Chris Sherwood: ISPs and Internet companies in a two-way street

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Chris Sherwood, Head of Public Policy at Allegro Group, Ecommerce Europe’s Polish member, published a blog outlining the mutual dependence that exists between Internet Service Providers (ISPs) and Internet companies. Reacting to a claim that Internet companies should share the costs of ISPs of Piotr Muszyński of Orange Polska, Mr. Sherwood carefully elaborates on how you can turn this argument around. Mr. Sherwood nuanced the views of Mr. Muszyński, arguing that it is in the interests of both the Internet companies and the ISPs to serve the customer.

Mr. Muszyński argued that traffic sent to Orange’s Polish customers by application and service providers “has an impact on [Orange’s] costs.” Therefore Internet companies should take its share of the burden. Nonsense, argues Mr. Sherwood: Internet Service Providers depend also on Internet companies to produce content, applications and services (CAS). Without CAS, there would be no reason to go online for customers in the first place. Therefore Internet Service Providers should be happy with this relationship of complementarity. What’s more, if ISPs would indeed put a price tag on Internet companies’ dependence on internet infrastructure, this would only add up to the immense costs that Internet companies have and result in more start-up failures, endangering the industry. Internet companies provide CAS against competitive prices for users – often for free. On the other side Internet companies have to invest in capacity, such as servers for data storage, to ensure sufficient CAS supply for customers. Moreover, ISPs attempt to provide better service through increasing the capacity of their infrastructure – Internet goes faster, allowing more customers to access the CAS developed by Internet companies. Internet companies face the consequences and are forced to invest in their data storage to keep up with demand.

The relationship between ISPs and Internet companies is really a two-way street. Both sides’ existence and success depends on the other party. Therefore, telecoms companies should not make claims that can be detrimental to their own industry.

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