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Home: Issue 4 2011 › Open internet

Open internet

06/06/2011 | Channel: Technology, E-Business / IT

A.T. Kearney, the global management consultancy, has released a report on ‘A Viable Future Model for the Internet’, which explores the technical and commercial sustainability of the current explosive growth in traffic and services, especially video.

The report analyses investment in fixed and wireless networks required to support the dramatic increase of internet traffic. Even without fibre roll-out to all homes and businesses, the industry will need to invest eight billion euros p.a. above its current trend rate just to maintain current service levels and prevent the internet choking on the rapid growth in video content. Yet those who benefit from higher traffic volumes are those who generate it (typically content sites and over the top providers) and those who consume it (typically end users), while telecommunications companies today earn almost no revenue from the incremental traffic. Incentives for more efficient usage of bandwidth and for investment in future capacity are therefore depressed by this ‘structural disconnect’.

The report therefore analyses four potential ways to address the imbalance: modifying customer pricing; introducing traffic dependent wholesale charges (mainly impacting over-the-top players); launching a new set of enhanced quality services over the public internet, and offering similar enhanced quality services based on bilateral agreements between market players. The report quantifies each of these options and finds that, although all of them could contribute to make the Internet more viable, none of them alone is enough to solve the full problem. Therefore the solution is likely to be a blend of options.