December 02, 2013

Net Neutrality Debates Will be Big in 2014-But, Will They Go Anywhere?


There is an old saying that, “The more things change, the more they stay the same.”  This is an accurate description of the current hand waving over the European Commission’s proposal for a rather strong net neutrality regime in the European Union (EU), and the prospects of what the Federal Communications Commission (FCC), may or may not do on the subject in 2014.

If you are not a public policy wonk here is a short primer on net neutrality. In lay terms, it is about creating an environment where Internet service providers and governments treat all data on the Internet equally. In other words, the underlying service providers cannot discriminate or charge connecting individuals and organizations different prices by class of user, type of content, site, platform, application, and type of device attached or the mode of communications.  They must be “net neutral.”     

I will not bore you with the history of net neutrality except to say two things.  First, it is not new. In fact, the issue a few decades ago was known in the telecom world by such terms as “equal access” and “equal interconnection.” It has become greatly expanded in the Internet era, but has roots going all the way back to the before the telephone when concerns arose about access to telegraph networks.

There have always been concerns that infrastructure providers have a manifest destiny to figure out ways to use access and pricing to disadvantage competitors (some couch this as impeding innovation as well as competition).   Business practicality seems to dictate such behavior, despite facts to the contrary that openness and fairness means all boats rise when the tide comes in.  

Second, despite all of the arguments on both sides of the debate, the reason this has gone on seemly forever is net neutrality at the end of the day must be a balancing act.  Complicating matters is balance must be struck on a moving target that as the speed of technology innovation and adoption accelerates is only becoming that much harder to hit. 

Without getting into personal feelings about this, which span almost forty years of watching industry jockeying, suffice it to say what is most striking is that the nomenclature has changed a lot but the fundamental arguments on both sides have and they both have merits. 

Point and counter-point

On the one hand, all boats rise when everyone has access to a resource that is capable of giving everyone connected not just value, but ultimately the benefits of underlying network upgrades. These will have to be done to accommodate exponentially increasing and unpredictable traffic flows, and more importantly to meet competitive necessities. The need for speed means that the “best effort” Internet over time, especially as the network edge and last mile get upgraded for competitive reasons and become more agile as they become more scalable and software-define, may not be perfect but it will be a better effort user experience.  

On the other hand, it really is difficult to argue with the fact that somebody needs to pay for the capital investment required to meet future needs. Over the years the industry for a host of reasons has drifted far away from the notion that cost causers should be cost bearers. Plus, it also seems reasonable that if you want to offer a premium service over somebody else’s infrastructure that you should expect to pay a premium price for the privilege. In technical terms this means if the user experience you wish to deliver is of high quality and demands its packets are given QoS in the network, it seems odd that you should expect to not be charged a premium price. 

As noted, the problem is divining rules of the road that can discern when a service provider is using its position to manipulate markets and when it is competing fairly. This is a particularly sensitive issue these days when a network service provider it is competing directly with its own value-added capabilities against Over-the-Top (OTT) providers who themselves are looking for ways to create differentiated value by in essence gaming the policy regimes. 

I bring this up because with year’s end has come a slew of predictions that net neutrality is going to have a big year in 2014. Of that there is no dispute. There certainly is going to be a lot of talk. In fact, I was struck by a recent Strand Consult note about its report Understanding Net Neutrality and Stakeholders' Arguments .   While it claims neutrality Strand is hyping “four risks facing operators in the coming net neutrality debate.”  This hardly seems to be staking out a “neutral” position on its face.

History indicates a high probability that 2014, as in years before, will be a lot of talk and no action on net neutrality.  In fact, a little context is in order. Readers of all ages know that the first electromechanical stepping switch for a telephone exchange was patented by U.S. undertaker Almon Brown Strowger,  who was fed up that calls to his funeral home were being directed to a competitors because the wife of a competitor ran the manual switchboard. In other words, he was forced to create net neutrality to bypass the existing regime. Today’s networks are capable of providing differentiated capabilities to protect interests, but the way there needs a will, and now there are very powerful competing wills.

The reason net neutrality has been problematic over the years is thus not a technical issue.  It is a political and financial one.  It has not progressed to the extent proponents have wanted because the interests (telecom service providers mostly) that were against it had the financial and political clout to prevent it from happening in any type of meaningful way.  What has changed is that interests as if not more powerful see net neutrality as a critical element in their path to future glory and have the resources to at least make the debate lively. Whether they have the ability to do much beyond creating a stalemate remains to be seen.  Interestingly, despite the longevity of the debate in the U.S., Europe is going to be ground zero in 2014 to see who has the muscle. 

It is complicated, and with European governments at a high state of sensitivity over the Snowden leaks, an interesting collateral impact could be that net neutrality gets through.  In short, there is hope that like it or not, net neutrality will become the law.  How this cascades through the rest of the world will be almost as interesting to watch as how it all plays out it Europe. Given what is at stake, what can be said for certain is that if there is action rather than stalemate, there will be nothing neutral about the consequences.      




Edited by Cassandra Tucker



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