Fee-based systems for commercial e-mails raise the spectre of the two-tier internet, writes internet law professor Michael Geist.
The move is targeted at reducing spam
America Online and Yahoo's recent announcement of a new fee-based system for commercial e-mail has generated enormous discussion within the internet and marketing communities.
Supporters argued that the plan represents an innovative marketing approach that will help reduce spam.
Detractors, on the other hand, fear that the plan will choke off free speech by limiting the use of e-mail to those who can afford to pay millions in new service fees.
Closer examination of publicly available information regarding the plan reveals that the proposed e-mail fee-structure, commonly referred to as certified e-mail, will actually do little to address spam and may not attract a large client base.
Rather, its more significant impact lies in the fact that it is yet another step toward the two-tiered internet that will ultimately shift new costs to consumers.
With spam now accounting for the majority of all e-mail traffic, the reliability of e-mail has greatly diminished. Where internet users once trusted that their e-mail correspondence would arrive at their intended destination, layers of spam filters designed to keep spam out of individual inboxes has also had the unfortunate effect of blocking legitimate e-mail.
Large e-mail providers such as AOL and Yahoo, who together represent more than half of the e-mail addresses on many US consumer e-mail lists, have sought to work with legitimate marketers by employing a "white list" that enables e-mail sent from pre-identified addresses to arrive unhindered at no additional cost.
While that approach has been fairly successful, AOL and Yahoo have floated plans to replace the white list approach with a certified e-mail system managed by a company called Goodmail.
Under the certified e-mail system, marketers would pay a fraction of a cent per e-mail in return for guaranteed delivery that by-passes spam filters.
There is a danger that the plan could ultimately hinder the fight against spam
AOL initially indicated it would drop the free white list by the summer, though it backtracked soon after in the face of mounting criticism.
Notwithstanding the link between certified e-mail and spam, it is important to note that it has little to do with reducing spam.
Unlike spam, which is unsolicited commercial e-mail, certified e-mail only involves e-mail that recipients have agreed to receive.
In fact, there is a danger that the plan could ultimately hinder the fight against spam, since there is an inverse relationship between the attractiveness of certified e-mail and the effectiveness of spam filtering.
In other words, as the accuracy of spam filtering decreases (ie greater blocking of legitimate e-mail), the desirability of a certified e-mail system that guarantees delivery increases, creating incentives for e-mail providers to reduce the effectiveness of their spam filters in favour of a lucrative certified e-mail system.
While there is good reason for concern about the negative impact of certified e-mail on spam filtering, there is also ample reason to doubt that it will prove popular with marketers.
Marketers estimate that approximately 95% of legitimate e-mail arrives at its intended destination.
If AOL and Yahoo account for half of consumer e-mail addresses, marketers will have to balance the value of paying to deliver e-mails for half their list against the loss of 2.5% of intended recipients.
If certified e-mail does little to reduce spam and may not present an attractive business model, why all the attention?
Advising contacts of an e-mail address change is a laborious process that invariably results in lost connections and missing e-mails
There are at least three reasons. First, many non-commercial organisations such as charitable or civil society groups may not have the resources to even engage in a cost-benefit analysis of certified e-mail.
For those groups, many of whom depend upon e-mail as their primary method of communication, the shift from low-cost e-mail to certified e-mail could have a debilitating effect.
Second, while consumers enjoy considerable choice among e-mail providers, switching costs remain high since advising contacts of an e-mail address change is a laborious process that invariably results in lost connections and missing e-mails.
In many respects, this market resembles the wireless phone market, where the lack of consumer mobility stems not from a lack of choice but rather from the ongoing delays in number portability that would allow consumers to switch providers but retain their existing cellphone number.
Third, this marks the continuing progression toward increased differentiation - or tiering - of internet services.
Users and websites are accustomed to a straightforward model that involves a flat fee for an established service.
In recent months, ISPs and now e-mail providers are challenging those assumptions by moving toward two-tiered pricing, two-tiered access, and two-tiered e-mail delivery.
This movement represents a fundamental reshaping of the internet.
It requires the active involvement of competition and telecommunications regulatory agencies in order to ensure that the dominant internet access and service providers do not harm the long-term potential of the online world.
Michael Geist holds the Canada Research Chair in Internet and E-commerce Law at the University of Ottawa, Faculty of Law.