The New York Times has reported that Google and Verizon are inking a deal whereby some Google sites, such as Youtube, will pay Verizon for priority transmission.  In other words, Verizon will introduce a system whereby sites can be transmitted to Verizon subscribers at faster speeds than non-paying sites.  Youtube is being cited as a likely user of this service.

This is an idea which has been around since the web started to get traffic congestion in 1995.  At present all ISP's treat all site's equally, and bandwidth is allocated according to customer demand.  This is called "network neutrality."  It's a fairly fundamental aspect of ensuring the web is democratic and stops a few large corporations dominating everything.  It means Joe's Fishing Blog gets the same treatment as Microsoft.com, and is a key reason why small sites (like Facebook) can grow so quickly into bigger ones (like Facebook), and why bloggers can be assured anyone who wants to can get to their site.

Some people, including the FCC, are very concerned that this may be the beginning of the end of the open web, but I think history will show this to be a dumb decision for Verizon.  It's just another case of forgetting where the money lies - with the customer (not the provider).  In my experience as an internet investment advisor for venture capital firms, I've seen plenty of dumb ideas get popular with the corporates by focusing too much on what was in it for the corporations and forgetting to ask "what's was in it for the customer?".  People can too easily forget that all online activity, no matter what, starts and ends with the customer/visitor/user.  If people don't use/view/buy it, it doesn't matter how great it is, you're not going to make any money.

Bandwidth is a finite shared resource.  To make one site faster, I have to make other sites slower.  So how does Verizon granting Youtube  a traffic priority help the Verizon subscriber?  With or without priority channels, I can still get Youtube.  Are Verizon going to refuse access to websites which don't pay?  Of course not, most sites won't pay and there are hundreds of millions of them. Verizon couldn't approach every single one even if they wanted to.  Verizon can hardly cherry-pick a few big companies and force them to pay or be blocked.  Can you imagine the conversation in Redmond:

"Well, Mr Balmer, it's like this.  Unless Microsoft give us a million dollars per year, we'll block access to the Microsoft website for Verizon subscribers."

Do you think Steve Balmer would quiver in his boots with fear at the damage he would suffer, or just conclude Verizon were just going to hurt themselves by degrading the service they offer?  Would he reach for his chequebook, or the door?

Do we expect that the speed difference will be so great it will make that much difference?  Unless Verizon is so slow most sites don't work at all, who's going to notice an improvement?

If this will have any effect, it will discourage people from using Verizon.  In order to make it worthwhile to pay for, the performance difference has to be obvious to users.  That means non-paying sites have to be slow, so I get a sense of relief when I hit a priority one.  Why would I sign up with Verizon, where any small site I may be interested in is slower than on other networks?  Will people carefully analyse their experience and conclude Verizon prioritize key sites, or will they make a snap judgement that Verizon has just got slower and move to a competitor.  Do Verizon expect that most people will be aware of this deal?  Can you imagine that down on the farm in Smallville, Martha will say to Jonathan  - "When you've finished fixing the tractor, switch us to Verizon because several of our favourite websites have priority deals to ensure higher bandwidth allocation"?  Server bandwidth allocation is not exactly a prime marketing USP for the general consumer.

Furthermore, how many organisations will pay for priority access?  Smaller companies won't be able to afford it, non-US companies won't have heard of it, and most bigger sites won't bother.  People will continue to visit Facebook and Youtube anyway.  Youtube won't be able to charge higher ad rates just because a few Verizon customers are on a priority channel, the ads will still get delivered to slower networks just as effectively.  So there's no incentive for advertisers to pay higher rates.  If you can't sell the ad space at a higher rate, why would you eat into existing profits and give a chuck of cash to Verizon?  As a business, we only pay a premium price if we can sell at a premium rate.  There's no financial benefit for Youtube, so why bother to give Verizon a penny?

It won't surprise me to see companies like Youtube pay for priority with Verizon - for a year or two.  Many large organisations are stuffed with idiots who've forgotten what the web is really about, and cash-rich dot.com organisations are always blowing huge sums on dumb things.  That doesn't mean this is the way of the future, just a small blind alley which will die quietly.  Net neutrality is an inherent aspect of the web - its not just built into the technology, more importantly it's an inescapable fact of the way people use it.

Hey big corporations! Stop trying to control the web:

"We hold these truths to be self-evident: that all websites are created equal; that they are endowed by their creators with certain unalienable rights; that among these are the right to bandwidth, freedom from censorship, and the right to pursue popularity."

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