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Telcos, Google & academia — the plot thickens!

Different interest groups are still battling to be heard, as regulators weigh potential for innovation and the best experience for consumers against the right of service providers to profit from their investments in infrastructure.

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Next-generation services will take shape according to social trends, emerging technologies and regulatory pressures. No doubt, one of the more important issues being debated right now is the ability of service providers to innovate and create dynamic, personalized services that not only give consumers what they want and need, but also reasonably afford them the chance to recoup their investment in infrastructure — the foundation over which not only their services travel, but those of over-the-top players, as well.

With advances in technologies like policy control and charging solutions, among other advances, operators are at last beginning to be able to dynamically manage the broadband experience for their users while also ensuring very fine-grained quality of service (QOS) levels. But just how much they can innovate and personalize – not to mention monetize – will depend on what continues to be a raging debate among service providers, academicians and OTT players like Google. All are fervently trying to influence the FCC’s decisions around Net neutrality and impact the ability of network operators to enforce policies and shape traffic to relieve pressures on their networks during times of congestion.

During a conversation with Susie Kim Riley, chief marketing officer for Tekelec (formerly of Camiant, since acquired by Tekelec), it became evident there has been a lot of energy dedicated by policy, rating and charging companies to educate the FCC regulators about the intricacies, purposes and outcomes of telco subscriber data management, congestion management and policy management. “We try to show that it would not be in our best interest to, for example, block Hulu traffic over an operators’ network if it is a hot thing among consumers; you don’t just block traffic, applications or users arbitrarily, as there are so many choices you would lose those customers,” Riley said.

But, she said, frustratingly some “ivory tower” academics are applying theory rather than real-world economic and free-market knowledge to push regulators to heavily regulate the industry because they are convinced that operators would definitively block any type of “competing” traffic or applications, even if it meant losing subscribers and losing revenues.

“From a revenue-building standpoint, you want subscribers to have the best experience possible, so operators don’t arbitrarily alienate them,” Riley said. She is pushing to have the FCC carefully consider language around “discrimination" because it’s a simple truth that there must be some sort of “discrimination” for certain packets to get to their destination before others. “If the consumers want to continue to have access to VoIP or video services, then they have to allow some degree of ‘discrimination’ so that packets tied to dynamic services get to a destination before non-crucial packets like those associated with e-mail,” Riley said, adding what most service providers already know: something’s gotta give.

Just what is the incentive for the service providers to continue heavy investments in network builds and infrastructure if they can’t recoup and even profit from those investments? “I’ve actually had some in the regulatory world say that if they break even, the operators should be satisfied,” Riley said.

Two-sided business model

Rather, what she and others in the communications industry are proposing is a “two-sided business model," perhaps most aggressively championed by STL Partners’ Telco 2.0 initiative – in which service providers would be given the ability to work with third parties in non-discriminatory two-sided business approaches. “You would have an open-pipe environment where anyone can work with the service provider and play by the same rules, as long as you don’t discriminate who you play with,” Riley said.

The big challenge, however, is that academicians and activists will say that under no circumstances should a third party pay a service provider for anything because then its content would be prioritized and the subscriber would lose out on other (competing) services.

But Riley argues that the contrary is true: “If you have subscribers willing to pay an extra dollar for faster movie downloads while in an airport or you have parents that want to be able to pay to block adult content from popping up on their kids’ computer screens, then you have to allow a two-sided business model where people can pay those responsible for the creation and delivery of those services.”

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© 2014 Penton Media Inc.

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