The Net Neutrality Ruling: All Sound and Fury?
The hue and cry over the demise of Net neutrality may be premature, despite an unfavorable court ruling earlier this week. "We're seeing a paradigm shift, and that requires a different approach by regulators, consumers and network operators, said Mike Jude, Stratecast program manager at Frost & Sullivan. "Nobody knows the rules yet, and we're feeling our way into the future here."
01/16/14 3:14 PM PT
A federal appeals court's Tuesday ruling on Net neutrality has sparked dire predictions: Streaming video will cost more; Internet-based multiplayer games could get expensive; and innovation might be stifled.
However, nothing is going to happen for a while because "it's not a done deal," Dan Rayburn, principal analyst at Frost & Sullivan , told the E-Commerce Times.
The court's ruling "opened up a clear path for the FCC to reinstate and improve the process," he said.
Key Points of the Ruling
The court essentially said the FCC "has established that section 706 of the Telecommunications Act of 1996 vests it with affirmative authority to enact measures encouraging the deployment of broadband infrastructure," and that its arguments hold water.
However, it ruled against the FCC because its classification of broadband carriers exempted them from treatment as common carriers.
This means the FCC cannot impose the antidiscrimination and antiblocking rules laid down in the Net neutrality principles it espouses.
Is Pain on the Horizon?
It is possible that consumers might see reduced access and choice regarding new and innovative services, David Sohn, general counsel for the Center for Democracy & Technology, told the E-Commerce Times.
"If ISPs start restricting access or playing favorites, consumers will have less ability to access and choose among online services based on their own preferences because ... the ISPs will be steering them towards [their] preferred partners," Sohn explained.
Further, a non-neutral environment won't support as much online innovation, and the next YouTube or Twitter or Facebook "might never get off the ground," he suggested.
Consumers may Benefit
The death of Net neutrality might result in broadband being upgraded more quickly, argued Matt Davis, a research director at IDC.
That's because companies such as Google and Apple now have to negotiate with broadband providers for the bandwidth their apps consume, and if new deals result in bandwidth payments on a metered basis, "they will have the incentive to upgrade speeds," Davis told the E--Commerce Times.
Most markets have an alternative broadband provider, pointed out Mike Jude, Stratecast program manager at Frost & Sullivan.
"If Verizon decided the day after tomorrow that they were going to increase the rates tremendously on content providers, consumers would shop around for the best deal," Jude continued. "Verizon killing the Internet tomorrow is just not going to happen."
Further, most content goes through content delivery networks such as Akamai and EdgeCast, said Frost's Rayburn. They have service-level agreements with last mile providers delivering content to the home, and "an ISP is not going to deliberately degrade the quality of video coming into your house because you'll leave."
Reaction From the Industry
The Telecommunications Industry Association has called on "all interested parties" to maintain an ecosystem where industry can continue to innovate and consumers are protected.
The ruling will result in more innovation and choices for consumers, Verizon said. However, archrival AT&T, along with Comcast and other providers, reportedly will continue to abide by the Net neutrality rules.
"The benefit of this ruling is the FCC didn't get what it wanted, and Verizon didn't get everything it wanted," Frost's Jude told the E-Commerce Times. "They each did get something."
Ultimately, the FCC and cable companies are likely to compromise.
"The FCC will tell Verizon, 'OK, you want all these things from us -- access to more spectrum, more flexibility in how you offer services, fine; you're going to have to offer them on the principle of Net neutrality,'" Jude suggested, noting "they've done this kind of thing in the past."