• 06/23/2014
    7:00 AM
    Andrew Froehlich
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Net Neutrality Retreat Threatens Cloud Growth

A proposal to undermine net neutrality by allowing ISPs to charge for "fast lane" traffic would create competitive barriers for businesses and stymie cloud adoption.

I'm about as pro-capitalism as one gets. Nevertheless, I believe there are instances when the US government must step in and impose regulation on industries with near monopolies. Our Internet carriers are one example of a near monopoly. That's why I'm very much in favor of net neutrality to protect customers from being shaken down by a handful of carriers.

However, the FCC is wavering in its commitment to support a full-blown net neutrality policy by considering a proposal to allow ISPs to sell tiered services to businesses like Google and Netflix for preferential treatment of their Internet content on backhaul links. The plan, though sounding capitalistic in nature, would create artificial barriers to entry and could slow cloud growth.

The concept that the FCC and several ISPs are pushing is often referred to as "fast lane" traffic. The idea is that Internet backhaul service providers would be able to charge extra for favored treatment when transmitting data over the Internet. Businesses that didn't pay the fees for preferential treatment would have to wait a bit longer for their data to be sent.

This effectively would create a competitive advantage for those willing to pay extra for improved speeds. It's a slap in the face of the entire net neutrality concept, which attempts to preserve the Internet's openness and fairness.

When artificial competitive advantages and barriers to entry are created, they often have unintended consequences. Cloud computing is largely popular because it's allowed even the smallest companies to compete against the big players. Massive amounts of capital are no longer needed to build an online presence. Small businesses can leverage a fraction of a larger infrastructure and expand/contract as needed. But with a proposed (and likely expensive) added cost to match larger competitors, small companies and startups would either wither and die -- or not even try to compete in the first place.

I completely understand the concern of ISPs looking into the future and wondering how they're going to pay for the underlying Internet backhaul communication. Over the next five years, Internet traffic is expected to skyrocket, and someone has to foot the bill for backbone upgrades.

Still, in my opinion, forcing online businesses -- creators of most Internet content -- to pay is not the wisest choice. In fact, I'd rather see consumers pay extra for content consumed in the form of data caps and added fees for exceeding them. This gives control to consumers to use their bandwidth as they see fit. It also allows businesses to compete on an even playing field. By doing so, businesses battle against one another based on product/service alone. Then it's up to consumers to decide which choice is right for them.

It's dangerous to create fast and slow lanes for Internet traffic. If the net neutrality stance were to capitulate on any one measure to pay for the expected Internet growth spurt, the best solution (and the one that would truly promote capitalism) would be to push the cost down to the consumer.

If we essentially expect businesses to pay for a manufactured competitive advantage, it could heavily impact competitiveness on the Internet and almost certainly would erode cloud use by small businesses and startups. That's a dangerous road to travel, and it would create a net that is far from neutral.


Net Neutrality

I too a bit concerned by the FCC's sudden seeming disinterest in net neutrality. It's likely to stay enshrined in Europe as I think the EU would have cause to investigate anti-competitiveness if it was removed.

In the US however, we may need to pin our hopes on that democratic bill to ban the fast lanes. Considering the state of the house at the moment I doubt it will pass, but I have my fingers crossed. 

Re: Net Neutrality

Yes, in the US, net neutrality's fate looks rather bleak. According to the San Francisco Chronicle, service providers are outspending supporters of net neutrality (Google and other tech companies) 3-1 in giving money to legistlators who oversee net neutrality matters.



Re: Net Neutrality

I agree. This is a great example of how capitalism doesn't work -- when you pay off the regulators. The big businesses keep getting bigger because they have the money and the control to keep any competition from getting big enough to threaten them. Soon we will have one big communications/entertainment provider: AmaTimeWarFlix&Tgle

Re: Net Neutrality

SMB's can compete against big players -- but only if the playing field is somewhat level. It just seems like they just don't have a loud enough collective voice to matter to regulators on either side of the issue.

Re: Net Neutrality

Not sure if this idea offers much hope, but the Electronic Frontier Foundation wrote an interesting blog post about the role cities and municipal broadband networks can play in supporting net neutrality and providing competition to the service provider monopolies.

Re: Net Neutrality

Marcia, really interesting post, thanks for pointing that out. I guess the question is whether Internet will develop to be more like a utility or a luxury item. Right now it is not like running water or electricity that almost everyone has acess to. It's true that there is a lot of dark fiber out there we're not using, but cities will ned to invest in lighting that up, and I'm not sure if that will happen across the board. It may be more likely Google will continue to do it.

Re: Net Neutrality

In parts of Europe Internet access is considered "a human right."

I'm not going to go that far (I'd hurt my eyes from rolling them that much), but it has definitely taken on utility status, I would say.  I work a lot from home.  Internet outages can affect my life a great deal more than, say, boil-water orders.  #FirstWorldProblems

The difference, though, is that it is -- as Andrew points out -- a near-monopoly.  Not a true monopoly.  That is a very important distinction when it comes to regulation.  Comcast, Verizon, and others NEED each other in this sense because if they didn't have each other, they might very well come under the purview of state regulation regarding ratemaking.

Re: Net Neutrality

Susan, it is unfortunate that the FCC can't take real action. As Joe pointed out below the EU is taking action to enforce net neutrality, and they can regulate that.

Sometimes government regulation is necessary to protect consumers. Otherwise we let big corporations, especially telecoms, dominate the internet ecosystem.

To me this discussion reminds me that telecoms have managed to convince over 40 US States to drop the fixed line requirements, another loss for consumers.

Re: Net Neutrality

The funny thing to me in all this is looking back at the DOJ's relentless pursuit of Microsoft in antitrust proceedings years ago.

At no point did I feel like I was "locked in" to Microsoft, despite the company's products ubiquity.

I have, however, felt "locked in" to my cable and broadband providers on more than one occasion.  Where's the DOJ on Comcast?

(I'm not necessarily advocating antitrust action against Comcast (despite my antitrust experience, I don't purport to presently know enough about the intricacies involved here), but the hypocrisy is stunning.)

Re: Net Neutrality

That's a good point Joe about the double standard. I feel very locked in when it comes to cable and broadband. I looked for alternatives to Comcast and AT&T last year, but there weren't really any viable ones. Really frustrating.

Re: Net Neutrality

@Marcia: Well, there is Verizon FIOS, but that's only if they're in your geographic area (and, for that matter, if they're in your building -- if you live in an apartment or condo complex).  Ditto for DirecTV and other satellite services for television, but they are quite different, and -- again -- can present difficulties if you live in an apartment or a condo.

I am also aware of services that let you connect your laptop to the Internet via 4G for a reasonable monthly price -- and I'm not just talking about Verizon and AT&T's super expensive data plans.  If only I could remember the name... I got a solicitation for such a service a few years ago, and I was very tempted (I think it was only about $50/month for unlimited data, or at least some very high data amount).  If I remembered the name of the company and/or hadn't thrown out that piece of junk mail, I'd seriously consider switching.

Re: Net Neutrality

Yeah, I think there might be some really nichy Internet services, but the problem is that I still need phone and TV, and the way Comcast and AT&T has it set up, unless you get a bundled service from them, the prices are ridiculous. The satellite TV services are expensive too.

Re: Net Neutrality

@Marcia: For landline phone service, you might consider a service like Vonage for phone only (although you need broadband for it to work).  The price is comparable to -- if not cheaper than -- Comcast/Verizon/other Broadband providers.

Re: Net Neutrality

Yeah, since I'd still need a broadband service to use Vonage, I don't know if it would help much in terms of reducing the overall communications bill. Getting stand-alone Internet service is usually expensive.

Re: Net Neutrality

I cut the cord on my fancy-schmancy cable TV package a while back, but still needed Internet.  Through some perversion, it was about $4/mo. cheaper for me to get basic cable with broadband Internet than broadband Internet alone.

I can't remember the last time I turned on my TV.  It just sits and collects dust, and my basic cable goes to waste, existing only to bring down the cost of my Internet.

Re: Net Neutrality

Congratulations on cutting the cord! That is a strange deal on the cable/broadband, but great it saves money.

Re: Net Neutrality

I'm even considering getting rid of Broadband altogether and going 4G.

Honestly, I do miss cable, though.  I love me some fancy channels and some DVR.

Re: Net Neutrality

Yes, I agree there is a big problem and the cable companies (y) in the US have been able to fairly mow down the consumer. BUT there is an attitudinal difference that kind of allows for that to happen, as well. Americans do not want the government to interfere -- on this, on healthcare, on education -- an in many cases we pay the price. Literally.

Re: Net Neutrality

Susan, I don't want this to be a political dicussion. As an European I have a different perspective, and I lived on both sides of the pond.

One thing the EU Commission have demostrated is that regulation is necessary in some sectors, such as telecom, energy and transportation.

Tomorrow roaming charges in Europe will be reduced for the third time in six years. And the GSM standard is sucessful today because it was defined and regulated by the EU 25 years ago.

As Joe mentioned the EU have declared internet access a basic right of every citizen, and net neutrality is part of the new data protection directive.

I am not sayign that government regulation is good on everything, but consumers should be protected against abuse.

Re: Net Neutrality

@Pablo: Considering the very connected, very integrated nature of the European continent and the attendant demand for access and connection to other countries thereby, what's the demand/popularity for satellite phones in Europe like?

I see these special "call anywhere in the world, unlimited" ultra-high-tech, ultra-compatible-tech phones advertised in in-flight catalogs all the time, particularly when flying abroad.  I'm curious if these are actually particularly popular among those who have to regularly travel other than high-level executives and people with money to burn.

Re: Net Neutrality

Joe, I have not seen anyone using a satellite phone in Europe. I believe that, at least in Western Europe, we have almost 99% cellular coverage.

But population density in much higher than the US, and we have many more service providers.

The fact that all the EU and most of the world uses the same GSM standard also helps to provide good coverage.

Now 3G is almost everywhere. LTE is taking a bit longer, but now is available in most large cities.

And the EU is trying to take the lead to develop the future 5G standard.

Re: Net Neutrality

@Pablo: Certainly, much of Europe has great cellular coverage.  What are the International (or, at least, "intra-European") calling rates like?

(FWIW, I remember when I bought the cheapest throwaway I could find when I was in Poland a couple of years ago, calls to other countries like Germany were not really an option.  But, again, cheapest throwaway I could find.)

Re: Net Neutrality

I think Americans are trying to fight back against cable companies by "cutting the cord," but the recent Supreme Court decision against Aereo was another setback for that movement, at least temporarily. 

Re: Net Neutrality

@Marcia: I haven't read that SCOTUS decision yet, but I'm looking forward to it because Scalia wrote the that should be a real delight of jurisprudential wit to peruse through.  Scalia dissents are to SCOTUS opinions what a '47 Château Cheval Blanc is to wine.

(Here's my personal favorite.)

Net Neutrality

We already have non-Neutrality when it comes to our selection of networking equipment and our selection of general Internet speeds from our providers.  To stifle/restrict even more is just...well, a pain in the butt, to say the least.

Maybe this is exactly what NBC-owned Comcast wants, though -- to get us to give up our Internet video-watching ways and go back to sticking to watching regulr TV.