The FCC’s (News - Alert) recent ruling on net neutrality would seem to strike a blow for the common video-streaming person by stating that all content as it relates to Internet service providers is created equal. At its most basic level, this means that the Amazons, Hulus, and Netflixes of the world are free to continue clogging the networks of the companies they compete against – Comcast, Time Warner (News - Alert), Verizon, etc. – while effectively leaving them with the bill.
As much as I like the idea of net neutrality as an ideal, it’s no more practical or fair than allowing online companies a free pass on sales tax. Broadband access is not an inalienable right, nor is it free. ISPs spend billions of dollars building world-class networks, from millions of miles of fiber optic cable to warehouses full of Wi-Fi routers. Under the banner of net neutrality, content providers inherit all of this technology for free. The result? ISPs are vilified for their big monthly bills (which are largely a break-even proposition for them), and content providers come out winners at $10 a month.
Beyond not being fair, net neutrality ignores a level playing field that encourages competition and its natural byproduct: innovation. Let’s say, for example, that content providers are asked to carry part of the cost of the networks they use – and before you protest about rising costs, it’s reasonable to assume that asking content providers to pay for network access will reduce your ISP bill in direct proportion. This would give content providers an impetus to look for ways to reduce network bandwidth, perhaps through more advanced video codecs or device caching. Innovation like this is a win-win for everyone: better quality video with less network congestion. Without any vested interest in the problem, however, it’s unlikely that content providers will look for a solution.
On the flip side, service providers are looking for a solution to the bandwidth problem. Ethernet-based backhaul, Wi-Fi network integration, and network functions virtualization are all initiatives that look to expand network capacity in anticipation of exploding video traffic. If net neutrality prevents service providers from monetizing these new network investments, they may have little choice but to stop innovating.
The most glaring error of the recent FCC ruling, however, is its presumption that ISPs have nothing to add to the content in terms of value. I believe that subscribers would pay a premium for better-quality video, and that ISPs (or any business) shouldn’t be prohibited from getting fair market value for their services. The FCC, after all, isn’t demanding that Netflix charge the same fee to watch new movies as those released 10 years ago, despite the fact that the cost in terms of network delivery is comparable. Quality of experience is a commodity – just ask DSL users – and subscribers would pay more (or less) for different tiers of quality service. For example, if Hulu (News - Alert) or Netflix began charging $15 per month for a premium HD service featuring downloads in high definition, would the FCC cry foul? Yet, ironically, it would again be the ISPs that bore the burden of delivering a premium HD service.
Let me be clear: The idea of ISPs providing lower quality service for certain content providers that they deem competitors is an unfair competitive practice. Consumers need to be protected against such practices; it’s one of the reasons the FCC exists. But this isn’t like local loop unbundling. This is about content providers getting a free ride and consumers getting cheated out of a better experience in the name of neutrality.
Time will reveal whether the FCC can actually enforce net neutrality. I, for one, don’t fear a future in which content providers have a vested interest in improving the network experience and where subscribers pay accordingly for the services they do (or don’t) get. It’s a market model with a good track record so far.
Kevin Riley (News - Alert) is CTO at Sonus (www.sonus.net).
Edited by Stefania Viscusi