MAD Perspectives Blog

 Net Neutrality Soon to be a Distant Memory?

Peggy Dau - Monday, May 19, 2014

If the cable industry has its way, the internet will soon feel like my former local cable plan. I'll keep paying more without receiving any incremental value or having any say in the matter. The current debate over net neutrality boils down to concern by internet service providers (ISP) that services like Skype and Netflix consume large amounts of bandwidth, causing network congestion that can only be addressed by infrastructure investment by the ISP. The ISPs claim that the FCC Open Internet Order 2010 goes too far in its restrictions requiring ISP transparency in how they manage network congestion and prohibits ISPs from blocking traffic or creating "slow" lanes for any content.

This issue has worked its way through the courts and has escalated in terms of visibility thanks to the success of OTT services like Netflix and Amazon Instant Video as well as voice/video-over-IP services such as Skype. Netflix's website indicates bandwidth requirements of 3 Mbps for standard definition content, 5 Mbps for high definition content and 25 Mbps for 4K content. It is obvious why ISPs are concerned. While 4K content is not yet widely available, nor have consumers invested heavily in 4K TVs, it is clear that 4K content is the future. As the volume of Netflix subscribers increases, so do the concerns of Comcast (easily the nation's largest cable operator and soon to be larger and more powerful with its acquisition of Time Warner Cable), Verizon and other providers of fiber optic based networks.

In my opinion, these ISPs are simply trying to figure out a way to underwrite their future network investments. They can pontificate about the FCC overreaching its authority or freedom of speech or regulatory ability, but the bottom line is always about money. Netflix has already started creating direct relationships with ISPs to guarantee that they will have the necessary last mile bandwidth to deliver content to their subscribers. And, what is the result? An increase in the monthly subscription cost for new subscribers (and without a doubt existing subscribers at some point in the future).  Of course, the ISPs (cable or telco) already have tiered plans based on download speeds.  Presumably pricing reflects current costs and will be adjusted as needed. This was certainly the practice of my former cable provider.

The new proposed ruling from the FCC introduces paid prioritization. This means that content owners can pay the ISP and incremental fee (which is what Netflix has negotiated with Comcast and others) to guarantee access to necessary bandwidth. So, the ISPs get paid, AGAIN, for use of their "pipes".  Let's summarize what this means:the ISPs would generate income from consumer subscriptions AND from content providers.  Consumers would pay subscriptions to the ISP and to OTT content providers (aka Netfllix).  Who wins? The ISP.  Will my service any better?  Impossible to say.

This is a hot potato topic. There are strong opinions on all sides. I don't claim to be an expert.  Check out the for a good summary of different perspectives. For me, this feels like the ISPs will be able to discriminate in favor of their own content. In the case of Comcast this is a very real concern given their ownership of NBCUniversal. For me, the open internet is a basic right, symbolic of the democracy that we live in.

What's your perspective?