Mobile internet neutrality will prevail thanks to Keynesian economics

The whole furor over mobile bandwidth caps and throttling will eventually die down. Telco providers will be forced to adhere to net neutrali...

The whole furor over mobile bandwidth caps and throttling will eventually die down. Telco providers will be forced to adhere to net neutrality, prices will come down, and unlimited data will eventually return, all thanks to Keynesian economics.

Swedish newspaper The Local recently reported that local mobile providers were looking to block access to Voice Over Internet Protocol (VoIP) apps such as Skype.

It's obvious that these apps would eat into mobile revenues as people seek to bypass expensive voice calls with free ones routed through the internet. However, the companies would probably run into problems with European regulators, who have been proponents of internet neutrality, where companies or other entities are prohibited from tampering with how their customers use the network.

Such a knee jerk reaction is understandable, especially since operators need to recoup their investments into strengthening and enlarging their mobile networks, given the deluge of users demanding more and more data. Networks globally have become overloaded as a result.

Consumers have not left this sitting down though, and there have been numerous lawsuits in the USA against providers such as AT&T for limiting mobile internet access despite having subscribed to an "unlimited" data plan.

As the battles between telco firms and their customers heat up, in the long run I think we'll see the consumer emerge as the victor.

A little over 10 years ago, we also had gatekeepers such as America Online (AOL) who effectively was able to regulate what we could or could not do or see on their networks. With increased competition, growth of technology and rise of competitors, these propriety networks did not last, and were eventually lost to the reality of Keynesian and Darwinist economics.

Similarly, in Asia internet costs were initially very expensive. In Hong Kong, dial up internet back in the late 90's were charged HKD $1.50 (US $0.20) an hour for PNETS, an interconnection charge imposed by Hong Kong Telecom (now PCCW) for access to their networks. In the mid 2000s, Thailand started to see growth of broadband internet, but were initially limited to only 100 mb worth of data an hour.

Similarly, as technology progressed and competitors emerged, the cost went down, caps were lifted and speeds were increased. Improved technology has helped to drive down costs and deliver the same services over the same old network - ADSL for example, is delivered over traditional copper networks. A decade ago, such speeds were thought to require a new fibre optic network and thus out of the reach of most consumers.

Technology also helps the market to achieve economies of scale, as once it becomes cheaper to enter we'll see increased competition, forcing down prices while improving services. 50 megabits in Hong Kong is normal, while in Thailand 6 mb is the slowest speed you can buy from dominant telco provider True.

In other words: the whole furor will pass. Net-neutrality will eventually champion thanks to market economics in cooperation with regulators, and customer demand. In a few year times, anger over bandwidth caps will become a thing of the past, unlimited and unthrottled mobile internet will once again become the norm and perhaps we'll be making all of our calls over VoIP.

Everything will eventually swing back into equilibrium. As history has shown us, market economics always wins after all.

Photo credit: Osman Kalkavan



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K Bulsuk: Full Speed Ahead: Mobile internet neutrality will prevail thanks to Keynesian economics
Mobile internet neutrality will prevail thanks to Keynesian economics
K Bulsuk: Full Speed Ahead
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