Comcast meet Copowi, your new enemy!
How much would you pay for an Internet connection from an ISP that guarantees a neutral network, bills itself as a “social enterprise” instead of a traditional business, and sends free Ubuntu CDs to every new customer?
In the US, the battle over network neutrality has captured the public imagination in a way that it has yet to do in Europe or Australia. Debates over network neutrality occur in the media and in Washington, but new ISP Copowi wants to give customers a way to vote with their dollars as well. When it opened its doors for business two weeks ago, Copowi billed itself as the country’s first ISP to guarantee network neutrality, and it now hopes to prove to other ISPs that the issue matters enough to consumers to provide a competitive advantage, even if prices are higher (and they are).
Copowi already offers service in 12 Western states, but “absolutely” wants to go national—even international. Copowi senior partner George Matafonov tells Ars that he sees no reason why the company couldn’t eventually expand into Australia, Canada, and the UK.
But for now, with a few hundred subscribers, selling service in Australia looks a long way off. I spoke to Matafonov (an Australian himself) about Copowi’s business model, its challenges, and whether it will really remain neutral if a handful of peer-to-peer users start slurping up most of the available bandwidth.
Your gateway to a neutral ‘Net
Copowi’s main pitch is a fully neutral network, which it defines as one that provides “equal access to all web sites and online services.” The idea is that usage will be unrestricted and traffic will not be shaped, throttled, or prioritized. According to Matafonov, the major telecommunications companies want to “privatize the Internet” because greater control leads to greater profits. The eventual outcome could become something more like cable television than like the open Internet we know now, and Copowi strongly supports SavetheInternet.com’s campaign to preserve an open ‘Net.
But Copowi doesn’t own any “last-mile” lines to people’s homes, which means that it needs to lease DSL lines from local telcos out west in order to offer service (interesting side note: although companies like Verizon and AT&T scoffed at the idea of offering part of the 700MHz band as a “wholesale-only” license, both firms run thriving wholesale businesses of their own already). This puts Copowi at the mercy of the telcos that it leases lines from and means it has only limited control over its network neutrality guarantee.
Matafonov says that Copowi has had no problem in its negotiations yet, though. The telcos have so far been happy to provide unregulated access if Copowi is willing to pay for the bandwidth.
Because of this, and because telco wholesalers rarely resell lines at competitive prices (they don’t want to create their own competition), Copowi’s service runs toward the pricey side of the broadband spectrum. Users in Colorado, for example, will have to cough up a staggering $33.95 a month for a 256Kbps DSL connection—expensive by any standard.
Copowi’s higher-end plans are actually far more competitive when it comes to price. A 1.5Mbps connection is still not cheap at $49.95 per month, but a 7Mbps link isn’t a bad deal at $59.95 a month.
Matafonov admits that high wholesale rates are “one of the key questions” that the company faces, but he hopes that a small niche of customers will be willing to pay the premium for a guaranteed neutral connection. He also hopes that prices will drop as subscriber numbers grow and Copowi can negotiate better contracts. For now, though, Copowi targets those who don’t make “cost” their primary concern when choosing an ISP.
How strong is that guarantee?
Network neutrality sits at the center of the company’s business plan; it’s Copowi’s main selling point over rival ISPs. But network neutrality can be simpler to theorize about than to implement, especially when other customers on a network begin to see their connections suffer due to massive bandwidth usage by a small number of subscribers. Typically, this sort of congestion is caused by P2P software, and numerous ISPs and universities around the world have taken to throttling the total network bandwidth that can be used for such applications in order to keep networks useful for other users.
Doing this would seem to cut the heart right out of Copowi’s neutrality guarantee, but Matafonov admits that “P2P can be a real problem; no way around it.” The network owners that Copowi leases from might be forced to implement throttling in order to maintain service levels; if that happens, Matafonov says that Copowi will explain the situation to its subscribers and says that there may need to be a bit of “give-and-take” on the matter.
The Copowi terms of service (TOS) provide some flexibility in these situations; the company tells users that they may not “violate laws, infringe the rights of others, interfere with users of our network or other networks, or otherwise violate our Acceptable Use Policy set forth on our Internet Services web site.” Those clauses could allow Copowi to take some kind of action if a small group of users “interferes with users of our network.” Otherwise, the TOS allows Copowi to change the agreement so long as it gives subscribers 30 days notice.
Welcome to the social (enterprise)
This isn’t a path that Matafonov wants to take, though. He’s been dreaming about opening up a guaranteed neutral ISP for a year and a half, ever since network neutrality made a big splash in the US media. He’s committed to the idea of neutrality not just as a way to attract customers, but because he believes it’s important to the future of the Internet. It’s so important that Copowi isn’t set up as a traditional profit-making business but as a “social enterprise” that uses market forces and corporate structures as ways to create social goods for communities.
That approach is evident even in the company’s name; Copowi stands for “community powered Internet.” The idea is that the company is “based on communities where all things we provide are community powered,” says Matafonov.
Here’s how Copowi defines what it’s up to on its web site: “A social enterprise, on the other hand, is not driven by the profit motive; it is there simply to deliver a service or product as cheaply and efficiently as possible. The bulk of the work is often done by a community of volunteers so that the running costs are extremely low. Without huge overheads it makes it a very lean, competitive and effective way of organizing.”
How this works in practice isn’t quite clear yet, but the company does offer an affiliate program and kicks back a portion of its profits to those who recruit subscribers using their own social networks.
If the idealism present in this vision reminds you of the same attitudes often found among open-source software advocates, that’s no coincidence. The Copowi founders want to model the entire business on open source principles, and they go so far as to distribute a free Ubuntu CD to every new subscriber. Copowi uses open-source tools whenever possible and pledges to open the code for any network administration tools that it develops internally as way to encourage other like-minded community ISPs to form.
To infinity and beyond
For now, Copowi is a tiny firm. It’s had a few hundred applications in the first couple weeks of its existence, and broadband is only available in 12 states (Washington, Montana, North Dakota, Minnesota, Oregon, Idaho, Wyoming, Utah, Colorado, Arizona, New Mexico, and California). Dial-up users—should any still exist—can also pay $15.95 a month for nationwide access.
But Matafonov is convinced that an untapped market niche exists in the US, a niche populated by those willing to pay a few bucks more for a neutral connection and an ISP with a conviction about the value of open-source ideas. Should Copowi get to 5,000 subscribers, it would have the leverage needed to go national and lease access lines across the country. It would also show other independent ISPs that they can still compete with the big boys, and that price isn’t the only thing that matters.
And it might just help keep the Internet free.