Federal Communications Commission Network Neutrality Rules Likely to Fall

By Gary Kim December 27, 2013

With the caveat that one can never be too sure how any court will rule, some now believe the Verizon court challenge of Federal Communications Commission “network neutrality” rules will win, invalidating the current rules and likely forcing the Federal Communications Commission to rewrite the rules.

Stifel Nicolaus analyst Christopher King predicts the U.S. Court of Appeals for the District of Columbia will rule soon on the controversial rules, which prohibit fixed network service providers from offering any forms of access except “best effort” to consumers.

"We believe Verizon and other telco and cable providers could gain new latitude to seek new premium (paid prioritization) deals with Internet edge/content companies," says King.

One possibly important short term implication is that Comcast, as part of the rules imposed when it purchased NBCU, will still have to abide by the “best effort only” rules until 2018, even if the FCC loses the case.

Whether other fixed network service providers can use the interim four years to gain a bit of an advantage, at least temporarily, over Comcast, remains to be seen.

Should it become lawful for ISPs to provide quality of service guarantees for Internet apps, it is possible a few app providers might want to create “access” versions of content delivery networks, much as Akamai and other content delivery networks routinely offer such services to enterprise customers.

In fact, such quality of service features are essential for ISP apps such as voice communications and video, which are highly susceptible to degradation in “best effort” environments.

Any such deals would have to be constructed in ways that do not provide advantage only for ISP-affiliated applications, of course, to avoid antitrust and restraint of trade issues.

Application providers obviously worry that such quality of service measures would become a new “cost of doing business,” even as the measures would improve end user experience.

Some policy advocates worry that the ability to buy quality of service features would put small competitors at a disadvantage (that is true, but always true).

ISPs would gain the ability to craft new quality assurance features that presumably would be sold to business partners, even if conceptually, such features also could become a feature end users could purchase as part of their service plans as well.

It might be reasonable to expect the FCC will attempt to craft new rules, to ensure such packet prioritization features are available to all application providers, if the original FCC rules are struck down.




Edited by Cassandra Tucker

Contributing Editor

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