Time for a net neutrality grand bargain?

Rob Powell/Telecom Ramblings
30 May 2012

In the continuing debate over net neutrality, what strikes me as most ominous is that there is no debate. Rather it all seems to echo the current odious political environment, as there are only talking points and non-negotiable positions. It’s very hard to find anyone seriously looking for a cooperative solution to the underlying economic problem.

We need to break out of the rut that the net neutrality discussion has gotten stuck in, because as Timothy B Lee said on ArsTechnica over the weekend, current US broadband policy is failing. FTTH has largely stalled and competition is faltering. The industry needs sufficient incentive to build bigger pipes to the consumer the way it is now building out more rapidly to the enterprise.

Net neutrality advocates seem to be stuck in a single position, which is that last mile providers must build out for the good of society and if they can’t find a way to make money off it in a net neutral way then too bad. And on the other side, we continue to hear the drumbeat against freeloading OTT traffic, and blatant end-runs around what rules do exist in a damaging way (e.g. Comcast/Xbox and Comcast/Level3). All proposed solutions I have seen are unilateral, and that’s a bad thing.

As video goes mobile where the tenuous rules imposed for wireline bandwidth do not apply, things are quickly going to come to a head. Verizon’s new Viewdini solution is poised to hit the market, and we don’t yet know on what terms. But it seems rather unlikely not to turn out to involve a new revenue stream for Verizon that will elicit howls of outrage from the other side. In fact, what it looks like so far is an exclusive toll booth for video providers to avoid data caps. For OTT operators like Netflix to reach Verizon’s customers, there will surely be a fee.

But as I rambled on about last month, this does not necessarily have to be the end of the competitive world. It does not necessarily end in the strangling of innovation on the internet with small providers unable to compete. And it also doesn’t necessarily mean that OTT providers will have to bear the full brunt of cost increases. It certainly *could* go there, but what we need is an industry structure everyone can work with and invest in.

For instance, Verizon and its fellow mobile operators could agree to structure things so as to encourage innovation. There could, for instance, be an entry-level traffic threshold for content providers which is free or less expensive per bit. That would give new entrants some runway to work with before breaking out the checkbook.

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