It looks almost certain that the FCC is going to kill Title II regulation, and with it net neutrality. Just as happened the last go around the FCC has already received millions of comments asking it to not kill net neutrality. And if you read all of the press you find dire predictions of the consequences that will result from the death of net neutrality. But as somebody who has a decent understanding of the way that broadband and the associated money flows in the industry I don’t think it will be as dire as critics predict, and I think there will also be unanticipated consequences.
Impact on Start-ups – the Cost of Access. One of the dire predictions is that a new start-up company that uses a lot of broadband – the next Netflix, Vine or Snapchat – won’t be able to gain the needed access with carriers, or that their access will be too expensive. Let me examine that conjecture:
- Let me follow the flow of money that a start-up needs to spend to be on the web. Their direct largest cost is the cost of uploading their content onto the web through an ISP. The pricing for bulk access has always favored the bigger players and it’s more expensive today for a company that wants to upload a gigabyte per day compared to somebody that uploads a terabyte.
- The normal web service doesn’t pay anything to then deliver their content to customers. Customers buy various speeds of download and use the product at will. Interestingly, it’s only the largest content providers that might run into issues without net neutrality. The big fights a few years ago on this issue were between Netflix and the largest ISPs. The Netflix volumes had grown so gigantic that the big ISPs wanted Netflix to somehow contribute to the big cost of electronics the ISPs were expending to distribute the service. The only way that there would be some cost to start-ups to terminate content would be if the ISPs somehow created some kind of access fee to get onto their network. But that sounds largely impractical. Bytes are bytes and they don’t exactly contain the name and billing address of the party that dumped the traffic on the web.
- Some content like live video is a complicated web product. You can’t just dump it on the web at one location in the country and hope it maintains quality everywhere it ends up. There are already companies that act as the intermediary for streaming video to carry out the caching and other functions needed to maintain video quality. Even the big content providers like SlingTV don’t tackle this alone.
- Finally, there will arise new vendors that will assist start-ups by aggregating their traffic with others. We already see that today with Amazon which is bundling the content of over 90 content providers on its video platform. The content providers benefit by taking advantage of the delivery mechanisms that Amazon has in place. This is obviously working and it’s hard to see how the end of net neutrality would stop somebody like Amazon from being a super-bundler. I think wholesalers like Amazon would fill the market gap for start-ups.
Paid Prioritization. The other big worry voiced by fans of Title II regulation is that it stops paid prioritization, or Internet fast lanes. There are both good and bad possible consequences of that.
- It’s silly to pretend that we don’t already have significant paid prioritization – it’s called peering. The biggest content providers like Google, Netflix and Amazon have negotiated peering arrangements where they deliver traffic directly to ISPs in specific markets. The main benefits of this for the content providers is that it reduces latency and delay, but it also saves them from buying normal uploads into the open Internet. For example, instead of dumping content aimed at Comcast in Chicago onto the open web these big companies will directly deliver the Chicago-bound traffic to Comcast. These arrangements save money for both parties. And they are very much paid prioritization since smaller content providers have to instead route through the major Internet POPs.
- On the customer side of the network, I can envision ISPs offering paid prioritization as a product to customers. Customer A may choose to have traffic for a medical monitoring company always get a priority, customer B might choose a gaming service and customer C might choose a VoIP connection. People have never had the option of choosing what broadband connections they value the most and I could see this being popular – if it really works.
- And that leads into the last big concern. The big fear about paid prioritization is that any service that doesn’t have priority is going to suffer in quality. But will that really happen? I have a fairly good broadband connection at 60 Mbps. That connection can already deliver a lot of different things at the same time. Let’s say that Netflix decided to pay my ISP extra to get guaranteed priority to my house. That might improve my Netflix reception, although it already seems pretty good. But on my 60 Mbps connection would any other service really suffer if Netflix has priority? From what I understand about the routing of Internet traffic, any delays caused by such prioritization would be miniscule, probably in microseconds, which would be nearly imperceptible to me. I can already crash my Internet connection today if I try to download more content than it can handle at the same time. But as long as a customer isn’t doing that, I have a hard time seeing how prioritization will cause much problem – or even why somebody like Netflix would pay an ISP extra for it. They are already making sure they have a quality connection through peering and other network arrangements and I have a hard time understanding how anything at the customer end of the transaction would make much difference. This could be important for those on slow broadband connections – but their primary problem is lack of broadband speed and they are already easily overwhelmed by too much simultaneous traffic.
I am not as fearful of the end of net neutrality as many because I think the Internet operates differently than what people imagine. I truly have a hard time seeing how the ending net neutrality will really change the way I receive broadband at my home. However, I do have big concerns about the end of Title II regulation and fear things like data caps and of my ISP using my personal information. I think most of folks real concern is about Title II regulation, but that’s too esoteric for most folks and we all seem to be using the term ‘network neutrality’ as a substitute for that.