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FCC's 'Middle Ground' Already Under Attack

Carol Wilson
4/24/2014
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The reactions to the Federal Communications Commission (FCC) 's new net neutrality proposals have been swift and predictable even though those proposals haven't even been formally announced yet.

In advance of the expected announcement today, multiple news outlets are reporting that Chairman Tom Wheeler is circulating a proposal that seeks a middle ground. It would allow broadband ISPs to offer premium access to companies that want to carve out guaranteed high-speed bandwidth for their services, as long as such access was commercially available to all on reasonable terms.

Just the fact that anyone would be able to pay for premium services is drawing howls of protest and claims that both President Obama and Wheeler are reneging on their support for a free and open Internet. (See Wheeler Writes Regulatory Rubric and Wheeler Walks Line on Net Neutrality.)

In a Common Cause press release, former FCC Commissioner Michael Copps, now a special adviser to Common Cause's Media and Democracy Reform Initiative, said: "If true, this proposal is a huge step backwards and must be stopped. If the Commission subverts the Open Internet by creating a fast lane for the 1 percent and slow lanes for the 99 percent, it would be an insult to both citizens and to the promise of the Net."

The Wall Street Journal, which broke the story Wednesday , claims the winners in the net neutrality wars would be the broadband ISPs, who would be able to make money selling services to both consumers and content providers, and larger content companies such as Google (Nasdaq: GOOG), Apple Inc. (Nasdaq: AAPL), and Netflix Inc. (Nasdaq: NFLX), who can pay more to make sure their content reaches consumers with higher quality. (See Netflix CEO Wants 'Strong' Net Neutrality .)

But broadband providers, many of whom are announcing financial results this week, are being more measured in their responses.

"We have to see what's ultimately embedded in the proposal," said Time Warner Cable Inc. (NYSE: TWC) Chairman & CEO Rob Marcus. "At this stage, it's difficult to speculate until we know what's contemplated.”

Asked about possible new business models for offering Internet video content, Marcus said it was "premature" to discuss. "We'll have to see what new business models emerge," he said.

The new rules were made necessary by a January court ruling that struck down the FCC's previous rules in a challenge brought by Verizon Communications Inc. (NYSE: VZ). According to the Journal, the FCC would require broadband ISPs to disclose more information about their networks and would retain the right to decide on a case-by-case basis on the fairness and reasonableness of the commercial terms broadband ISPs have set. (See Net Neutrality Fight Not Over.)

UPDATE 11.30 AM EST: FCC Chairman Tom Wheeler is "setting the record straight" in a blog you can read here , in which he says the FCC's proposal to be circulated today would set "a high bar" for what is commercially reasonable. In addition, he says the agency will solicit other approaches to preventing "behavior harmful to consumers or competition by limiting the openness of the Internet."

— Carol Wilson, Editor-at-Large, Light Reading

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NetZoo
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NetZoo,
User Rank: Light Beer
4/24/2014 | 6:57:42 PM
Re: Fundamental arguments
Having been at an SP that has tried before to create tiered service, I can tell you that the only way to get customers, on either end of the service, to buy a premium service is to make the basic service terrible.  If there were effective competition, then someone could switch if this were the case.  However, as was pointed out earlier on this thread, there is no real access competition in America.  This policy change will lead to:


1) A slow (or not so slow) slide toward a very poor "basic" internet, and a faster "premium" service.

2) Balkanization of the internet into different "QoS/CoS" pools with non-standard and incompatable mappings between networks for the "premium" services. This will encorage large players to have to buy service from all the providers to get good access to their customer.

3) Dramatically increased pricing power from the service providers with access footprints.

4) Decreased value of SPs without access networks.  They will move more into enterpise services.

 

 
gconnery
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gconnery,
User Rank: Light Sabre
4/24/2014 | 6:52:19 PM
Re: Fundamental arguments
@Sam,

 

No, ISPs are making money hand over fist already.  That's whats especially odd here.  Somehow they've been able to charge their customers (us) for higher speeds and upgrade their networks as they have to date, but that won't work going forward (yeah right) and they need to also charge somebody else too so they can make a fair wage.  Something like that.
futurephil
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futurephil,
User Rank: Light Sabre
4/24/2014 | 5:29:39 PM
Re: Fundamental arguments
You should listen to my podcast or phone me. But, in general, most net neutrality arguments assume that with more speed comes more quality. Or even the same quality. That's not necessarily true if the network is a shared resource and if the resources aren't being dynamically allocated.

And now, I need a beer.
RitchBlasi
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RitchBlasi,
User Rank: Light Sabre
4/24/2014 | 5:00:34 PM
Re: Stick a fork in it
Agree with you fully Carol.
sam masud
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sam masud,
User Rank: Light Sabre
4/24/2014 | 4:59:39 PM
Re: Fundamental arguments
Carol,

At a personal level, I'm more than fine with the way things are--I have about 30 megs of broadband access, I'm totally addicted to Youtube and Netflix and hardly ever have a hiccup. I think Mitch makes a good point in noting that once ISPs are allowed to fast lane, it'll no longer be a level playing field for the next Netflix to come along.

BTW, are ISPs (I'm talking about the big guys) actually losing money. I honestly don't know...

 
futurephil
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futurephil,
User Rank: Light Sabre
4/24/2014 | 4:56:47 PM
Re: Fundamental arguments
Well, that's true. :) 

In this case, I'm merely amplifying what Geddes and others have been saying for a while.

Oh, if only the network was thought of as a dynamic trading space and someone, somewhere were building software to enable reallocation of network resources in real-time. We could call it something catchy, like SDN... 
Mitch Wagner
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Mitch Wagner,
User Rank: Lightning
4/24/2014 | 4:53:17 PM
Re: Fundamental arguments
Interesting. Unpack, please? How are the arguments making false assumptions about the nature of networks, and measuring the wrong things?
Carol Wilson
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Carol Wilson,
User Rank: Blogger
4/24/2014 | 4:43:13 PM
Re: Fundamental arguments
Sam -- if you are consuming video content over the 'Net, why wouldn't you want to be able to get guaranteed bandwidth? I would like to have that option. 

Carol
futurephil
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futurephil,
User Rank: Light Sabre
4/24/2014 | 4:42:55 PM
Re: Fundamental arguments
Yes, in the sense that those arguments both make false assumptions about the nature of networks. In other words, they're not measuring the right things on the network, so what they're asking for doesn't make sense. Happy to chat about it if you want.
Carol Wilson
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Carol Wilson,
User Rank: Blogger
4/24/2014 | 4:41:17 PM
Re: Fundamental arguments
Mitch,

First, I think Phil Harvey, below, has it right but don't tell him I said so or it will go to his head. The guy has an incredibly huge ego already - don't tell him I said that either. 

I understand that the level playing field of a best-effort Internet works in favor of folks with no money but lots of good ideas. I think they will still have their opportunities even if Netflix is allowed to deliver its video content with guaranteed quality of service. 

And we, as consumers, can decide for ourselves if we want to pay more for the enhanced Netflix service -- because they will certainly pass along those costs -- or not. The market gets to decide if this succeeds or fails.

 
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