[kictanet] Telkom Kenya cries foul over social media’s free ride on its - Corporate News

Wed Sep 14 10:32:41 EAT 2016

Good morning

The network neutrality debate has landed on the shores of Africa.

Here is an excerpt of an academic paper i had written some time back.

*The net neutrality debate can be viewed as the next battle between the
netheads and the bellheads; providers of broadband access on one side and
Internet content and application providers on the other side. Frieden
(cited Orlowski 2006) states that the Bellheads are investing heavily in
fiber capability which will solve a problem that the “Netheads” have proved
themselves unable or unwilling to tackle, that of high quality video over
IP.*

*Given that US government is keen to facilitate the rollout of universal
and affordable broadband[1] <#_ftn1>.  It can be argued that the aggressive
fiber rollouts could suffer if network operator shares continue to lose
value making it difficult to blame the companies if they did slow down roll
out. The companies, after all, have a duty to shareholders to pursue
maximum profits not necessarily to fulfill the goals of Internet advocates
(Drucker, 2006).   However one has to be careful in analysing the market as
forces in telecommunications can be misleading. Telephone companies, for
example, get billions of dollars in federal and state subsidies for rural
service.   Access charges are designed to compensate network providers for
the use of their facilities and the compensation scheme is in part funds
universal service.  Additionally, these companies may be claiming more in
the depreciation and the value of their assets.  *

*Regulators may therefore seek to eliminate access charges by allowing
rates to rise to cover network cost if not service providers should pay
access charges.  This is however difficult to implement politically on the
basis of public interest.  Additionally, it is equally difficult to expect
new entrants to pay access since the avoidance of access is, at least in
part, the source of their perceived competitive advantage.  *

*Historically, the FCC has not regulated the Internet or the services
provided over it. However following the 9/11 terror attacks in the US,
security is a key government priority.  Consequently, open access to the
Internet articulated in the FCC “Four Network Freedoms”, is subject to
legality of content and needs of law enforcement (Frieden, 2006)    The FCC
is thus constantly reviewing mechanisms[2] <#_ftn2> to implement important
social objectives, such as public safety, law enforcement access, consumer
protection and disability access, as communications migrate to
Internet-enabled services.*

*On Wednesday, 28th June 2006 the Senate commerce panel voted against
amending the telecommunications bill by attaching the net neutrality
provisions that would prevent operators from blocking, degrading or
prioritising service on their networks (Orlowski, 2006).  The defeat of the
amendment could herald the return of the vertically integrated incumbent
firm providing services along the whole value chain.  Despite the fact that
the access network has been considered a natural monopoly area as a single
firm could presumably construct and provide local services at a lower
average cost than two or more firms (Spulber, 2002)[3] <#_ftn3>, Sir Tim
Berners-Lee, the creator of the web, views the defeat of the net neutrality
legislation as the entering a “dark period” for the Internet, if access
suppliers were allowed to choose which traffic to prioritise (BBC, 2006).  *

*The higher costs of a “tiered Internet” levied content providers will
simply be passed on to consumers, directly or indirectly. As there is no
“free ride” on the network, and consumers will bear the costs of network
development through higher access charges and higher prices for online
goods and services[4] <#_ftn4>. Moreover, a “tiered Internet” will further
concentrate the market power of the cable modem and DSL duopoly,
eliminating competition in the conduits and leaving consumers with no
escape from content discrimination.*

*The potential return of the two tiered Internet may further widen the
digital divide between developed and developing countries.  It may be
argued that successful internet organizations should contribute to the cost
of internet infrastructure either through Internet settlement agreements or
contribution to universal access funds.  This argument is based on the fact
that these companies are providing functional equivalent services, thus
there is a need for operators to maintain network integrity and for
governments to guarantee national security, and I concur.*

------------------------------

[1] <#_ftnref1> FCC defines "high speed" as 200 kilobits in at least one
direction.

[2] <#_ftnref2> On February 12, 2004, the FCC ruled that an entirely
Internet-based VoIP service would be an unregulated information service in
USA.  However the FCC released an order requiring VoIP providers to deliver
enhanced 911 emergency services to its customers.   *Source:
http://www.fcc.gov/cgb/consumerfacts/emergencies.html
<http://www.fcc.gov/cgb/consumerfacts/emergencies.html>*

[3] <#_ftnref3> This theory is based on the assumption that firms will seek
to leverage on economies of scale to achieve production efficiencies,
pricing services above cost and not precluding competition

[4] <#_ftnref4> Scott (2006) predicts that companies like Google and Yahoo
that support their free services through advertising revenue will raise
their advertising rates, resulting in higher consumer prices on all the
goods that advertise on these sites.  While Amazon and eBay will raise
their rates to account for the extra charges and I-Tunes and other
pay-per-download content sites will charge higher rates as well, to cover
access charges by AT&T and Verizon.

Disclaimer: Views expressed except those referenced are the author's own.
The full paper is available on request.

On Wed, Sep 14, 2016 at 7:16 AM, Ali Hussein via kictanet <
kictanet at lists.kictanet.or.ke> wrote:

> Listers
>
> This is getting abit tiring..Telcos complaining social media platforms are
> getting a free ride on their infrastructure.
>
> http://www.businessdailyafrica.com/Corporate-News/Telkom-Kenya-
> cries-foul-over-social-media/539550-3379938-9liqm4/
>
> What are your thoughts? Should Telcos charge companies like Google and
> Facebook for access to their networks?
>
> What would be next? A small fee for every website?
>
> #NetNeutrality
>
> *Ali Hussein*
> *Principal*
> *Hussein & Associates*
> +254 0713 601113
>
> Twitter: @AliHKassim
>
> Skype: abu-jomo
>
> LinkedIn: http://ke.linkedin.com/in/alihkassim
>
>
> "Discovery consists in seeing what everyone else has seen and thinking
> what no one else has thought".  ~ Albert Szent-Györgyi
>
> Sent from my iPad
>
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