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Net Neutrality Court Ruling Won't Ruin The Internet

Competition, not massive regulation, is the best way to make the Internet open.

A federal appeals court earlier this week neutered the FCC's Net neutrality rules, which prevented carriers like Verizon and Comcast from interfering with other carriers' traffic. It's a freak-out moment for many, including the Los Angeles Times, which wrote a headline "Bow to Comcast and Verizon, your overlords." Not quite.

Here's the stated problem: The big carriers (notably Comcast) have already shown that, left to their own devices, they will start picking and choosing which data streams should be fast, slow, or simply blocked. That means that the carrier, not the person who pays the bills, is in charge of what will and won't work from end to end. So, enterprises could be in the position of having selected a VoIP-as-a-service provider, tested the provider, and then having service degrade, not because there is a legitimate engineering issue, but because the carrier has decided to deprioritize (or drop) packets between the provider and the enterprise.

Proponents of Net neutrality say that regulations that force carriers to treat all packets the same is the right way to fix this problem, and that, absent Net neutrality, carriers will discriminate against competitors. It's a compelling argument: Why wouldn't AT&T want to mess with Vonage? Why wouldn't any cable provider want to mess with Netflix or Hulu?

[Learn more about the court ruling. See FCC Net Neutrality Rules Rejected.]

Yet, I fundamentally disagree that Net neutrality is the right thing for the FCC or others to focus on. The right thing to focus on is encouraging a broadband free market. A true free market allows consumers to switch when they're not getting what they paid for. Even in today's market, where there are only two or three choices, if a large company's IP voice traffic starts getting messed with by AT&T, let me assure you that AT&T will be minus one customer.

From the consumer standpoint, let me also assure you that the second that Netflix starts getting messed with by a cable provider, Netflix's software will pop up a message on the consumer's screen that says: "For best service, you may wish to switch to XYZ provider in your area."

The trouble is that historically, broadband is not a truly free market, since, typically, there are only two consumer broadband providers in any given community. Enterprises typically have more than two choices, yet pricing is normally baselined at the consumer level, since consumer service is far more common. I have been witness to a third provider entering my market, followed by drops in price and increases in capacity.

In recent years, the American Recovery and Reinvestment Act's Broadband Technology Opportunity Program (BTOP) provided grants to build out more broadband infrastructure. This helped to make the broadband business far more competitive than it has ever been, since part of the "strings attached" to the grant money was that carriers must allow others open access to the fiber. The private sector has also contributed to competition: Google singlehandedly raised "fiber optic" to public and economic development consciousness. Smaller municipal successes like Gig Tank have also fueled investment interest in middle-mile networks.

Net neutrality isn't a bad thing to focus on, but I worry that too much regulation could really drag down the Internet. You have only to look at the antique and slow-moving common carrier telecom regulation environment to see that this worry is founded in reality.

Why am I worried about burdensome regulation? You see, the FCC originally crafted its Net neutrality rules classifying Internet service as "information services," not a common carrier telecommunications service. Since the court struck down Net neutrality largely based on this classification, it is possible that the FCC may reclassify Internet service as telecom, making it subject to a vast quagmire of obsolete and awful regs.

The larger -- and more productive -- issue for the FCC to focus on would be how to foster more broadband competition. Let me guarantee you that without competition, no amount of regulation will help prevent bad things from happening. Without competition, prices and capacity stay the same.

Bottom line, I don't think that enterprise CIOs have anything to worry about, for now. Carriers would be idiots to start messing with the very customers that keep the best metrics about service delivery: enterprise customers.

And in general, the Internet is not going to melt down because of a lack of Net neutrality. But choice will be seriously affected if growth in competition doesn't continue. And the best way to kill new entrants into the market would be to significantly increase regulatory burden on Internet providers. Whatever the FCC does in response to the ruling, let's hope that it's not that.

Jonathan Feldman writes for InformationWeek on the topics of leadership, innovation, IT people skills, and running large organizations "like a startup." He is CIO for the City of Asheville, N.C., where he encourages innovation through better business technology and process.

Too many companies treat digital and mobile strategies as pet projects. Here are four ideas to shake up your company. Also in the Digital Disruption issue of InformationWeek: Six enduring truths about selecting enterprise software. (Free registration required.)

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User Rank: Ninja
1/15/2014 | 1:07:10 PM
Re: Here's the REAL problem...
Amen. I was wondering about that same thing in a post to another Info Week article on this. It has always seemed to me I'm subsidizing the people who want HD content on their iPhone just so I can VPN tunnel into work. That hardly seems fair and doesn't appear to me that charging for the last mile (tiered) solves this issue. Just how much investment in bandwidth do all of us really want to pay for so our teenagers can Xbox game all day long.
The Judge
The Judge,
User Rank: Apprentice
1/15/2014 | 1:05:21 PM
Re: Regulatory Capture
Wow, you sure read a lot into my post, and then added to it with some zany enhancements.

I never said there would be some individual sitting around watching every little thing.  But in my years of experience in research and in dealing with multiple regulatory and oversight agencies, I can tell you that the letter of the law has far more impact than you will ever realize.  And you can thank the government when your kid eats a Crayon and doesn't die from its toxicity.

I can also tell that you have no familiarity whatsoever with what I am refering to regarding regulation, tin-foil hat...
User Rank: Apprentice
1/15/2014 | 1:02:53 PM
Re: A naive posting
The ruling eliminates the internet.  By definition, handing control of it to private money redefines what it is.  It becomes a private communication network controlled exclusively by the richest people on earth.

The courts once again prove beyond any doubt that their number one job is the preservation and growth of private wealth, not the public good. Oh sure, they throw lots of little bones to the peasants, but when the big choices come...
User Rank: Apprentice
1/15/2014 | 1:00:00 PM
We'll see......
I think the author underestimates the ultimate end game here, along with the deviousness of the major ISPs.  We'll have to wait and see what happenes after the initial furor dies down. but Verizon did not go to the trouble and legal expese to bring this suit because there was no money to be made..

I believe the FCC will reclassify the ISP's as telecommunication providors and regain control over this.  But they may wait for the Supreme Court to rule first.  Or they may take a wait and see attitude, watching for any anti-competitive action on the part of the ISP's, and then act.     Once the FCC and Congress OKed the Comcast purchase of NBC, the whole game changed.  One way or another, Net Neutrality has to come back in some form.

User Rank: Apprentice
1/15/2014 | 12:59:17 PM
There are NO choices in many cases
The problem, as anyone with cable knows, is that there are few choices for broadband internet and in many cases only one choice is available. In Northern California, specifically in regions of the Tri-Valley area Comcast is the only available choice for broadband internet access. In the Antelope Valley it is Time Warner Cable. Period. The other options? AT&T or Verizon DSL, which is simple a step up from dial-up in terms of speed--hardly "broadband." So what are you talking about? Comepetition? If I'm not pleased with my ISP then guess what? I have the choice to downgrade to DSL, and that's hardly a choice at all. For my needs I need 30 Mbps not the 1-2 Mbps offered by AT&T or Verizon (and let's not even get into their forced bundled services and high costs for inferior internet access). Regulation is a necessary function of government and in this case the consumer must be protected as was the case when the proposed T-Mobile buyout by AT&T was blocked. Now imagine the impact on consumers if AT&T had succeeded. T-Mobile is now upending the industry and forcing significant change in pricing structures for mobile plans that benefit the consumber. The internet must be protected because the pipes that carry the data are owned by only a few.
The Judge
The Judge,
User Rank: Apprentice
1/15/2014 | 12:54:30 PM
Re: Here's the REAL problem...
Spoken like a true ISP mouthpiece.  You sure can tell who has a dog in this fight...

You can't be so naive as to think these coporations risked millions in fighting Net Neutrality, all for the good of the 'majority', as you put it.  Now that's delusional...

Weren't you posting on this topic on other boards yesterday?
User Rank: Apprentice
1/15/2014 | 12:53:50 PM
Not buying it...
"From the consumer standpoint, let me also assure you that the second that Netflix starts getting messed with by a cable provider, Netflix's software will pop up a message on the consumer's screen that says: "For best service, you may wish to switch to XYZ provider in your area.""

You need to think a bit more critically about the outcome here. What happens when moving to provider XYZ results in restricted/slow access to Hulu and Amazon Prime, or other services that I use? Since a household must pick one internet provider, I suspect the outcome of selection will be "premium" access to a few of the sites/services that each household uses, and then paying an additional add-on fee for premium access to those remaining sites. It seems unlikely that one provider will be a panacea for all of a household's internet access needs, and we will all be paying for upgrades here and there to make up the difference achieve the same internet experience we have today.

I suspect the FCC will in fact classify the internet as a "telecommunications service," because (let's be honest here) internet access if far more essential to our daily lives than speaking on the telephone.
User Rank: Ninja
1/15/2014 | 12:51:05 PM
Consumer's interest
Net neutrality is appealing because it is aimed towards creating an environment where all traffic is equal -- torrent or otherwise. However, it is in the interest of consumers that not all traffic be equal. Take for instance a medical procedure that might lead to lower health care costs using technology based video collaboration, in such a situation preferential treatment needs to be given to the data of the video link and there needs to be an economic incentive in place to bring about such a change.
The Judge
The Judge,
User Rank: Apprentice
1/15/2014 | 12:49:44 PM
Re: Calm Down everyone
You're being naive.  This has happened before, and the results will be the same.

Remember when Congress de-regulated cable and radio in the mid-1990's?  How has that turned out?  Now, you have limited choices and steep cable fees, so much so that there are renewed clamorings for cable regulation.  As for radio, only a handful of companies own almost every radio station in this nation.  In the city in which I live, two companies own all eleven FM and three AM stations.  This limits the sources of media information available, and throttles the development of other industry (music, venue development, etc.).

Or how about when rail was de-regulated in the 1960's, and instead of answering consumer calls for increased competition, companies simply closed down passenger lines?

You also operate from the assumption that Americans can simply switch providers.  In reality (and as stated in another post on here), most Americans only have access to one high-speed cable provider in their area.

Stop buying into the corporate propaganda, and ask yourself this:  Why would these major corporations risk millions in legal fees to fight Net Neutrality if they wouldn't gain from it being stricken down?
User Rank: Strategist
1/15/2014 | 12:48:01 PM
Here's the REAL problem...
"Here's the stated problem: The big carriers (notably Comcast) have already shown that, left to their own devices, they will start picking and choosing which data streams should be fast, slow, or simply blocked."

Sorry.  That dog won't hunt.

The REAL problem is that consumers are being charged for services they DO NOT USE.  Net Neutrality has always been a lie.  It's about increasing the profitability of companies that are too cheap and lazy to pay for the bandwidth they use and pass that cost on to THEIR actual customers.

This court ruling is the first sane government decision to come along since Net Neutrality began wasting people's time with this nonsense.  The high bandwidth users (a minority) that the ISPs throttled in days gone by were ruining the Internet experience for everyone else (a majority).  And now we have to pay for their fun.  Don't whine the next time you pay your Internet access bill.  You're underwriting Google's profitability, Netflix's "cheap" streaming fees, and all the gaming communities' fun.  You should feel generous and content in your generosity.  You deserve to for supporting Net Neutrality.

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