Updated: Net Semi-Neutrality Rules Allow Internet Companies Pay for Faster Service

Web data and video services have seen the most Petabyte growth and the net neutrality debate has focused

In the growing consumption of Petabyte data per month the new ruling creates 2 Internet Classes, wired and the other wireless. Wireless networks like Verizon can charge Google, for example, to deliver data at faster rates. FCC rules and regulations may suggest charging per data consumed, making Internet subscriptions at variable costs per month. However wiggle room for wireless at this time is allowing for wireless applications to develop.

In October 2010 Google and Verizon presented an FCC proposalregarding net neutrality.  Now Verizon Communications, Inc. can charge Internet companies like Google Inc.’s You Tube to provide faster wireless data delivery of streaming video, according to a December 21, 2010 FCC approved compromise to create two Internets. 

Since Internet congestion slows web traffic, some Internet providers either blocked or slowed data delivery, prompting the net neutrality debate.  Julius Genachowski, chairman of the FCC, suggested providers could create a price per data consumed that would part from the current flat rate monthly Internet subscriptions. 

The 3 to 2 vote approved a compromise that would broadly create two Internet classes, one for wireless networks (smartphones and wireless devices) and the other for fixed-line providers.   Democratic commissioners were in favor of it with Republican commissioners opposed. 

When the Internet first was developing, advertising revenue covered much of the cost.  The approval of two Internet classes has opened the door for the possibility of additional revenue and profit in the network economy through variable Internet subscription rates depending on data consumed. 

Blocking Access is Prohibited for Land Line Providers, but Wireless Have Wiggle Room  

The new rules are a win for the wireless industry, but Internet companies like Google believe the decision is a good first step and stronger regulations need to have rules equivalent for wired and wireless services. 

In other news, last week Android passed Apple iOS smartphone popularity, according to Millennial Media mobile ad network.  Android, owned by Google, Inc., measured 46 percent of all ad impressions across their mobile (wireless) network while Apple iOS was at 32 percent. 

With wiggle in wireless networks have exploded in mobile display ad business placement. 

4info, a mobile advertising company serving ad units including mobile web, apps, video, and SMS, increased mobile display ads 2,000 percent in 2010.  Mobile web advertising is 80 percent of their revenue (20 percent from SMS), and 69 million unique usersof wireless or 75 percent of wireless Web users in the United States are said to be reached by the 4info ad network. 

Wireless applications go beyond wired Internet services, delivering different kinds of content such as location based services.  Starbucks (NASDAQ: Sbux) has a national mobile/wireless payment system available to 6,800 Starbucks stores and about 1,000 Target (NYSE: TGT), co-branded, locations.  Using QR Code, Starbucks customers can download a free Starbucks Card, Mobile App that can pay for their purchase by using their phone as a scanner.  Starbucks says it is using this mobile payment system to build brand loyalty and customer rewards, convenience, and social connection.  One third of Starbucks customers use smartphones; three quarters of them using either Black Berry and iPhone mobile devices. 

Mr. Genachowski said “[M]obile carriers faced more congestion issues than other companies and need more leeway to manage their networks.”  Wireless Internet has wiggle room while wired Internet cannot cite congestion as a reason for blocking or slowing down content except for “reasonable network management”.  Wireless providers can charge for speedier delivery, but monthly wired subscriptions are still on a fixed rate delivery.  The wireless platform is still being formed – from location based services – to mobile display advertising, without FCC restrictions.

RELATED BLOG 

Google and Verizon offer an FCC Proposal on Net-Neutrality”. Capstone Media.  October 21, 2010. 

ABOUT:  4infonetwork, a mobile advertising agency, funded by investments from US Venture Partners, Draper Fisher Jurveston, NBC Universal’s Peacock Equity Fundy, Mezzanine Capital Partners, and Gannett Company, Inc, is headquartered in San Mateo, CA.  Their premier product is AdHaven, a publishing platform suite for mobile advertising tools, built upon mobile display and SMS ads heading toward app rich media, video, and software capabilities.  Founded in 2004 by Mr. Zaw Thet and 50 employees, 4info received $8 million of C funding (3/1/05), $10 million in D funding (6/1/07), and $20 million in unattributed funding (1/22/09), and last year acquired advertising start up Butter (6/21/10).