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The changing fortunes of Net neutrality

Deke Kassabian | May 2, 2014
Network neutrality is a term coined more than a decade ago by Columbia Law professor Tim Wu, and describes an equal-treatment approach to Internet traffic handling. In 2010, I wrote in Network World about the Net neutrality conversation then in progress. Now, during the first few months of 2014, a few interesting things have developed and Net neutrality may be a useful lens through which to consider them.

Network neutrality is a term coined more than a decade ago by Columbia Law professor Tim Wu, and describes an equal-treatment approach to Internet traffic handling. In 2010, I wrote in Network World about the Net neutrality conversation then in progress. Now, during the first few months of 2014, a few interesting things have developed and Net neutrality may be a useful lens through which to consider them.

" In January, a federal court ruled against parts of the FCC's 2010 Open Internet order, maintaining some but effectively reducing other net neutrality assurances." In mid-February, Comcast bid $45 billion to acquire Time Warner Cable, to create a national giant cable television provider (and by extension, home broadband Internet provider)." In late February, Netflix and Comcast struck a business arrangement to allow improved Netflix traffic delivery on the Comcast network that so many Netflix customers use. More recently, it has been reported that Netflix entered into a similar deal with Verizon." Now, FCC Chairman Tom Wheeler recognizes the mounting concern regarding Net neutrality. In recent days he has committed to clarifying the FCC position on the 2010 Open Internet Order and if and how the provisions apply to broadband Internet providers. Wheeler and the FCC will release a proposal to the public on May 15. 

Let's look at each of these developments a little more closely, beginning with...

The Weakening of the Open Internet

The January US Court of Appeals ruling on Net neutrality actually maintained the expectation that ISPs should be transparent regarding their traffic handling and special business arrangements in order to avoid opaque anti-competitive practices. The court ruled, however, in a way that may allow broadband providers to charge for expedited services. In 2010, I argued that something like this could be a sensible model. If transparency was maintained, different service levels could reasonably be offered at different prices. In 2014 I find myself a little less persuaded by my 2010 thinking, primarily because...

The Broadband Market is Coalescing

The number of viable options for consumer Internet access to the home is small and shrinking. In many markets, it's a choice between telephone company Internet access (such as Verizon FiOS) and cable television company Internet access (such as Comcast Xfinity Internet). Certainly, the availability of more options would be better for consumer choice in terms of features and service offerings, and might also provide more pricing pressure.

A merger of two of the largest cable companies in the US to create a behemoth cable TV and broadband Internet company further reduces options. When asked about the impact of a proposed Comcast acquisition of Time Warner Cable, Comcast indicated that it would not be anti-competitive because there is virtually no overlap in the current Comcast and Time Warner markets served. I believe them. The fact that they are not in the same markets means that competition for consumer choice is not being directly reduced by this proposed acquisition. Staying out of each other's markets probably was not a positive force for consumer choice, but it likely was a good business decision. Still, while a Comcast acquisition of Time Warner Cable may not be anti-competitive strictly speaking, it could be detrimental for consumers in a less direct way. The combined company would serve such a large portion of the home broadband market that it would wield disproportionate leverage with companies who provide bandwidth-heavy online services for home users. That could lead to more ...

 

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