Today we learned that Verizon and Google were near a deal to slaughter the principle of Internet neutrality in its sleep. Shortly thereafter, however, they denied that they are planning to inflict any harm on the maxim that the Internet should be an egalitarian utopia. While it's possible that Google will try to hold onto this philosophical ideal, it's rather likely practicality will eventually gnaw away at their willpower and force them and others to cut deals with Internet service providers (ISPs) like Verizon. If you combine this with several other ways the world is evolving, you quickly see that ISPs will eventually take over the world, or at least be one of the biggest forces in the economy.
Net Neutrality Is Bound to Fail
Net neutrality has already been alluded to. This is a complex topic that can't possibly be fully explored here, but net neutrality won't likely endure. It's simply impractical. ISPs have legitimate reasons, beyond squeezing more profit out of customers, for wanting to be able to discriminate on pricing. When they eventually do break through the current barriers that exist, their pricing power will be incredible. Eventually most Internet-driven revenue will have to pass through the hands of the ISPs, who will eagerly take a cut.
In terms of the amount of data customers consume, we're already seeing AT&T enter the unfamiliar territory of usage-based fees. The company has quickly discovered that a handful of data hogs can ruin the fun of everyone else. The only way to restrain such a market is to price your product accordingly. Other ISPs might try to resist kicking aside their unlimited data plans for now, but the temptation for fairer pricing and higher profits will ultimately be too great. Even among customers, a grudging acceptance will eventually occur, where they realize they're better off just paying for what they use, instead of subsidizing the guy downloading a movie every hour.
Credit And Other Ambitions Unrelated to the Internet
But the ISPs reach and revenue won't be limited to the Internet alone. Thanks to the vital role they play in mobile devices, they will have the opportunity to capitalize in other ways. For example, earlier this week we discovered that major mobile carriers and ISPs, including Verizon and AT&T, are developing ways to allow smartphone owners to use their device as a credit card. Naturally, these service providers will get a cut of the associated fees.
And this is just the beginning. As we become more and more dependent on the Internet and our mobile devices, we'll become slaves to the ISPs. We're a culture of information junkies, and we need our fix. The ISPs have already given us a taste -- the first time is free (or at least, relatively cheap). But as the industry evolves, they will be able to slowly increase their profits. And considering that their service permeates every aspect of our lives, there isn't much holding them back.
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