Dan is watching a movie at home using his paid Netflix account. Unfortunately, the movie quality is not that good and stutters during playback. He is not able to forward, rewind or jump to a certain chapter within the movie because this functionality takes too much time to load. As a consequence, Dan stops watching the movie and is very dissatisfied with his online movie experience and Netflix. However, what Dan does not know is that it is not Netflix’s fault; he lives in a multiple-unit residence where the neighborhood kids play World of Warcraft on the Internet while their dad is watching a streamed pay-per-view movie in HD quality via IPTV. This takes up so much bandwidth that Dan cannot watch his movie in the desired quality. Nevertheless Dan blames Netflix for the bad experience and discontinues his Netflix subscription.

This shows the problem that online service providers are currently facing: they are not able to guarantee a level of service quality that ensures their paying customers a great online experience. This can range from online video services such as Netflix to interactive online gaming such as Borderlands via the OnLive service to video conferencing services such as LifeSize or other services making intensive use of bandwidth, all of which face the same difficulty.

A way out of this dilemma is to ensure quality of service through technologies such as those which telecommunication companies (telcos) are currently implementing in their next generation access (NGA) infrastructure. Telcos are integrating quality assurance services as they expand their service portfolios from simple voice and data to broadband TV and on-demand multimedia service offerings for which they need to ensure a constant level of quality to their customers. However, telcos’ most serious problem is that their products are not as accepted and successful as the ones of straightforward online service providers such as Netflix or iTunes. The one’s weakness is the other’s strength. Consequently, a strategic partnership between these online service providers and the telecommunication operators might create value in terms of greater revenue at lower costs for both. The operators could focus on investing in their infrastructure and provide quality-of-service mechanisms to online providers who focus on content acquisition and distribution. Although this scenario is very appealing, it brings up one important issue: net neutrality.