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Net neutrality: The debate is on

Recent Federal Communications Commission proposals to allow Internet service providers (ISPs) to charge content providers for faster Internet access on the basis of “commercial reasonableness” has uncorked a grand debate between those who want more or less regulations and openness. Issues of competition, innovation, rights, privacy and intellectual property all overlap in this high-stakes tug-of-war for the Internet. The short-term outcome is anything but clear, but change is coming.

To help unravel the issues, think of a barbell. At one end are consumers and small businesses, the Internet is the pipe in the middle and at the other end are vast data centers with service providers (Netflix,  Google, Facebook, Amazon, etc.) along with content creators who use both those services and traditional networks to distribute their content (movies, TV shows, songs, curated databases, etc.). Everyone pays for an Internet data services connection on which to send and receive content. The Internet was grown up alongside the traditional networks of radio, over-the-air broadcast TV and cable video networks.

On the Internet every day it costs less and less to store, process and transport vast quantities of data. Internet services are rapidly evolving and the converged network already incorporates video and phone networks. The Internet of things is coming. Content still costs to create and content owners continue to seek opportunities to reach customers directly. 

At the consumer and end-user side of the networks are hundreds of millions of users on cable and DSL, and wireless subscribers with devices everywhere. Internet bandwidth is the water that makes all the other Internet services possible, and it competes in many cases with traditional networks. Regulators have allowed a lot of leeway for the Internet to develop, promoting competition and innovation, and where users could purchase unbundled services many have “cut the cord” and buy only what they need. 

The open Internet rules were designed to support this process while managing the relationship between the Internet and traditional networks. It’s not an easy balance to strike. Previous appeals court rulings struck down earlier net neutrality rules, stating that the FCC overstepped its authority while at the same time affirming it can write rules. Internet providers pledged to stick to open Internet guidelines.

Despite this, recently Netflix customers on Comcast were having increasing performance issues to such an extent that Netflix made a deal to pay Comcast for preferred bandwidth, while at the same time petitioning the FCC to maintain open network standards contrary to this deal. Service improved immediately (demonstrating network capacity was not at issue) but the solution is contrary to open Internet ideals. 

Preferred bandwidth deals would exclude smaller startups and create potentials for artificial scarcity. By raising the issue now the decision on rules and how services are classified and regulated is on the table. The Supreme Court case of Aereo vs. broadcasters (capturing over-the-air HDTV broadcasts and providing them as an Internet service) and the Comcast-Time Warner merger are also in the mix. One of the rationales behind the merger is to create economies of scale to negotiate with the content owners, who in turn seek the best deals for their content and more direct access to consumers. Aereo competes with the broadcast model.

Regulators, legislators and Supreme Court justices have expressed a keen understanding that an open and innovative Internet is the key. Personally I expect in the short term new regulations and mergers will occur – but also strong support for continued unbundling of network connectivity from services so consumers can access Internet-based innovation and competition. 



• Charles Keating is president of Keating Consulting Service (www.kcsco.com), an IT consulting firm serving global clients since 1983. He is also a partner in K2 Strategic Solutions (www.k2strategic.com) and Professional Options (www.professionaloptions.org), and current president and co-founding member of West Sound Technology Association (www.westsoundtechnology.org). 

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