Lifting Net neutrality rules can't promise long-term carrier climate

FCC Net neutrality rules may be eliminated, allowing carriers to charge for priority services, but that may have long-term challenges, too.

Watching a new rulemaking process unfold at the Federal Communications Commission (FCC), it seems that Internet carriers in the U.S. may get exactly what they want -- the end of FCC Net neutrality rules that prevent them from selling priority Internet services to customers willing to pay more for faster access. With the Net neutrality debate raging, another question to add to the pile is whether getting what they want will be a blessing or a curse to carriers in the long term.

Last week, even before a draft of the FCC's new and revised Open Internet Notice of Proposed Rulemaking (NPRM) (i.e., Net neutrality regulations) was released, opinions about whether all content should be treated equally on the Internet were flying after FCC Chairman Tom Wheeler said the new draft would be released soon, and public comments would begin on May 1.

Among the main areas of contention are that allowing Internet service providers to charge extra "commercially reasonable" fees to companies willing to pay for priority handling will ultimately raise rates for consumers who subscribe to services like Netflix, and priority handling changes will have a chilling effect on startups that can't afford to compete against companies willing to pay for faster access.

Net neutrality is meaningful for people who don't know how to work around it, but it can easily be worked around.

Brian Washburn,
Service Director, Current Analysis

In the midst of the uproar, Wheeler said there is no "turnaround" at the FCC in terms of Net neutrality policy, and in his official FCC blog, he wrote that the new Open Internet NPRM follows the roadmap provided by the U.S. Court of Appeals for the District of Columbia Circuit in January, when it struck down the FCC's existing Net neutrality rules and directed the FCC to try again. The court said that even if Net neutrality regulations were eliminated, the FCC would still be able to stop providers whose conduct was not commercially reasonable, Wheeler emphasized.

While not wholly against changing Net neutrality rules, long-time telecom analyst and consultant Tom Nolle of CIMI Corp. noted that a key point is that the term "commercially unreasonable" is undefined and could continue to be an issue with the courts and the industry.

In his April 24 CIMI Corp. blog, Nolle wrote that content delivery networks already pay for Internet traffic handling, just as other content companies could end up paying for Internet Quality of Experience under new FCC rules.

"The issue we're facing with the end of Net neutrality is that money has been spent on generating traffic, not on the cost of carrying it," Nolle said. "To promote Internet growth, the FCC took the easy way out and "initiated practices that were based on unlimited usage. Regulators, and even Internet service providers, went with unlimited usage for customers."

To make the system work, all of the players in the Internet ecosystem have to be able to make a profit, even those who build the networks, Nolle said, adding that a major issue going forward will be to make sure network operators don't let best-effort Internet speeds become terrible Internet speeds for those not paying for premium handling. If the FCC's Net neutrality regulations are lifted, new technologies like software-defined networking, network functions virtualization and the cloud will help create a path that will profit everyone in the Internet ecosystem.

Ironically, in Europe, Ovum telecoms regulation analyst Matthew Howett pointed out in a statement that in early April, “the European parliament voted to restrict ISPsfrom charging services for faster network access. It has some fairly substantial legislative hurdles to cross yet and we expect changes to the text will be made, but it’s not an issue that will just disappear." 

The end of Net neutrality: The curse of getting what you wish for?

Brian Washburn, service director of global business network and IT services at Current Analysis, believes people are selling the Internet short if they believe the loss of Net neutrality is going to destroy the Internet. "Net neutrality is meaningful for people who don't know how to work around it, but it can easily be worked around," he said.

One workaround would be if a company bought preferred content pipes from ISPs and then sold a Net-neutral Internet service for a few dollars more a month, he explained. "Anyone who wanted to buy it could ride preferred content pipes," he said. If that kind of service existed, smaller companies trying to compete with Netflix or Google wouldn't necessarily get squelched by the bigger players. "Squelching isn't even necessarily going to become an issue, but even if it does, the Internet can route around. That's just the nature of the Internet," Washburn said.

Carriers getting what they want doesn't guarantee smooth sailing, either. Washburn also believes most providers are taking the short view about easing Net neutrality regulations. If companies like Verizon, AT&T and Comcast begin to act more like media companies, prioritizing their own content, it's possible that the FCC might begin to see them more as media companies rather than carriers, he said. That would mean they could be regulated as media companies in terms of ownership and cross-ownership, depending on how much of the market they own.

"If I were Comcast, for instance, I would be looking at the Net neutrality elimination with some trepidation and concern over the long-term future," he said.

In the U.S., telcos fear they won't be able to invest to meet future bandwidth demands unless they are able to better monetize the access they offer, Ovum's Howett said. "Internet companies fear startups, consumers and innovation will suffer if there is a further movement away from the current 'best efforts' nature of the Internet. In reality, the truth is probably somewhere in the middle," he said.

The SDN/Net neutrality connection

SDN and NFV have a role in killing Net neutrality

SDN and NFV players need to care about Net neutrality

"There are short-term reasons why it makes sense for Net neutrality to go away, but in the long term, we could be starting down a road to a long-term legal discussion that will go in interesting new directions that we're not thinking about right now," Washburn said.

What's definitely true for now is that there are many discussions, interpretations and court battles to come. The Net neutrality draft proposal may even be revised before the commission votes on it on May 15. In theory, the results should be final by the end of the year, but it's more likely that whatever is decided will then be turned over to the courts for a ruling.

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