Life After Net Neutrality

For the past few months, in the United States, a fight has been brew­ing over how the pipes that con­trol the Inter­net would be ruled. On one side, activists and large Inter­net com­pa­nies felt that access to the Inter­net should be neu­tral and that all sites should be accessed in the same fash­ion. On the other side, large cable and phone com­pa­nies have been argu­ing that they should have a chance to charge dif­fer­ent rates for dif­fer­ent types of ser­vices. The whole fight was embod­ied into a cam­paign called Net Neu­tral­ity and made its way into the Amer­i­can congress.

Today’s news that the Net Neu­tral­ity bill was defeated may cre­ate future prob­lems for Amer­i­can inter­net busi­nesses but will not kill the Inter­net, as some have claimed. Instead, it will prob­a­bly dic­tate, in the long run, the death of the very pro­po­nents of a ban on net neu­tral­ity: phone and cable com­pa­nies which have been try­ing to over­reach in their attempt to fat­ten up their bot­tom line.

Look­ing at the stakes

At issue in this debate is how band­width is dis­trib­uted and whether it should be metered in any fash­ion. At the cur­rent time, in the US, most peo­ple who get broad­band pay a flat monthly ser­vice fee that gives them unlim­ited band­width at up to a cer­tain speed. Under a new model many phone com­pa­nies and cable com­pa­nies are try­ing to pop­u­lar­ize, this would change. Their view is that cer­tain ser­vices, like phone ser­vice or video ser­vice, require more band­width and there­fore should be charged in a dif­fer­ent way. they would basi­cally intro­duce new charges that would offer access to such ser­vice for a premium.

The fear from many is that such model would get them into the busi­ness of mon­i­tor­ing what type of ser­vices are avail­able and being selec­tive in what access they offer. For exam­ple, they could start offer­ing access to cer­tain sites at a pre­mium fee but decline access to other sites or degrade the ser­vice in such a way that those other sites would not work well on most computers.

Short term impact

In the short run, few will feel the impact of the com­mu­ni­ca­tion providers’ strat­egy. A few pock­ets here and there will start fail­ing but, all and all, only new ser­vices will be affected. Where it gets inter­est­ing, how­ever, is when new offer­ings start mak­ing their way onto the Internet.

At the cur­rent time, the US is already start­ing to lag in broad­band pen­e­tra­tion. This will become a big­ger issue if the telecom­mu­ni­ca­tion providers have their way as they will prob­a­bly start mod­er­ate increase in the basic price of broad­band access. Some may con­sider this view alarmist but his­tory tells us that basic rates on phone ser­vice have gen­er­ally been increas­ing, which is inter­est­ing con­sid­er­ing the com­plains about com­pe­ti­tion forc­ing com­pa­nies to lower their rate. The same increase in rates has been true on the cable side of the equa­tion, where rates of ser­vice are slowly mov­ing up.

As price is one of the major levers in increas­ing broad­band adop­tion, such rise in prices will only slow things down. Of course, it may not be a point of con­cern until one con­sid­ers the global mar­ket­place. Unlike the United States, other coun­tries are rapidly mov­ing to increase broad­band adop­tion and the speed of broad­band lines alto­gether. What that will result in is a greater capac­ity to cre­ate and develop next gen­er­a­tion appli­ca­tions that they will then be able to resell to the rest of the world.

We’ve already wit­nessed the rise of for­eign com­pa­nies estab­lish­ing them­selves almost overnight as major player with the recent appear­ance of Skype, a com­pany that was born out­side the US bor­ders and rapidly acquired a fol­low­ing that made it worth sev­eral bil­lion dol­lars. This wealth gen­er­a­tion hap­pened out­side of the US because broad­band was cheaper and more acces­si­ble there. I’ve also recently seen offer­ings by a cou­ple of non-US com­pa­nies that may fol­low the same curve and I am get­ting con­cerned about the US abil­ity to com­pete if band­width is not wide­spread, increas­ing in size and inex­pen­sive enough for all.

Restric­tions on broad­band access and degraded (or uncom­pet­i­tive speeds) may ulti­mately rep­re­sent a major Achilles heel in the US abil­ity to com­pete on the global stage.

Long Term Impact

But what if…

John Gilmore, promi­nent Inter­net activist, once said

The Net treats cen­sor­ship as dam­age and routes around it.

Extend­ing the approach, one could start won­der­ing how the net would work around cen­sor­ship at the source (which is basi­cally what lim­ited access could become).

Enters the con­cept of Mesh Net­work­ing. In a mesh net­work, com­put­ers can work in a peer to peer fash­ion to con­nect to each other. One could envi­sion mesh net­works being cre­ated out of thin air (using wire­less Inter­net access card) with­out hav­ing to go onto the lines of the telco providers. Of course, the issue would still be in terms of trav­el­ing over long dis­tances to ensure that sites that are located in far away loca­tions are still acces­si­ble. This prob­lem could be solved by some of the con­tent providers them­selves, who could enter in some form of social con­tracts amongst each oth­ers agree­ing that they would carry each other traf­fic back and forth, bypass­ing some the last-mile telco providers in the process. Under such a model, Google’s data cen­ter would allow for ama­zon to use their band­width and vice –versa, Microsoft or Yahoo would allow each other sim­i­lar rights of way and so on… As they all oper­ate large facil­i­ties, they could cover a sub­stan­tial por­tion of the US pub­lic and bypass the tel­cos all the same.

Under such a sce­nario, peo­ple would start aban­don­ing the restric­tive net­works offered by phone and cable com­pa­nies to access the more free and open net­work offered by the con­tent providers. The result would be an even­tual dis­place­ment of the telco providers in the long run and, due to prob­a­ble resent­ment fos­tered in the process, an evap­o­ra­tion of any rev­enue from their other ser­vices as those would prob­a­bly be tied to line access.

Con­clu­sion

If Net Neu­tral­ity goes, US com­pet­i­tive­ness will be affected neg­a­tively and will result in more new wealth being gen­er­ated out­side of the US than in the US. Fur­ther­more, in the long run, an over­reach could result in peo­ple aban­don­ing the tel­cos alto­gether, if Mesh net­works take off.