Who Pays for Innovation

Being a technologist and would-be business man, I realized early on in my career that there seems to always be a battle raging on who pays for technical innovations. Right now there is a battle brewing about “Net Neutrality”. If you don’t know what NN is go to Google and get more information. But in a nut shell NN is a term that describes the ISP (Internet Service Providers) role in providing free flowing, non-filtered access to the Internet for the subscribers who pay for the service.

Traditionally, ISP have provided a non-restricted network connection to the Internet for subscribers. At my house today I have a cable connection to the Internet provided by Comcast in which all network protocols are open and allowed (except for SMTP I think). Before I got the speedier cable connection, Bellsouth provided me DSL access and before that I had the trusty 56K dial up access by a long forgotten local Atlanta based ISP. And before the Internet came along I had no ISP and used a 28.8K connection to access the many bulletin boards systems in Atlanta, of which some had Fido Net so I could send email to other BBS users around the country. And when I first started talking to the world from the confines of my computer I, being 14 at the time, used a very expensive 1200 baud modem that my dad got us and I thought it was the bomb since my friend only had a 300 baud modem and his text simply crawled on the screen!

Now what was the point of the long historical recollection? Simple, I went from a FREE 1,200bps dial-up connection to a fifteen dollar a month 28,800bps dial up connection to a forty dollar a month always connected 768,000bps DSL connection to a forty two dollar a month always connected 6,000,000bps connection. In the span of 23 years or so my connection speed increased 5000 times and my cost got more expensive each time I adopted a faster, newer connection technology.

Yea, I know I’ve lost the non technical folks by now… But in order to discuss the business factors within the NN issue you have to have some historic reference. You see, in the old world of telephone communications, AT&T and the Baby Bells really didn’t concern themselves with the few geeks connecting their computers to each other. Why would they? The “Nerds” of the time were very few and there wasn’t any “real” money to worry about. Those company’s only cared about the massive amount of people using their copper based infrastructure to make voice connections.

If you fast forward to our world today, the numbers have changed and everyone knows about the Internet and wants to be connected to it. During the last twenty five years technology has transformed the way communications is used by the average consumer. The old school ways are quickly coming to an end. ISPs have to provide higher and higher network connection speeds to keep subscribers and that cost a ton of money because new infrastructures have to be purchased and built out. We are not talking about millions of dollars but billions of dollars in investment. With this kind of money being invested, investors want a quality return on their investment. And if you are an ISP Chief Executive, you have to look for newer methods and avenues for extracting revenue anyone and everyone.

Since the game has changed, those big ISPs, the companies that provide the real back bone of the Internet, feel that they should get a piece of the reoccurring revenue streams generated by providing consumers the ability to do things such as talking over the Internet, downloading music, watching TV and other “enhanced” Internet based services.

On the other side of the coin the technology innovators that write new software that provides these “enhanced” services feel that they shouldn’t have to share any revenue since the end-user has already “paid” for the connection to the Internet.

hitchhiker You know, in the long run it doesn’t matter. Why? Because in the long run the cost of deploying new technology is ALWAYS paid for by the CONSUMERS. The bottom line is that when you want to go from free dial up connection at 1200bps to six million bps always on connection you will have to pay for it. When you go from watching free TV on five channels in the late 70’s to an on demand TV model with hundreds of channels, WE THE CONSUMERS will have pay for it.

Let the ISPs, technology companies and the Government fight it out about who gets what revenue stream. Because when the dust settles we, the all mighty consumer, are paying for it anyway!

“Hey buddy, can I get a ride?”

“Get your own damn car dude! Didn’t you hear? There AIN’T no such thing as a free ride!”


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Filed under All Posts, Business, Internet, Technology

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