Network Neutrality Forces: Rules Good For Business

The network neutrality forces are trying to make the case that regulations will be good for business -- even for the likes of AT&T and Verizon, which are quite frankly the targets of the Federal Communications Commission's rulemaking proposals.The rules that the FCC intends to enact are intended largely to prohibit the incumbent carriers and network operators from discriminating against certain kinds of content by either charging them a higher toll than other content providers, or throttling them altogether.

While AT&T and Verizon might be tempted to abuse their monopoly powers over access to the Internet, acting on those impulses could easily backfire on them. Paul Meisner, Amazon's vice president for public policy, said during a press conference organized by pro-net neutrality forces yesterday, "ultimately, the net ops [network operators] will benefit from getting certitude" about what they are allowed, or not, to do.

If that sounds a little bit like wishful thinking on the part of a vendor that has a dog in the fight, Brad Burnham of Union Square Ventures, one of thirty venture capital and Internet business leaders who signed a letter in support of network neutrality, added a more neutral (pardon the pun) perspective.

According to Burnham, network neutrality regulations could help the incumbent carriers focus on innovating within the scope of their own services, rather than looking over their shoulders at possible shareholder lawsuits that could occur if they didn't do everything in their power to squash potential competition.

"They have an obligation to their shareholders to take advantage of every piece of leverage they have," he told me.

Derek Turner, research director of the Free Press, also offered empirical evidence to the effect that regulations have helped stimulate investment in the telecommunications and Internet space, and that lack of investment has correlated to relatively less regulation.

"This disproves the frenzied claims that network neutrality will be catastrophic for investment," he said during yesterday's conference.

He also noted that the CEOs of Clearwire and Cellular South also favor network neutrality rules because they will even the playing field and, again, prevent the incumbents from essentially snuffing them in the cradle. "These guys are scrapping… they want to enter this competitive market," Turner said.

The FCC's public comment period on net neutrality rules is open until the end of the first quarter of next year; final rules are possible in 2Q 2010 but could slide further down the calendar, depending on how controversial the issue remains.

Meanwhile, a disparate spate of companies and groups, from the National Organization for Women to Internet founders, Internet content providers and consumer advocates, have come out strongly in favor of these rules.

Even investor groups don't seem particularly allergic to this regulation. Paul Gallant, lead telecom research analyst for institutional brokerage Concept Capital said he found reason for carriers to be cautiously optimistic.

According to Gallant, FCC chairman Julius Genachowski's remarks introducing the proposed rulemaking indicate that new rules "will be sensitive to carrier needs to manage network congestion and experiment with new business models."

He also noted that wireless carriers, including Verizon, AT&T, Sprint, U.S. Cellular, MetroPCS and Leap, should welcome comments to the effect that "wireless carriers have unique technological constraints and different regulatory histories, which will be taken into account when net neutrality rules are applied to them."

Doubtless, network neutrality rules will be painted by Fox and friends as another forced march led by Marxist acolytes of Comrade Obama. But given the mainstream support these rules are getting, the noise may only serve to further marginalize Fox's coverage.