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No. 1 Story

ACCC clears Optus to scrap HFC network and use NBN instead

The ACCC has cleared, provisionally, the proposed deal between Optus and NBN Co under which Optus is to be paid around $800m to shut down its HFC network and transfer customers onto the NBN. read more

Stuff yourself silly - how much free lunch can you cope with?

Opinion and Analysis

The prevailing attitude right across the Internet is that the user pays their ISP; everything else is free.  Wrong!

We pay our ISP a monthly fee to gain access to the Internet and gain access to an agreed total amount of downloaded data.  But when it comes to determining where that data comes from, most users don't much know or care.  Unfortunately, someone has to stump up the cash to fund these servers and the people who create the content.

There are four possible business models when it comes to paying for the Internet infrastructure that delivers this content to the consumer.  From the perspective of the digital consumer:

"I pay."  This is simple – whatever I consume, I pay for.  This includes general subscription services and fee-for-service web sites.  The pr0n (don't you love stupid filters!), gambling and premium news services occupy this space.

"You pay."  Here, the expectation is that the service provider has sufficiently deep pockets to offer the service without recourse to external funding.  Essentially, this is 'profitably' limited to Governments and similar organisations.  In addition, we have the "low-rent" self-funded blogs and small commercial operations.  The only exception is the eCommerce sites that are able to fund their sites out of revenue earned (there aren't as many of these as you might think).  Unfortunately, it is the 'Low rent" sites that are caught in this zone, more about this later.

"Someone else pays."  This is the advertising model; the space occupied by the huge majority of sites.  Obviously Google is the shining star here, but there are plenty of others.  Interestingly, many of the smaller sites are essentially resellers of some larger aggregator of advertising budgets – the number of real players is very small.

The final model is "No-one pays."  This is the model preferred by a vast majority of Internet users.  After-all, as mentioned in the introduction: for most users, they've paid their ISP, shouldn't every thing else be free?  That's fine, but unless the ISPs start paying the content providers, this isn't going to work.