Earlier this week the DC District Court of Appeals struck down most of the provisions of the FCC’s Net Neutrality rules. There are dozens of web articles and I am not going to repeat a detailed summary of what that decision said. In short, it said that the FCC messed up years ago when they decided that the Internet is an information service and that common carrier rules don’t apply. But the net neutrality rules relied on looking at the Internet as if it is a common carrier service. A lot of legal experts pointed this out when the net neutrality rules were issued and they were right.
What I find interesting is how the press has reacted to this ruling. I went to a Google search and I read dozens of articles about the ruling. There are not too many really controversial issues in the telecom industry and for the most part our press mostly looks at technical and business issues. But it seems that the net neutrality ruling hit people in a more visceral way. Since every article author relies on the Internet they all had a very personal reaction to the ruling and so the reactions to the ruling are all over the board. It is the range of reactions that I find so interesting:
- The Court itself said that they agreed that their ruling could have a chilling effect on future innovation and if the carriers were to strike sweetheart deals with large content providers on the web it might disadvantage start-up companies who cannot afford to pay to get preferred access. Lots of articles took this perspective.
- Public interest groups are massively alarmed over the ruling and one article went so far as to say that this ruling marks the first day of the end of the Internet. Most of these reactions were not quite so dire, but in general these groups assume that the ruling means that the large network providers like Verizon, AT&T and Comcast are going to use the Court’s ruling to quickly change how the Internet functions. They think that these large companies cannot resist the urge to monetize the ability to discriminate among content providers and that they will use this power to choke and slow down internet traffic providers that won’t pay them a toll.
- Legal experts took a very different tact and most of them talked about ways that the FCC could fix what they have done. Almost universally they opined that they saw this coming (and most of them did). They say that the FCC screwed up years ago when they declared the Internet to be an information service and that the only way to fix this is to somehow get the Internet back under the common carrier rules. As a whole the legal opinions were pragmatic and not particularly politically biased or emotionally charged.
- And there were political opinions. There are those who opined that the new FCC chairman Wheeler is not entirely thrilled with the idea of net neutrality and that he would put a brave face on the ruling but not fight hard enough to overturn the Court ruling. Others thought just the opposite and assumed that the FCC would fight this ruling to Supreme Court while working to craft a new approach to fix the problem.
- And finally there were the business prognosticators who took at a shot at predicting what this would mean to the business world. These opinions varied widely. At one extreme was an opinion that the network owners would do almost nothing so as to not make the FCC enact a different set of more effective rules. On the other extreme were those business analysts who assumed that the carriers already have a list of changes they will make due to the ruling and that we will see a lot of announcements soon of deals between network owners and large content providers. I also saw a number of predictions that once the cat is out of the bag that the FCC is going to have a big practical challenge to undo the results of this ruling.
I don’t have any better crystal ball than anybody else. I have no idea how hard the FCC is going to fight this. I agree that the only practical solution is to somehow bring the Internet under the common carrier rules. But that is going to be a hard thing to do. I also think that the carriers will start implanting some arrangements that break the spirit of network neutrality. AT&T had announced a plan to do that just a few days before the court ruling. Comcast and Verizon had proposed arrangements in the past that went against the grain of network neutrality. But I can’t see this as the beginning of the end of the Internet. If the big companies abuse this too badly they will give consumers the impetus to look for providers who don’t screw them. So the big companies will find ways to make money off of this, but they won’t be the total demons that are feared by the public interest groups. It’s going to be interesting to watch and I will report back on this from time to time.
Very interesting analysis of an issue that will not be going away in the near future as far as my crystal ball sees. I can’t help but think that there are probably some within the FCC that would long for an Internet that was controlled in a very similar fashion to Radio Spectrum. Imagine the implications if the FCC and then every other government on the planet went down that path?
The carriers and content providers seem to work well together as things are today. I am sure that the Telcos would love nothing more than to monetize the content type and provide a CoS SLA across their networks to truly differentiate themselves , but in effect the content providers have already moved to a more efficient model where they create CDNs close to (big pipe & short distance) or within the big three Telco’s numerous data centers around the world. If the neutrality starts to collapse too far from today’s models, I believe we would find ourselves migrating towards a distributed data delivery architecture similar to BitTorrent in order to provide effective content delivery system with a high quality end-user experience to every end subscriber. Effectively this would turn every OTT box, Computer, Tablet, etc., into a multiport cache server. Now imagine the security implications of that scenario? I know I’d want a much stronger firewall front-ending my router.
I don’t think there is a whole lot of worry about the relationship between the biggest carriers and the biggest content providers happening. I am guessing that the way that carriers will monetize network neutrality is on the back of consumers rather than content providers. I see them imposing caps on homes and then offering to provide things outside the cap for a fee. I can foresee them charging people for ‘premium’ access to various services that are free today. No one of these changes will, by themselves seem like a bad thing, but in aggregate there is the possibility that the carriers will be controlling what people get fast, get slow or can’t get at all. That is the ugly scenario particularly with the Internet of Things right around the corner.