I am not much for predictions, at least not for specific events. But I feel comfortable enough on this one to lay it down.
There is no way that BellSouth and SBC and Verizon will be able to get the two-tier Internet they desire. It is not going to happen.
1. There’s too much one-tier history at this point. Perhaps if they had started back when we were first talking about an Information Superhighway, but not today.
2. Given that they sell bandwidth to companies, they will be exposed to hugely complex racketeering issues, unless they completely shed any business services.
3. The infrastructure cost in maintaining , monitoring and managing traffic shaping at this level is hugely expensive (If I’m wrong, and they do manage to get political support for this, buy Cisco stock)
4. It devalues their existing DSL – day one, it’s worth X, and day two it’s worth .5X, because now most (if not all) of the sites one goes to will be slower. Few things piss off the american taxpayer more than paying the same price for something of considerably less value.
5. The technological complexities inherent in “guaranteeing” service to a company that does pay for more bandwidth are hideous – monitoring, reporting, determining where the failure points are, etc.
6. Public interest groups will eat them alive, demanding special access for all sorts of non profits, charities, governments, schools, etc. Tons of additional maintenance, monitoring and lawsuits, with zero additional revenue.
7. Courts, including the court of public opinion will look at this and say ‘what is the benefit to the consumer of this tier structure’? HDTV demands additional channel space, so it has clear need to be an additional cost. Radio-quality voice requires the same (an extra line, bound together). But there is no need or value here – just naked rent-seeking by the telcos
8. If the telcos suggest that they will be able to lower DSL prices because of the new revenue coming in from the content providers, that will set off a whole new set of “dumping” and “anti-competition” lawsuits from other ISPs.
The telcos will continue to float trial balloons. They may even get the opportunity to run a trial or two. But at the end of the day, this will die a quiet, miserable death.