Tiered service
Encyclopedia
Tiered service structures allow users to select from a small set of tiers at progressively increasing price points to receive the product or products best suited to their needs. Such systems are frequently seen in the telecommunications field, specifically when it comes to wireless service
Mobile network operator
A mobile network operator , also known as mobile phone operator , carrier service provider , wireless service provider, wireless carrier, or cellular company, or mobile network carrier is a telephone company that provides services for mobile phone subscribers.One essential...

, digital and cable television options, and broadband internet access. When a wireless company, for example, charges customers different amounts based on the number of voice minutes, text messages, and other features they desire, the company is utilizing the principle of tiered service. This is also seen in charging different prices for services such as the speed of one's internet connection and the number of cable television channels one has access to. Tiered pricing allows customers access to these services who may not otherwise due to financial constraints, ultimately reflecting the diversity of consumer needs and resources.

Tiered service helps to keep quality of service standards for high profile applications like streaming video or VoIP. This comes at a cost of increasing costs for better service levels. Major players in the Net Neutrality debate have proposed tiered internet so content providers who pay more to service providers
Internet service provider
An Internet service provider is a company that provides access to the Internet. Access ISPs directly connect customers to the Internet using copper wires, wireless or fiber-optic connections. Hosting ISPs lease server space for smaller businesses and host other people servers...

 get better quality service.

History

It was not until the Internet began its rapid evolution that tiered services became a controversial issue. And it was not until the early 2000s that Internet carriers considered the option of abandoning net neutrality policies. In 2005, the FCC changed the way Broadband service providers
Internet service provider
An Internet service provider is a company that provides access to the Internet. Access ISPs directly connect customers to the Internet using copper wires, wireless or fiber-optic connections. Hosting ISPs lease server space for smaller businesses and host other people servers...

 are regulated. This made Broadband service providers "information services" instead of "telecommunications services". This means Broadband service providers are no longer subject to Common carrier
Common carrier
A common carrier in common-law countries is a person or company that transports goods or people for any person or company and that is responsible for any possible loss of the goods during transport...

 Regulations. Since the beginning of the twentieth century, common carriage guidelines required the quality of service must be the same for all, preventing one customer from being favored over another. During the first decades of the 1900s, this policy related directly to the telephone industry, and AT&T specifically. However, in recent decades, the policy has grown to encompass a broader range of communication services. Preventing preferential treatment of customers in the realm of the internet is referred to as the policy of Net Neutrality. Former chairman of the FCC Michael Powell considered net neutrality to be fundamental to the success of the Internet and even one of the basic rules to maintaining freedom on the Internet. The Federal Communications Commission
Federal Communications Commission
The Federal Communications Commission is an independent agency of the United States government, created, Congressional statute , and with the majority of its commissioners appointed by the current President. The FCC works towards six goals in the areas of broadband, competition, the spectrum, the...

 (FCC) continued its skepticism of tiered pricing for quite some time, and it was not until concerns about the availability of the spectrum began to surface that things began to change. FCC Chairman Julius Genachowski
Julius Genachowski
Julius Genachowski is an American lawyer and businessman. He became Federal Communications Commission Chairman on June 29, 2009.-Education:Genachowski grew up in Great Neck, New York. He attended yeshiva and studied in Israel...

 annonced in 2010 that the benefits of tiered pricing include helping to prevent data backups on networks. Genachowski expressed his fear of a coming "spectrum crisis" as a result of the increase in smartphone usage ultimately clogging carrier networks. The FCC suggested a number of solutions to the problem including greater use of the unlicensed Wi-Fi
Wi-Fi
Wi-Fi or Wifi, is a mechanism for wirelessly connecting electronic devices. A device enabled with Wi-Fi, such as a personal computer, video game console, smartphone, or digital audio player, can connect to the Internet via a wireless network access point. An access point has a range of about 20...

 spectrum, more femtocells, and more efficient arrangement of cell towers, but even these measures were not believed to be enough to keep spectrum bands open.
Attempts have been made to put price controls on tiered service. United States Congress
United States Congress
The United States Congress is the bicameral legislature of the federal government of the United States, consisting of the Senate and the House of Representatives. The Congress meets in the United States Capitol in Washington, D.C....

 put a bill forth to prevent a "two-tiered pricing scheme with priority service." The bill did not pass congress, but allowed the FCC
Federal Communications Commission
The Federal Communications Commission is an independent agency of the United States government, created, Congressional statute , and with the majority of its commissioners appointed by the current President. The FCC works towards six goals in the areas of broadband, competition, the spectrum, the...

 to stop ISPs from blocking websites.

The way ISPs tier services for content providers and application providers is through "access-tiering". This is when a network operator grants bandwidth priority to those willing to pay for quality service. "Consumer-tiering" is where different speeds are marketed to consumers and prices are based on the consumers willingness to pay.

Net neutrality

Net neutrality is the practice of keeping internet service providers from offering tiered service and controlling the ability to block out competition by restricting certain pipelines within the internet. By blocking these pipelines, the provider creates an unfair transfer of packets across the internet, diminishing the quality of service. Internet service providers seek to discriminate against peer-to-peer
Peer-to-peer
Peer-to-peer computing or networking is a distributed application architecture that partitions tasks or workloads among peers. Peers are equally privileged, equipotent participants in the application...

 (P2P) communication, FTP, online games, and high bandwidth video streaming. This practice is called bandwidth throttling
Bandwidth throttling
Bandwidth throttling is a reactive measure employed in communication networks to regulate network traffic and minimize bandwidth congestion. Bandwidth throttling can occur at different locations on the network. On a local area network , a sysadmin may employ bandwidth throttling to help limit...

, which is used to control congestion within the network created by these processes.

Implications

A tiered internet gives priority to packets sent and received by end users that pay a premium for service. Network operators do this to simplify things such as network management and equipment configuration, traffic engineering, service level agreements, billing, and customer support.

Tiered service fair queuing

Fair queuing is an algorithm that allows for network moderators to control packets by assigning flow weights. Groups of guaranteed-service applications are classed by their nature (eg., "voice","video","game") based on similar bandwidth and delay requirements. These guaranteed-service applications are given priority over best-effort applications which are limited by the access bandwidth available to the user.

Continuous rate network model

The Continuous-rate network model allow users to request any amount of bandwidth necessary for their uses and the network must be able to provide any arbitrary amount requested. There must be mechanisms put into place by the network provider that allows for a distinguishing to be made for these arbitrary requests. This process can become almost impossible for traffic with a finite duration. Bandwidth requests are inherently variable in size, arrival time, and duration and creates link capacity across the continuous rate network to become fragmented. The network would then have much difficulty in maintaining a sufficient level of utilization and users’ expected quality of service.

Arguments

Initial reasoning against tiered service was that ISPs would use it to block content on the internet. Internet service providers
Internet service provider
An Internet service provider is a company that provides access to the Internet. Access ISPs directly connect customers to the Internet using copper wires, wireless or fiber-optic connections. Hosting ISPs lease server space for smaller businesses and host other people servers...

 could use this to prioritize affiliated partners instead of unaffiliated ones. Many argue that one fast network is much more efficient than deliberately throttling traffic to create a tiered internet.

AT&T

AT&T
AT&T
AT&T Inc. is an American multinational telecommunications corporation headquartered in Whitacre Tower, Dallas, Texas, United States. It is the largest provider of mobile telephony and fixed telephony in the United States, and is also a provider of broadband and subscription television services...

 had a trial in 2008 in Reno, NV which was one of the first cases of tiered service for in-home broadband internet pertaining to the amount of data used.

BT Group

BT Group
BT Group
BT Group plc is a global telecommunications services company headquartered in London, United Kingdom. It is one of the largest telecommunications services companies in the world and has operations in more than 170 countries. Through its BT Global Services division it is a major supplier of...

, a British telecommunications giant, is now going to charge users of their service extra for faster delivery of content. Meaning that they will not be handling all traffic across their network equally.

AT&T

AT&T
AT&T
AT&T Inc. is an American multinational telecommunications corporation headquartered in Whitacre Tower, Dallas, Texas, United States. It is the largest provider of mobile telephony and fixed telephony in the United States, and is also a provider of broadband and subscription television services...

 revised their cellular data plans to create data tiers for specific types of usage. AT&T indicated that tiered pricing may be brought on in the future for LTE
3GPP Long Term Evolution
3GPP Long Term Evolution, usually referred to as LTE, is a standard for wireless communication of high-speed data for mobile phones and data terminals. It is based on the GSM/EDGE and UMTS/HSPA network technologies, increasing the capacity and speed using new modulation techniques...

 data plans.

Metro PCS

MetroPCS
MetroPCS
MetroPCS Communications, Inc. , formerly known as General Wireless, Inc., is an American mobile phone service provider. It operates the fifth largest mobile telecommunications network in the US, with 8.9 million subscribers as of May 2011...

 has been accused of violating net neutrality by their proposed tiered cell phone data services. With some of these services being capped, this violates various agreements for open internet.

Sprint

Sprint
Sprint Nextel
Sprint Nextel Corporation is an American telecommunications company based in Overland Park, Kansas. The company owns and operates Sprint, the third largest wireless telecommunications network in the United States, with 53.4 million customers, behind Verizon Wireless and AT&T Mobility...

 is implementing tiered data plans for their mobile broadband products. The plans come in 3GB, 5GB, and 10GB capacities. Sprint previously claimed to have unlimited service, as this is their first venture into tiered pricing schemes.

Verizon

Verizon Wireless
Verizon Wireless
Cellco Partnership, doing business as Verizon Wireless, is one of the largest mobile network operators in the United States. The network has 107.7 million subscribers as of 2011, making it the largest wireless service provider in America....

 introduced their LTE network with the capability for tiered services at the end of 2010. Because the companies 4G network is now available in tens of cities across the United States, Verizon has the opportunity to charge premium prices for faster data delivery. Such data plans allow Verizon to charge under a tiered service platform, similar to many home wired internet services.

Arguments

There are many arguments between ISPs, who traditionally support tiered services, and Network Neutrality proponents. ISPs say that tiered services are necessary to keep and maintain network performance. Also, tiered pricing schemes allow ISPs incentive to upgrade their networks and provide better service. Network Neutrality proponents say that ISPs do not have this right to degrade internet services and that their service should be open and consistent.

Verizon
Verizon Communications
Verizon Communications Inc. is a global broadband and telecommunications company and a component of the Dow Jones Industrial Average...

CEO, Ivan Seidenberg, expressed his concerns with network neutrality regulations saying that stricter regulations preventing tiered services ignore "benefits of smart networks."

Unfortunately, in recent years, both critics and proponents alike have seen the debate over net neutrality and tiered services become increasingly more partisan.
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