Economist/NYT opinion writer Paul Krugman coined the term “Zombie idea” to describe an idea that, despite being repeatedly refuted with evidence, keeps coming back. Not surprisingly, zombie ideas typically have powerful constituencies that benefit from the adoption of the zombie idea they push, and who invest a great deal of money and energy continuing to resurrect the idea each time it gets killed.
This Halloween brings us the return of the “content companies should pay money to last mile networks because they use more resources” idea. I first explained why this was a dumb idea back in 2006, after then-AT&T CEO Ed Whitacre explained that he wasn’t going to let companies with content his subscribers actually wanted “use his pipes for free,” Despite lots of reasons why this is a Dumb Idea that would end up seriously reorganizing the internet economy for the worse, you find carriers around the world reviving it because $$$. This is particularly true outside the U.S., where the argument also gets caught up in debates about American dominance of internet content and popular culture. There is a separate U.S. flavor, supported by folks like Brendan Carr, about charging “big tech” to build out broadband infrastructure, which I’ve also previously criticized. But the non-US flavor has been gaining traction as a function of the “Techlash” and therefore needs some in depth discussion — especially since we can actually see the predicted bad consequences play out in real time in South Korea.
Back in 2016, South Korea adopted a new interconnection rule based on a long-standing telco compensation rule called “sending party network pays” (SPNP). As I’ll explain in detail below, SPNP has deep roots in the whacky world of telecom “settlement” (the fancy word for who pays whom in international calling) how networks compensated each other for exchanging traffic. Those opposed to adopting this approach predicted (based on about 100 years of history) that it would prove impossible to enforce without super intrusive government oversight and would introduce severe latency into S. Korea’s networks as the “sending networks” (such as Netflix, but also gaming companies and others with high resolution visual content) routed traffic in clever ways to avoid paying significant charges. To the surprise of no one except the advocates for the proposal, the predicted badness happened. The cost of transit skyrocketed, latency dramatically increased, and the Korean government keeps needing to consider new and more intrusive ways to (a) stop companies from avoiding the fees to ISPs while (b) trying to target foreign content providers while protecting domestic uses they like — such as video chat and video games.
Despite this real world example, and an impressive array of folks explaining in detail why they totally hate this stupid idea, important folks in the European Council (egged on by the EU telcos) continue to think this is a Totally Awesome Idea. So I will explain how we got here, what traditional “sending network party pays” actually means, why this ain’t it, but even setting that aside, why what happened in S. Korea shows this is a Really Dumb Idea.
More below . . . .