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AT&T insisted that Apple throttle or cut off YouTube on the iPhone. AT&T's Kris Rinne demanded Apple "restrict its YouTube app to run only over Wi-Fi. Maybe the iPhone could feature a smaller, lower-resolution videostream or cut off YouTube videos after one minute," In Germany, René Obermann of DT is demanding that Google and Apple pay extra to get ordinary decent service on his network.

     All the folks who thought this was never going to happen now have to face the facts. The technology to slow done some video in order to force a payment is now starting to work.

   It may or may not be right for government to enforce neutrality; governments often create more problems than they solve. But let's all be honest. Telcos want to make money; if they can get away with demanding it, they will. Deutsche Telekom has 12M subscribers, 47% of the enormous German market. Very few video companies could resist paying them if the alternative were having their streams partially blocked.

     9 million people streaming Netflix every month, often in HD, have little or no trouble on most major networks. They now stream up to 3.4 megabits and most shows look fine on Jennie's 50 inch plasma. That's dramatic evidence that most U.S. networks are effectively neutral. CTO level executives from Verizon, Comcast, AT&T, BT Wholesale, and Free,fr have confirmed it to me.

On most large fiber, DSL and now cable networks, they've solved virtually all congestion problems. All this congestion and related talk (on major wired networks) is a myth spread by lobbyists, economists, lawyers, and shills who haven't bother to check the people running the networks. 

     DT has a world class DSL network. Their CTO told me it could easy handle any likely volume of video streaming without QOS, significant extra capex, or other modifications to the system. It turns out that any decent DSL network can stream megabits of video without a problem.  Bandwidth isn't free, but it's so cheap that an effectively neutral network only costs about an extra 25 cents/month/customer.

     Most large networks are neutral today or darn close. Even with video expanding, the capex to keep the networks essentially congestion free is modest. It's typically less than the depreciation on the equipment in place, dimes/month/subscriber.

         Apple had the bargaining power to refuse when AT&T made demands, Fred Vogelstein reports in a powerful Wired article. AT&T sells its own video packages, of course, and didn't offer to cut them off after a minute. AT&T's sales would be $billions lower without the iPhone, so Apple has clout. Verizon, Sprint or T-Mobile would be delighted to take up the slack. Nokia, Motorola, Samsung and other phonemakers would have had little choice but to agree. If they lost AT&T as a customer in a cutthroat cellphone market, they have no way to make up the lost sales. 

      Up to now, it's mostly been rhetoric and symbolic but generally insignificant issues. This is real, unlike Ed Whitacre's comment "We won't let them use our pipes." Whitacre never followed up after public outcry, but Obermann has already called in Google to discuss.AT&T was ready to go ahead, trusting the $2M/year silver tongues in D.C. would let them do what they want.