurred. This is more applicable to wireless carriers.

AT&T is supporting Google in the cause for Net-neutrality. AT&T has all the reasons. It is the larget ‘fixed line’ operators in United States. If it succeeds in the cause, it would mean a big blow to the wireless carriers as  a whole. It is probably playing on competitive economics.

It would be interesting to see how it all adds up in the end. If telecom operators continue their internal struggle without consolidation of their businesses in hyper competitive markets, it would be soon be in a situation, when telecom companies would bid for the lowest prices for providing channels for faster data traffic. In that case the n-sided B2B business model [such as the Telco 2.0] (where telecom operators could stand as the back-bone providing the infrastructure while other service provides communicate with customers) would have to suffer dwindling earnings in revenue , because of the competition. Such a state could mean a complete lose-lose for the telcos. On one side, initially they protest net-neutrality, and then at a later point fight for revenues among themselves. In that case, it may sound as a good option to strike long term deals with the data generators about the acceptable business model as soon as possible, for if net-neutrality is adopted as a standard, telcos would probably have no big incentive to invest in hardware for providing faster data accesses.

Business consolidation could thus be an answer to the otherwise risky affair.

This entry was posted in Business, net-neutrality, Telco 2.0, telecom. Bookmark the permalink.

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