Have Content, Will Pay

This week’s Atlanta Business Chronicle reported that telecommunications and internet service provider, BellSouth, is proposing to charge internet content providers a fee in order to guarantee the fastest transmission of their content across the internet.

Online companies who opt to pay the fee will see their content distributed at top speeds, whereas those who do not pay will not.

BellSouth’s Chief Technology Officer Bill Smith feel that online firms such as Google, Vonage, or Napster (three mentioned in the article as examples), have essentially been donated bandwidth by ISP’s so that they could keep up with the public’s demand for richer and richer content.

“They, in essence, are enjoying a free ride today,” he said.

BellSouth is not the only company considering this revolutionary change. AT&T is said to be investigating the option, as well.

Smith sees charging a fee for guaranteed fast transmission as being like UPS charging extra to guarantee next-day delivery. If you are willing to pay for it, your delivery will get to its destination faster.

One company that BellSouth has discussed this with is Movielink, a site from which customers can download movies. Smith said that Movielink could possibly be charged forty cents per transaction. According to Smith, Movielink CEO Jim Ramo is “…in agreement that the model makes sense.”

Online gaming companies are among those mentioned as the types of firms who could be hit with additional charges.

Needless to say, there are those that are quite upset about the proposal. Immediate concerns focus on the detrimental effects pay-for-speed plans could have for small businesses and consumers. Some feel that, while they would not happily accept increased charges, large companies could handle them. Smaller companies, on the other hand, would find themselves at a distinct competitive disadvantage, as they would be hard pressed to foot the bill, and thus, need to provide content at slower speeds. On top of that, what are the chances that firms would pass along the costs to their customers? Presumably high, unless they want to absorb hundreds of thousands, or even millions, of dollars in added expenses.

Plus, to some consumer advocates, these fees would allow the ISP’s to “double-dip.” They would now not only be charging the end consumers for their high-speed internet access, but also the content providers for essentially this same access. The only difference is that the data is flowing into the homes and out from the providers.

Said Mark Cooper, Director of Research for the Consumer Federation of America, “We think it’s awful. The Bells – they are entrenched monopolists. Now that they face a little competition, they will do anything to kill it.”

There are those, other than people at BellSouth, who feel that the potential new pricing only makes sense. As both content providers and consumers become more reliant on faster and faster internet pipes, it costs companies like BellSouth more and more money each year to provide the infrastructure. Fees like the ones proposed are necessary.

Telecom analyst Jeff Kagan contends that, using Google as an example, “Google will not like it, but they’re not the ones operating these networks.”

He also says that charges to the content providers will help in protecting the end users, allowing those who pay for high speed internet access to actually continue to enjoy high speeds. As the broadband lines become more taxed with ever-richer multimedia content, those who don’t use all that bandwidth are being hurt by those who do.

“I don’t know what BellSouth should charge,” Kagan said. “All I know is that it can’t be the way it is. I don’t want my service slowed down because someone next door is downloading a movie.”

How will all this affect the online poker industry? The simple answer is that it is too soon to tell. The pay-for-speed model is just a proposal at this time, and as of now, is only something being looked at by the Bells, as a means to combat customer and money loss to cable companies, internet phone providers, and wireless companies.

But, should something like this happen, it could definitely have an impact on online poker, considering that most of the transactions at the poker rooms take place over broadband connections. One interesting problem would be how to determine what a “transaction” actually is. Thousands upon thousands of hands are dealt every minute across the internet – is each of these a transaction? It seems like an awfully unwieldy number of transactions to process and price.

And what if some players at a table are BellSouth customers, playing at a site that did not pay the extra charges? Would they be at a disadvantage because their connection to the poker room is slower than those with a cable internet connection? Probably not, as the slower broadband speeds would still be fast, but it’s something to consider.

Finally, if online poker rooms did decide to pay extra to send their content at guaranteed high speeds, what would that mean to the players? An increase in rake is quite possible, although experienced players would likely migrate to other poker rooms as a result, negating an advantage the faster speeds may provide. Poker novices would probably never notice. Instead of increasing rake, poker rooms might decrease player benefits, such as deposit bonuses, guaranteed tournament prize pools, or other perks.

As proposals like BellSouth’s develop, they will be something that the online poker industry may want to keep an eye on. It should be interesting to see if the ISP’s even want to discuss new charges with online poker rooms, considering the questionable legal standing of online gambling in the United States. It very well might look a little strange if BellSouth, AT&T, or another Bell company has an official business agreement with an internet poker concern.

Originally published January 19, 2006