Google made use of Unlockd’s single point of failure to achieve its commercial aims in closing us down, and I would suggest NBN and the government uses the tech giants’ single point of failure as leverage in solving its clear commercial problems with the NBN.
The speed at which the internet operates with their website or online service is critical to the commercial viability of the likes of Google, Facebook, Netflix and others … so why not make them pay to ensure it?
During my time running Unlockd, I was fortunate enough to meet telco CEO’s, governing bodies and executives from all around the world, and they all have the same problem.
They are investing massively and competing against themselves and other telcos to build the “highway”, which is then being used by the tech players, streaming services and app providers for free, as they generate huge revenue and profits.
If you look as an analogy from another sector – building roads – then you see that usage fees is central to a successful model.
Transurban with a $41 billion market cap, isn’t going to build new tunnels, roads and ways for people to access what they want for free. You get a freeway trip of 20 minutes or sit in traffic for an hour … you decide if that’s worth the $7 toll.
I know the telco model is a lot more complex, with many moving parts, but it would be unthinkable in transport infrastructure for a company to spend tens or hundreds of billions because it’s a nice thing to do to help Ford, Holden and BMW sell more cars, and then to just hope that some of the population are happy to pay for their roads as a business model.
I’m not naive enough to think there is a silver bullet to solving global telco infrastructure affordability, but what if telcos changed their strategy towards these online services?
Instead of offering Netflix, Spotify or other services for free to drive their own subscribers (and in turn help their real competitors get consumers hooked on their products), why not use the “single point of failure” that they control?
There are clearly concerns around net neutrality in all of this, but I am not proposing throttling back the speeds to all other websites. We know who the OTT and online giants are – Netflix, Amazon and the big tech companies – they are the ones making big money off the infrastructure, so why not put a fee on the speed of the product for them?
Ten million Australian consumers won’t want to watch Netflix on slow internet speeds buffering away every two minutes, or have songs interrupted halfway through on Spotify.
Snapchat, Facebook, Instagram and all these platforms can’t afford to lose subscriptions or daily active users, as it is one of the single metrics that investors look to other than revenue and profit.
They won’t like it, but they will pay ”internet speed access fees” to ensure that doesn’t happen … What’s their alternative?
We can see that the current broadband market structure in Australia is not going to work sustainably as it stands, so it should be changed to match markets that do work.
Paying for a certain level of service is no different to any other business model I’ve seen that has tiered products from start-ups, to enterprise software to consulting companies to infrastructure companies. It is the cornerstone of commercial pricing strategies.
Maybe it’s time to turn the tables on the single point of failure for the internet giants, without high functioning internet connectivity, what business do these companies really have left?
If media companies had presented a strong united front and charged the likes of Google and Facebook for displaying and monetising their content from the get go then they would not have ended up in such a weak position in dealing with their huge market power.
Similarly telcos and NBN should start working together, rather than against each other in this area, before they too face structural challenges and the tech giants can buy them, and their infrastructure for penny’s on the dollar, to control the whole eco-system.
Matt Berriman was the founder and CEO of advertising tech start-up Unlockd and is now a start-up investor and board adviser.