Connectivity providers are aging behemoth’s kept alive by the life support of monopoly. These monopolies, whether local franchise operations in the case of cable TV, or spectrum licenses in the case of wireless providers, assure premium prices for a commodity product, namely the connection from person to Internet. Yet even artificial scarcity isn’t enough to keep the price wars at bay and something has to happen to bring up the balance sheet for these enterprises.
What “it” is, is content. Charging for content, instead of charging for links or bits, is the only real way to “win out” and escape the vicious cycle of commoditization. And there are two ways to do this – become a content owner or become a content distributor. If you control the means of production of the content itself, then you get to charge to see or hear it. If you own the distribution mechanism, then you get paid to enable a person who would otherwise be unavailable to see or hear the content; the question is, by whom. Traditionally, the people who ultimately see or hear content pay the distribution mechanism, and the distribution mechanism pays the content owner. But what if that all changed?
What if content owners paid the content distributors and the viewers only paid for connections – or to use a common B-school metaphor, what if the shaver only paid for the handle and Gillette paid Wal-Mart to get the blades to the shavers?
This is the paradigm shift at the foundation of a metered content delivery network and out of it flows things like this:
Verizon Wireless lets Amazon set up their Web Services nodes in one of their big regional data centers and Netflix uses those AWS nodes to serve content to Verizon Wireless customers, including Fixed-LTE customers. Those bits served from the Verizon data center don’t count against the monthly network utilization quota because Netflix is already paying, through AWS, for the Verizon commodity, namely free space in the network path.
This only works, on the technical side, if you have a very intelligent network. For every flow of data, the network has to associate it with a subscriber, identify the content, decide where to source that content from, recognize if that source is a gratis source or a charged source, decide at what rate it is charged, and then convey the utilization costs to the accounting system so that the subscriber can be billed. Today, bits are bits. Tomorrow, the prejudicial treatment of bits will mean some bits are more expensive than others.