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1/15/2014
11:40 AM
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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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The Judge
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The Judge,
User Rank: Apprentice
1/15/2014 | 2:28:17 PM
Re: Here's the REAL problem...
Every state in the U.S. has millage on property for the purposes of education.  You have no say in that, only in how much beyond that you are willing to pay.  There's a lot you don't have any say in but pay for anyway.  

I don't smoke, but my health insurance premiums go towards paying for cancer treatment for those who do.  I don't commute, but the price I pay for gas is impacted (partly) by those who drive more than I do.  I have never driven on all the roads in my home state, but my tax dollars go toward the maintenance of our highways.

I have no problem with "subsidizing" those who might use the broadband more than I, but that really shouldn't be the point of this discussion.  What I oppose is the potemtial for control that might well (and eventually will) be exerted by some monstrous corporation over what infromation I can access.  That runs counter to one of the fundamental principles this country was founded on...
TerryB
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TerryB,
User Rank: Ninja
1/15/2014 | 2:06:03 PM
Re: Here's the REAL problem...
No question, that's essentially what I'm complaining about. Even though I just want enough internet to build a VPN tunnel, use email and web browse occasionally, the internet backbone better keep up with the Netflix's of the world which are consuming the bandwidth now. My concern is that we are paying for that increased investment, not NetFlix.

Unless the "last mile" going into NetFlix datacenters charges them for cost of all this extra backbone bandwidth they use, all of us who pay for any internet circuit are subsidizing this. I have no real knowledge of who pays what other than my own experience. I know it wasn't long ago I paid $19 a month for internet, now I pay $50 even though my internet usage has not changed. Meaning I don't consume high bandwith things like streaming video or HD gaming. Then throw in another $30 a month to cellular guys so I can get work email on my phone. It adds up in hurry.

I can live with cost I have now. But I'm not convinced this won't continue to ramp up as more and more high bandwidth services are launched, whether I ever use them or not.

Some of people posting correctly (to me) pointed out it would be so much simpler if backbone providers were not the same as the content and last mile providers. But I don't think a transition from where we are now to that model is possible. At least without some major event like government(s) taking over backbone and funding from tax base. Then it would be like The Judge describes. And that's OK with me if majority of people support that. At least then we (taxpayers) could recover revenue by charging NetFlix fees proportional to the bandwidth they consume. The Net would be neutral and you would pay for what you use.
BorisR434
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BorisR434,
User Rank: Apprentice
1/15/2014 | 1:59:09 PM
Re: Here's the REAL problem...
You are dead wrong.  Net Neutrailty doesn't have anything to do with the AMOUNT of data a consumer or business can use.  Even if full Net Neutrality (in its current form) was implemented, the ISPs still have the option to charge people and companies for the amount of bandwidth and data they use, as they already do this.  So if a website is using a lot of data, they will need to pay for it.  Net Neutrality just means that the ISPs can't limit consumer's access (by slowing or cutting it off altogether) to any source.  It is all about access to information / content, not about paying for consumption.  If a user wants to access the content of their ISPs competitor then they will pay for that access the same as if it was the ISPs own content (in the case of broadband / streaming video companies, for example).
Brian.Dean
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Brian.Dean,
User Rank: Ninja
1/15/2014 | 1:58:25 PM
Re: Here's the REAL problem...
The way I see it, is that much of today's successes of e-commerce can be traced back to investments that was made yesterday in the telecommunication sector. Today's investment should in the same way pay off in the future. If the internet is only going to be a means to consumer (HD movies etc), then it is not an investment to begin with.  
CoolBOBob1
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CoolBOBob1,
User Rank: Apprentice
1/15/2014 | 1:54:57 PM
Re: Here's the REAL problem...
Currently I have one broadband provider in my area.  I pay for a line that's 20Mbps d/l, 2 Mbps u/l.  If I pay my ISP for that line and the content provider pays for their line, why should my ISP be allowed to priortize or degrade that information.

For example, if I have Netflix streaming they can choose to slow down that service to either extract more money from Netflix on top of what they pay their ISP or they can try to cajole me into paying for their ISP streaming package.  Either way they are trying to extract more money so that I can get the service that I paid for in the first place.

It gets even muddier when your ISP is also a content provider, like Comcast for example.  Then they can make their content appear to have better service because they hamstring the competition.
TomW925
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TomW925,
User Rank: Apprentice
1/15/2014 | 1:49:04 PM
Re: A naive posting
LOL. Stop fear mongering. There are so many possible loopholes around an ISP favoring some bandwidth over others that it will never happen for long if it ever does happen at all.
KJones75
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KJones75,
User Rank: Apprentice
1/15/2014 | 1:48:01 PM
Re: A Nice But Impractical Idea
Not only are there few choices, I'm almost certain that there is price fixing involved. If all of the large ISPs agree to implement the same artificial degradation (which can be removed... for a fee!) on services like Netflix and Hulu then it doesn't make any difference which ISP I choose. The threat to switch ISPs becomes meaningless.
C151
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C151,
User Rank: Apprentice
1/15/2014 | 1:44:14 PM
Re: Here's the REAL problem...
the problem is that the users of the internet with lower usage have the most to loose since the netflix users will absorb the cost of their speed since that is the only way that the service can operate ...the lower users won't be able to pay the fees so that will result in them leaving the market ...soon all you will have is netflix to choose (exaggeration) from even if you don't subscribe to netflix
TerryB
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TerryB,
User Rank: Ninja
1/15/2014 | 1:27:31 PM
Re: Here's the REAL problem...
Each school district voters get to decide how their local public schools are supported. That's why not all public schools are equal. Did I miss the discussion and vote that bandwidth needs to increase exponentially, annually, so we can watch HD movies on iPhones and play Call of Duty on internet?

You are essentially arguing any application of the internet is something that must be supported by infrastructure investment. I argue my money can be spent better. I'm still waiting for that killer internet app that feeds and houses people living in poverty, or any of a thousand other examples of creating a better society.

We've jumped from email to web browsing to streaming HD on internet without any public debate I'm aware of. I'm sure Netflix is happy about it but doesn't mean I'm happy about paying for them to be successful.
The Judge
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The Judge,
User Rank: Apprentice
1/15/2014 | 1:15:31 PM
Re: Here's the REAL problem...
Think about what you're posting.  You are part of society after all, and we all pay for things that we may never use, or not use as often or as fully as others.

The best example I can give (though there are many others) is our public schools.  We all benefit from an educated populace, so we pay a set millage to provide education to our youth, whether we have kids or not.

I'm willing to put up with "subsidizing" (as you put it) others as long as it means the Internet is not controlled and manipulated for and by a select few corporations and their shareholders...
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