Home » Consumer News »Net Neutrality »Online Video »Public Policy & Gov't »Verizon »Wireless Broadband » Currently Reading:

Verizon: Prioritization and Compensation for Certain Traffic is the Future of the Internet



The head of Verizon believes two concepts will become Internet reality in the short-term future:

  1. Those that use a lot of Internet bandwidth should pay more to transport that content;
  2. The “intelligent” Internet should prioritize the delivery of certain traffic over other traffic.

Welcome to a country without the benefit of Net Neutrality/Open Internet protection. A successful lawsuit brought by Verizon to toss out the Federal Communications Commission’s somewhat informal protections has given Verizon carte blanche to go ahead with its vision of your Internet future.

Lowell McAdam, Verizon’s CEO, answered questions on Tuesday at the Morgan Stanley Technology, Media & Telecom Conference, attended by Wall Street investors and analysts.

McAdam believes groups trying to whip Net Neutrality into a major issue are misguided and uninformed about how companies manage their online networks.

“The carriers make money by transporting a lot of data,” McAdam said. “And spending a lot of time manipulating this, that accusation is by people that don’t really know how you manage a network like this. You don’t want to get into that sort of ‘gameplaying.'”

netneutralityMcAdam believes there is nothing wrong with prioritizing some Internet traffic over others, and he believes that future is already becoming a reality.

“If you have got an intelligent transportation system, or you have got an intelligent healthcare system, you are going to need to prioritize traffic,” said McAdam. “You want to make sure that if somebody is going to have a heart attack, that gets to the head of the line, ahead of a grade schooler that is coming home to do their homework in the afternoon or watch TV. So I think that is coming to realization.”

But McAdam also spoke about the need for those generating heavy Internet traffic to financially compensate Internet Service Providers, resulting in better service for content producers like Netflix — not considered ‘priority traffic’ otherwise.

“You saw the Netflix-Comcast deal this week which I think — or a couple weeks ago — which is smart because it positions them farther out into the network, so they are not congesting the core of the Internet,” said McAdam. “And there is some compensation going back and forth, so they recognize those that use a lot of bandwidth should contribute to that.”

McAdam reported to investors he had spoken personally with FCC chairman Tom Wheeler, who seems to be taking an even more informal approach to Net Neutrality than his predecessor Julius Genachowski did.

Verizon's machine-to-machine program is likely to be a major earner for the company.

Verizon’s machine-to-machine program is likely to be a major earner for the company.

“In my discussions with Tom Wheeler, the Chairman, he has made it very clear that he will take decisive action if he sees bad behavior,” McAdam said, without elaborating on what might constitute ‘bad behavior.’ “I think that is great; great for everybody to see that. And I think that is what we would like to see him do, is have a general set of rules that covers all the players: the Netflixes, the Microsofts, the Apples, the Googles, and certainly the Comcasts and the Verizons. But the only thing to do is not — you can’t just regulate the carriers. They’re not the only players in making sure the net is healthy. And I think we all want to make sure that investment continues in the Internet and that customers get great service.”

Verizon has already reported success monetizing wireless broadband usage that has helped deliver growing revenue and profits at the country’s largest carrier. Now McAdam intends to monetize machine-to-machine communications that exchange information over Verizon’s network.

McAdam believes within 3-4 years Americans will have between five and ten different devices enabled on wireless networks like Verizon’s in their cars, homes, and personal electronics. For that, McAdam expects Verizon will earn between $0.25 a month for the average home medical monitor up to $50 a month for the car. Verizon is even testing wireless-enabled parking lots that can direct cars to empty parking spaces.

For those applications, McAdam expects to charge enough to guarantee a 50% profit margin.

“These can be very nice margin products,” McAdam told the audience of investors. “So even at $0.25 if you are doing 10 million of them and it’s 50% or better margins, those are attractive businesses for us to get into.”

Currently there are 2 comments on this Article:

  1. JB says:

    Rent-seeking scum, full stop.

Search This Site:


Recent Comments:

  • Gregory Blajian: We were not Charter, gave up Comcast TV and phone to save money. Before we cancelled we were paying Comcast $250+/mo now we give them $57/mo for broad...
  • mike b: Still our best hope. Trump sure as hell isn't going to put someone in place who's willing to promote consumer-friendly practices....
  • John: Count me as one of those in Texas who dropped all services but Internet. I was an existing triple play customer under a current package price that st...
  • James R Curry: They're slowly expanding to cover most of those 7 cities, but they have sign-up windows. If you're not in your sign-up window then you can't get serv...
  • SAL-e: “Nearly everyone on the list is part of the Clinton campaign’s network of tech advisers, which helped draft the Democratic nominee’s tech policy platf...
  • Steve P.: Can someone explain Google Fiber to me? Don't they cover a small portion of 7 cities? About a fraction of 1% of the country, and not showing any signs...
  • Josh: Wow, that's nuts. If I lived in a Time-Warner area, that those copy restrictions *ALONE* would make me dump their service. I'm not trying to do any...
  • Dan: They need to bite the bullet, hire Amdocs to gut their ordering platform and copper facilities lookup tools, hire ATG to fix online ordering *after* A...
  • xnappo: Interesting view point SAL-e - one I have heard many times, but still thanks for the input....
  • SAL-e: "... I am paying their salary ..." No. You don't pay their salaries. The commissioners of the FCC are appointed bureaucrats by US president and appro...
  • Berfunkle: I wouldn't mind OTA 4K television. Where else are you going to get 4K content? The cable cos? LOL They don't even provide 1080P! It's a hassle and c...
  • xnappo: It is well within the FCC's charter, and since I am paying their salary I would like them to do their job :)...

Your Account: