Why application-specific policy and charging will (almost) always fail

Over the last couple of days, the technology blog and Twitter world has reacted with righteous anger to this slide and the underlying sentiments around Net Neutrality, especially given the FCC's announcements recently.

I don't think Openet and Allot have done themselves any favours with that webinar chart. Not only was it guaranteed to cause a storm of controversy, it's all made 100x worse by the fact that that sort of app-centric policy / charging mechanism simply will not work, either technically, commercially or (probably) legally. There are so many workarounds, pitfalls, gotchas and risks that any carrier would be crazy to even try it, especially in developed countries.

On the other hand, it's the sort of slide that will make some mobile operator marketing people salivate, especially the more gullible and technically-ignorant among them, so I guess I can cut the two vendors some slack. In all probability, there are some operators which will try to do this sort of thing anyway, so if they're going to waste their money, then I can understand the vendors thinking "well, they might as well waste it with us rather than the other guys".

[Sidenote - if you work for an operator and want to get a detailed view of why this is a *really bad* idea, please get in touch with me to arrange a workshop]

I'm supposed to be on holiday & am waiting for a rebooked flight, so I'm not going to give the long list of problems. But just to get the debate going, let's start with:

• Customer dissatisfaction & churn
• Likely regulator disapproval & censure
• Stuff inside VPNs
• Mashups (what happens to the YouTube video embedded in a Facebook page?)
• Who pays for *uploads*?
• Acceptable level of "false positives" and the legal liability associated with that
• Need for network ops guys to *really* understand applications & how they evolve on a daily basis
• Lack of anybody with the job title "policy manager" who grasps and has authority over all the necessary bits of the puzzle - radio, core network, app trends, devices, user behaviour, legal issues, PR, partnership etc
• Multiple fraud possibilities
• Fit with CDN architecture & difficulty of charging Akamai
• Probability of key Internet companies turning the tables on the operator and say "no, you pay *us* or else we're going to block access to your subscribers, suggest they churn, and give free adverts to your competitors"
• It gives implicit permission for fixed operators to charge your customers to use your femtocells on their DSL/cable
• Doesn't reflect signalling load in the RAN
• Difficulty in predicting future direction of applications. Is Facebook's new email service going to be classified as Facebook, or email? What happens if Facebook buys Skype?
• Tons of arbitrage opportunities
• Lack of decently flexible upstream billing & reconciliation systems
• Need to have perfect coverage before charging for incremental services

And plenty more.

Now most of the anger is around the general philosophy of Net Neutrality and whether operators should be "allowed" to do this sort of thing. I'm actually fairly, er, neutral on that. It's simply that this sort of approach is woefully flawed, and in any half-competitive market will lead to immense customer dissatisfaction and churn.

It's not wrong or evil. It's just naive.

Now... that doesn't mean that *all* application-based policy use cases are going to fail. There are some which I can see having value, or which are less prone to outright failure. I can see "zero-rating" of specific partner apps being valuable, because that will encourage the provider to collaborate with the telco. Although it's probably easier to just put those in a separate APN rather than sift through the main data-stream. I can also see the arguments of rate-limiting of P2P traffic for congested cells, especially uplink. In the fixed world, I can certainly see the role of this for specialised services which are use the broadband, but which are not Internet-based (eg IPTV or home security or specific cloud apps).

But the idea that an end-user will pay extra per-application, for major Internet services like Skype or Facebook, on their broadband access? Utter nonsense. As I wrote yesterday in my 2011 predictions earlier this week, there's a huge opportunity on the horizon for Policy and DPI. But the slide on Engadget is 100% the wrong way to attempt to monetise it.