Net Neutrality Solution: Buy Something

Warning: Commercial content follows.

It's not our fault, mind you. All we did was ask various industry groups what they think of the network neutrality debate. And you know what? Damn near every one of them tried to sell us something.

Yes, while the Federal Communications Commission (FCC) debates what it can do to ensure that carriers practice reasonable network management and enforce some kind of -- gasp! -- network neutrality, some say that the growing amount of traffic on the Internet is not a problem that can, or even needs to, be solved by legislation.

Lots of folks have arguments against the ways operators like Comcast Corp. (Nasdaq: CMCSA, CMCSK) manage their networks, but few from those same parties are offering solutions. That leaves it up to the vendors and content delivery networks to do what they do best -- present purchasing their gear and services as solutions for a complex problem.

"You can wait for a miracle, you can wait for more bandwidth, or you can look at the practical thing to do," says Mark Strangio, director of marketing for PeerApp Ltd. "Most of these guys manage their networks using DPI [deep packet inspection] products. That's step two." Caching, he says, is step three.

“The most interesting [point] of the debate is that neutrality equals fairness,” says Tom Donnelly, the EVP of marketing and sales and a founder of Sandvine Inc. (London: SAND; Toronto: SVC), a company purported to be involved in Comcast’s network management policies. “There’s a lot of complementary interest between subscriber and content developers and operators. There is no neutral party in that debate. I think you can make an argument that an efficient network is fair.”

He says cable operators must be allowed to manage their own networks. “When you share, there’s going to be some tension,” he says.

But Donnelly questions how much information should be shared about how operators manage their networks. “I think it’s naïve to think that to think that level of detail would not be used by some parties selfishly.

“Should QOS be a function of who can create the greediest code… and secure priority for itself at the expense of other traffic on the network?”

While applying more caching to an ISP’s network could help to reduce congestion, it’s just a baby step toward other technical and economic adjustments that can provide even more, says John Dillon, chief marketing officer of content delivery network (CDN) Velocix .

"I think the fundamental problem is that the value chain for video distribution on the Internet is broken," says Dillon. The value chain he describes inherently puts a financial squeeze on ISPs that can pressure them to apply limits on network traffic.

When a premium content provider pays a CDN to distribute its video, the CDN, in turn, will pay a transport provider, such as Level 3 Communications Inc. (Nasdaq: LVLT), to provide the backbone transport. The transport provider will then charge the ISP to receive the traffic.

"If you see an increasing volume of traffic, the transit fees that ISPs are paying are through the roof," says Dillon. This is a big problem for ISPs. While this raises their costs, their one source of revenue, subscription fees, has been on the decline, driven by competition.

Dillon says Velocix is working on a way to deploy its caching infrastructure within the ISP networks. The idea: Once a piece of content is cached in the ISP network, the transit costs are now much lower for the CDN. The CDN, in turn, charges the content provider less and the transit fees for the ISP are less.

"The final piece is we actually will pay a royalty to the ISP based on the volume of traffic flowing through their network," Dillon says. Dillon's proposition would result in an additional revenue stream for ISPs with the added incentive to allow more traffic to flow through its network. But first those cash-strapped firms would have to find a way to add a lot more equipment into their networks.

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