In Business Model, Internet Access, Mobile, Spectrum

Network neutrality cannot but affect both end user demand for Internet bandwidth, as well as the supply of such bandwidth by Internet service providers.

By prohibiting traffic shaping, net neutrality forces ISPs to rely on “brute force” bandwidth upgrades.

To the extent that net neutrality forbids zero rating, the rules also limit demand growth, and hence supply pressures.

Analyst Dean Bubley points out some of the nuances of spectrum issues, as viewed through the lens of end user demand and mobile Internet service provider retail practices that shape and affect usage, and therefore demand for spectrum.

On one hand, zero rating (sponsored apps) increases demand by allowing mobile users without data plans to access bundles of apps. But increased demand drives needs for additional spectrum, small cell architectures, offload and other measures to cope with higher demand.

Network neutrality rules prevent Internet service providers from offering quality of service mechanisms. But many apps require such QoS features (carrier voice is a prime example), and under net neutrality rules, only managed services such as carrier voice, conferencing and video services will have QoS features.

On one hand, distinctive ISP-only features are desired. On the other hand, ISPs also want Internet app suppliers to purchase such features.

Though ISPs believe the ability to expose third party apps to network-provided quality features, only about 10 percent to 15 percent of all cell sites routinely experience congestion.

ISPs want to sell larger data plans, but also want to sell “at wholesale, with lower margins” to potential third party partners.

Of course, some of the issues are commercially moot, at the moment, because network neutrality rules forbid any forms of paid prioritization, or even zero rating, in some cases.

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