Vodafone doesn't believe network neutrality will work as capacity demands increase, forcing operators to build out faster networks. Instead, a second network is needed, according to David Leftley, head of technology economics at Vodafone Group R&D.

Network neutrality typically refers the way Internet access or backbone providers deliver packets on a first-come, first-served basis, and do not prioritize packets of one type, source or destination.

That Internet model has so far meant a free lunch for application providers, companies such as Google currently sit on top of networks which the large network operators happily have put in place, according to Leftley.

That has to change, according to Leftley. His idea of how future networks should be financed and built is at odds with the principles of network neutrality.

"There are the network neutralists who believe we just build an infinite capacity network, as big as you can. Bandwidth is infinite, the carrier has no differentiation, and all content has infinite value. The application provider, on the whole, ignores the carrier. There is no value exchange, so I don't see how that can work," said Leftley, in panel discussion on the future economics of the Internet at the Wireless World Research Forum in Stockholm on Tuesday.

Instead, what is needed is an alternative, intelligent Internet that can extract and distribute the value of the content it carries, Leftley said. The solution he proposes, IPX (IP Exchange), is already being developed by mobile phone operators.

IPX will consist of a number of private, global IP (Internet Protocol) backbones designed to guarantee quality of service when users connected to different mobile operators communicate with one other.

The first IPX networks will see the light of day next year, and will make it possible for all involved to receive "a fair commercial return for their work," according to industry organization the GSM Association, which is leading the development.

What Leftley sees as a change in the message from network vendors has convinced him that operators are on the right track.

Leftley said he has had discussions with the likes of Cisco Systems and Juniper Networks, and they have gone from opposing the idea of an intelligent network to embracing it.

"There seems to be a common understanding that this has to happen," he said.

Leftley wasn't the only one on the panel advocating the idea of a second network. France Télécom and TeliaSonera, both working with Vodafone on IPX, are on the same page.

The French operator sees a future with two Internets, where one is a best-effort network and one offers support for quality-of-service guarantees. Users will for example be able to choose between free TV over the regular Internet or pick and pay for a service that uses the new network and get better quality.

"Two models for different users and services," said Brigitte Cardinael, at Orange Labs, a subsidiary of France Telecom.