Net neutrality boon for cheap, high-quality Web services

Federal Communication Commission net neutrality rules have the potential to save U.S. businesses money in ways that range from heading off potential new Internet access charges to opening up low-cost, high-bandwidth services distinguished by superior quality of service.

While the FCC won’t make final decisions until next spring at the earliest, its rule-making agenda that was approved Friday prompts speculation on what the outcome might yield, and that includes the possibility of high-quality access at a low price.

The agenda includes examination of managed or specialized services such as IP TV that run over the same networks as general broadband Internet services.

If the FCC decides to formally classify these specialized services as information services, existing communications law would allow for a rule requiring providers to wholesale the component parts of the service to competitors, says Tom Nolle, president and CEO of tech consultancy CIMI Corp. This was formerly the practice with information services, but the FCC changed its mind several years ago.

But language in the proposed rule suggests the commission might revisit the old regulation. “It could be the start of a regulatory reversal,” Nolle says, which might work this way:

If a service provider sold IP TV for $60 per month to customers — made up of the TV content and the high-speed delivery network — it would have to sell just the network portion of the service for less, Nolle says. That would drastically undercut the price of traditional network services with good enough QoS to support high-definition video, he says. Even paying the full consumer price for the service would be a good deal.

“I could save a ton of money on this if I’m a business,” Nolle says.

That is an unlikely scenario based on a reading of the FCC proceeding, says Colleen Boothby, a partner at Washington, D.C.,  telecom law firm Levine, Blaszak, Block & Boothby. The FCC would have to reverse an earlier decision, which is possible, but doesn’t seem to be the main thrust of the FCC rule making.

Rather, it seems more likely the commission will prevent service providers from discriminating about what services and content they will carry over their networks and under what circumstances, she says.

By banning such discrimination, the FCC could prevent a host of unnamed new charges against businesses depending on the type of content they move over their Internet access lines, she says. “All enterprise customers are content providers,” Boothby says, so they stand to face new fees if providers are allowed to charge more for certain types.

Goodbye Internet – Hello net neutrality

Hypothetically, a bank could be charged for supplying account balance data to its customers who happen to access the bank’s online services from a different ISP than the bank uses. So the customer’s ISP would charge the bank’s ISP for allowing the account data to reach the customer. There is no such proposal, but without a regulation this type of fee would not be prohibited, Boothby says. “It doesn’t exist yet, but the models are there,” she says.

This could help explain AT&T’s and Verizon’s lobbying efforts to prevent the rule making. They both need to recover the enormous amounts they’ve spent on network fiber upgrades. So far they charge for Internet access, TV and phone services over them, but they are involved in price wars on all three fronts with cable operators.

This predicament the providers find themselves in could result in higher general Internet access fees or a fee structure where customers pay by the byte, according to Irwin Lazar, an analyst for Nemertes Research. And that could influence the costs of supporting corporate work-at-home programs.

“Do not continue to assume that your employees will always have cheap access to high-speed residential services,” Lazar says in his blog.

“Develop contingency plans that include purchasing of business class services, use of optimization, and/or desktop virtualization to guarantee application performance.”

So in order to preserve application performance, it may become necessary to buy service-level agreements from providers or alter corporate infrastructure to squeeze better performance out of lower quality broadband services, he says. Likely additions to corporate networks are WAN optimization gear that reduces the volume of Internet traffic as well as gear that boosts the performance of Web applications, he says.

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Jim Love, Chief Content Officer, IT World Canada

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