An article in yesterday’s Wall Street Journal (”Cellphone Carriers Let Others Sell Mobile Content to Users,” by Amol Sharma and Li Yuan) reports that mobile phone carriers are starting to let third-party content providers sell content to mobile phone users. That may well be a positive development for users. But it also highlights how different the mobile phone model is from the Internet, and offers a good illustration of what’s at stake in the Internet neutrality debate.

Initially, mobile phone carriers provided “mobile content” (ringtones, games, etc.) exclusively through their own portals. Verizon Wireless customers who wanted to download content to their mobile phones had to buy it directly from Verizon Wireless. The Wall Street Journal article reports that this is changing — carriers are striking deals with third parties such as MLB.com, which will then be able to offer on their own websites content for download to users’ phones.

I suppose that’s a step in the direction of openness, but the limits described in the article are striking. Users’ choices are still limited to content providers who have “partnered” with the mobile carriers by agreeing to a revenue sharing deal. The mobile provider generally keeps a hand in the transaction by arranging for charges to be added to the monthly bill, and may actively discourage direct credit card or PayPal transactions between the user and the content provider. About 75 percent of all mobile content sales are still through the carriers’ own portals. And some content is available to subscribers of certain mobile carriers but not others; for example, Verizon subscribers can’t get access to online mobile content by World Wrestling Entertainment, Inc., while subscribers of other carriers can.

Maybe all of that is ok in the fledgling and spectrum-constrained market for mobile content. But whatever you may think about it, it is very different from the Internet. Internet users download content, services, and applications from whomever they choose — not just “partners” of their ISPs. The sites and services users can access don’t depend on which ISPs they get their Internet connections from. Users and content providers enter into payment transactions with one another directly, using credit cards and PayPal, with no ISP involvement and without the ISP taking a cut. The result has been a hyper-competitive environment with unparalleled innovation and diverse choices for users. Innovation by untold numbers of entrepreneurs of all stripes and sizes turns out to yield a lot more interesting stuff than the product development divisions of a limited number of “content partners.” Given all those entrepreneurial content providers, the idea of an ISP providing 75 percent of the content its users buy online is virtually unthinkable.

The differences between these models — and the consequences of those differences — are a big part of what’s at issue in the net neutrality debate.

This entry was posted on Friday, December 1st, 2006 at 10:21 am and is filed under Internet Neutrality. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.