E-mail with Postage Due

Just as the Senate Commerce Committee begins hearings on network neutrality comes word that AOL and Yahoo want to charge bulk e-mailers for guaranteed delivery of e-mail to their customers. Under the Yahoo and AOL plan, business customers would pay between 1/4 and 1 cent “postage” to be assured that their bulk email gets past the spam filters they routinely offer customers. Regular e-mail to AOL and Yahoo addresses would be treated no differently that it is today. The plan would add costs chiefly to senders of bulk email. The good news is that no one has demanded the government pre-emptively ban the idea — as is what occurred when another group of companies in the broadband value chain, the phone and cable companies, suggested that they would charge applications providers extra for expediited handling and management of bandwidth-intensive services. Second, in reporting the story, the New York Times correctly tied it to the overall network neutrality issue. Unlike carrier efforts to offer a similar tiering structure, however, Congress has not injected itself into the debate. Let’s hope it stays that way. For now, the right question is being asked: Is this a smart move from a market persepctive? Yahoo says by making the cost of bulk email more expensive, companies will be more discriminating about who they send email to. This will cut down on spam. On the other hand, the Times also quotes Matthew Moog, the chief executive of Q Interactive, company that runs a marketing service called CoolSavings that sends e-mail to 10 million people a month who have requested it. “No one wants … a tollbooth that makes it cost-prohibitive for legitimate mailers to reach the in-box,” he says. The discussion is right where it should be — whether open access and free access mean the same thing, or whether the industry can use market economics to allocate their resources. Being that the Internet is an economic beast, I would say the latter makes more sense. But I’m all for a market test. Pity that when carriers raise the same questions, the market debate gives way to immediate demands for a government ban. To give them credit, AOL and Yahoo have been mum on the issue of carrier network neutrality, unlike Google and Microsoft, who are lobbying aggressively for enforcement of a single-tier, “best effort” Internet. If AOL and Yahoo are successful with “e-stamps,” Google and Microsoft’s MSN will be sorely tempted to follow. It will be interesting how they manage it without undermining their own arguments for network neutrality.