14 June 2010

Tiered pricing and the rise of "proxynets"

This article over at Seeking Alpha is interesting. In it, Shelly Palmer argues that:

people with more money than time pay and people with more time than money steal. Piracy will run rampant, but it will be very easy to thwart because most of the consumption devices will require monthly data plans. If a device is connected to a network and the network operator has your credit card number or billing address, you will have a hard time using it to steal content.

The arms race will continue until the rigidity of the content provider pricing and network service provider greed overwhelm consumers or until a new technology evolves.

The new technology is what he calls "ProxyNets". In this scenario, the WiFi radios on smart phones will be used in the "ad hoc mode" instead of the "infrastructure mode" and will rely on mesh networking for interconnection. If the device density is sufficiently high (that is, the probability of participating radios being in range is high enough) then it will be possible to construct an informal network at low cost outside of a formal carrier relationship. You can even imagine jumping onto the Internet for some links (via an access point) if the density is not sufficiently high. The fact that such a network might exist outside of the control of a carrier, even if the quality is low, might be a "good enough" technology that could be the start of a classic "disruptive technology".

The argument is interesting and even somewhat plausible, especially since almost all smartphones now have wifi. In my international travels, I always jump onto a wifi network with my phone for data connections, since the carrier-based rates are punishingly high.

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