What price the Cloud?

[Commentary] An unappreciated wild card in the cloud revolution is the price and availability of broadband, especially mobile broadband.

A fight in Canada, which is just ahead of the U.S. in introducing usage-based pricing, has bloggers and politicians accusing Bell Canada of unconscionable "profiteering" from usage caps. The company, they rage, is reaping huge fees for additional units of bandwidth that cost Bell Canada virtually nothing to provide. This critique, which is common, could not more comprehensively miss the point. Another car on the roadway poses no additional cost on the road builder; it imposes a cost on other road users. Likewise, network operators don't use overage penalties to collect their marginal costs but to shape user behavior so a shared resource won't be overtaxed.

Net neutrality lobbyists in Washington are already in cognitive meltdown over the challenges that the video explosion poses to their hobby horse. You can see it in their attacks on MetroPCS, which has come out with a new low-priced mobile Web service that picks and chooses which Web resources users can tap. It won't let you use Netflix. It won't let you use Skype. The religion of net neutrality is offended by this, but who's to say consumers can't judge for themselves if the restrictions are worth the price? Yet every other potential solution is also opposed by the net neut crowd, including metered pricing.

And landing with a thud is a new A.T. Kearney report promoting the ultimate net neut bête noire. It finds the economics of the Internet "ultimately unsustainable" unless bandwidth costs are somehow shifted back to the shoulders of the big traffic generators, the Netflixes and Googles, if only to give them an incentive to use bandwidth efficiently. All along, what the net neut crazies have lacked in intellectual consistency they've made up in fealty to the business interests of companies that fear their services would become unattractive if users had one eye on a bandwidth meter. That's why opposition to "Internet censorship" morphed into opposition to anything that might price or allocate broadband capacity rationally. But such a stance is rapidly becoming untenable, whether the beneficiary is Google, with its advertising-based business model, or Netflix, Apple, Amazon and others who hope to capitalize on the entertainment-streaming opportunity. All are betting heavily on the cloud. All need to start dealing realistically with the question of how the necessary bandwidth will be paid for.