On Tuesday, January 14th, the Washington, D.C. District Court, on appeal, struck down the FCC’s rules governing net neutrality. Should you care, or is it just more mumbo-jumbo? You, very much, should care.
Net Neutrality is the principal that all kinds of data are treated equally, without giving preferential treatment to data from one provider or platform. What this potentially means is that ISP’s could charge to provide preferential treatment to certain suppliers. For example, Netflix commands a huge portion of this country’s internet bandwidth. Real-time entertainment apps take up 60 percent of peak downstream traffic, up from 50 percent last year, and Netflix has slightly more than half of that share.
Since cable and internet providers are typically one and the same, when you cut the cable, and choose to consume your video via the internet, the cable companies may start levying a surcharge on the portion of your internet consumption that is video. Conversely, the cable companies could charge Netflix or YouTube for the video that is carried on their networks. And of course, the ultimate entity that pays is you and me.
You want to watch that the Sound of Music? You will be paying Comcast an extra charge for the needed transmission speed. Potentially, both you AND Netflix will be paying Comcast for that privilege.
All of a sudden video becomes a huge profit center. Instead of incentivizing the cable companies to build faster networks, the courts are providing the cable companies, who typically have a monopoly in their served markets, to milk their network. Akamai performs an annual ‘state of the world wide web’ study: Hong Kong has an average internet speed of 57.5 Mbps, South Korea has an average speed of 49.3 Mbps,; the United States is 13th at 31.5 Mbps. High speed connections, or higher than 10Mbps, serve nearly 49 percent of connections in South Korea, 39 percent in Japan, and 19 percent in the U.S. South Korea has 86 percent broadband penetration, while the U.S. stands at 64 percent.
Believe it or not, New Hampshire is fourth-ranked in the country for internet connection speeds, at an average of just of 10Mbps. No surprise, D.C. is third. However, when I go to Taos, my speeds plummet to under 100 Mbps. The haves and the have not’s.
As internet speeds increase, more businesses are started that revolve around the use of the internet. Think of Amazon, Netflix, Spotify. And then there’s all those new cloud-based businesses. Who’s going to want to use a cloud-based program if it’s sloooooowwwww? We’ll all be back at our PC, researching at microprocessor, solid state disk costs, clockspeeds, and disk i/o performance.
The surcharges are happening, right now: AT&T recently launched something called “Sponsored Data” in which advertisers pick up the charge for getting content to customers. What about selling user’s data?
Why the decisions? It wasn’t that the court believed that net neutrality is a bad thing, but that the FCC implemented the rules in a legally questionable way. The FCC could define ISP’s as “Common Carriers”: Think telecom companies. The court found that the agency was imposing rules that applied to common carriers, and the cable companies have not yet been classified as “Common Carriers.” Is it really that simple? To date, there’s never been a situation where providers can block whatever they want. We’re there.
Lots of food for thought. If you have an interest in reading further, GigaOm’s Matthew Ingram has a nice synopsis.
Sources: GigaOm, WSJ, This Week in Google