Tuesday, September 02, 2008

Internet Bandwidth Cap will limit Innovation

Today in New York Times there is an article “Comcast to Place a Cap on Internet Downloads”. This is first sign of trouble in Internet economy. The idea of putting cap on Internet download is akin to putting up speed barriers in the information freeway - A move which will surely kill innovation.

Internet has been one of the prime drivers of Innovation in the last decade. Internet changed how people communicate, how people access information, how people buy things and most importantly how people live their lives.

I live in India, where Internet is relatively expensive and usually comes with a bandwidth cap. As a result, I know how stifling it can get if Telco’s are allowed to impose such caps and restrict Internet usage.

To understand the impact of download cap, one must come to India. In India, YouTube is a non-starter, IPTV is still in its infancy, Police impose strict monitoring rules on cybercafé, i.e.: Internet usage is limited.

With all these restrictions, it is not surprising to see that there is not even one Indian company that became successful in the Internet space. Here is pop quiz: Name top-10 Internet companies from India?

Do you find that tough? Then try the Top-5. To sum up the popularity of the top-5 Indian Internet companies is less than that of a small Internet startup like Ciao.com or cuil.com. E-Commerce is virtually non-existent in India. Even the biggest Indian retailers do not have E-commerce presence.

Closing Thoughts

Open and unlimited Internet is the key for innovation. Restricting Internet usage will kill innovation and competitiveness of US firms. In the long run, it will affect the overall development of various technologies: Internet, Software, Hardware, semiconductors, entertainment, and telecommunications.


Richard McLaughlin said...

Open and unlimited Internet is the key for innovation. Restricting Internet usage will kill innovation and competitiveness of US firms. In the US, Canada and most of Europe companies will not see a limitation on the internet. Here is is common to buy a massive internet connection - my last job in France we had a 2meg internet connection, then 6 then 12 in an 18 month period. That 12 meg does not include the 155meg connection that we had to our HQ back in the US, it was only internet.
Countries like India will suffer, partially because of the poor infrastructure and partially because of big business. As a consultant I built the internet connection for a major organization, and part of that project included secure lines. Secure in the sense that people could not access the lines and rip them out to sell the copper.
Given the choice between dropping line of copper on the ground, or only buried 6 inches, and the option of having a company pay a lot for a great connection, the carriers will go to the people with deep pockets first and then the small businesses get whatever is left over.

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