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Neutrality and innovation

Editorial Type: Opinion     Date: 05-2015    Views: 1225   





Mike Mooney, General Counsel, Regulatory Policy, Level 3, discusses why net neutrality is critical if the modern enterprise is to continue evolving

Even with the Federal Communications Commission (FCC) pronouncement regarding net neutrality the Internet remains uncharted territory. This potentially leaves the fate of a large number of online content and communications companies in the balance as they work to retain their customers and fight for consumer choice.

This may sound dramatic, but the fact is some dominant Internet Service Providers (ISPs) in the United States and Europe are wielding their power over their helpless enterprise and retail customers. By charging access tolls for preferential treatment and degrading basic, no-toll services, Internet content companies are being forced into a corner. The choice is either don't pay and face the consequence - an inconsistent and poor content experience for customers and likely churn - or pay the ISP a seemingly arbitrarily established monthly premium to add bandwidth at the interconnection point, even though this additional capacity would actually cost the ISP a nominal one-time amount.

This situation leaves Internet content companies in an unenviable position, because ISPs control the only access to millions of consumer eyeballs. Netflix, for example, is dependent on Verizon to reach the large proportion of its customer base that also purchase their Internet access from Verizon, making Verizon the only option to deliver Netflix movies to them.

The Open Internet Order of 2010 aimed to protect Internet openness, but it addressed only half the problem. It focused on the prevention of technological implementations within the ISP last-mile network to degrade no-toll services, while ignoring the issue of intentional congestion of ISP's interconnection points with the Internet backbone. While many ISPs have behaved properly, several larger ISPs took this as permission to congest interconnection locations as a means to demand access tolls. They have heavily exploited this advantage in the last few years to the detriment of Internet content providers and the ISP's own customers.

Netflix is one such organisation which and it has been significantly impacted by ISPs in this way. Video performance deteriorated as some last-mile ISPs let interconnection links with various businesses' transit providers become congested, and in doing so forced Netflix to deal directly with them and pay their access tolls to improve service quality. The degradation resulted in customer complaints, and had Netflix not given in and paid these fees it would likely have seen the impact of this ISP sabotage in its revenues.

This example is a case in point. Businesses like Netflix which depend on reliable and uncongested interconnection have no choice but to pay the tolls if they want adequate service performance. And, for those organisations that are newer or cash-poor, a paid fast lane can spell the end before the beginning. Challenger brands will effectively become a thing of the past.

Companies like Google, Facebook and Twitter all launched as nimble and innovative startups. They all brought something different to the market and challenged the status quo and, importantly, all relied on the ISP to build an audience on a neutral playing field. Had ISPs worked to impose arbitrary tolls and slow Internet speeds for these companies when they were starting out, it's unlikely that the Internet would be resemble what we see today. Without Google or Facebook, search or social networking could be a totally different experience dominated by the ISP’s own affiliated services.

For the Internet to remain an open market, one that is not dominated by ISPs who dictate the content and applications consumers have access to based solely on spend, the FCC needs to act. In fact, it is a free and fair playing field which will best benefit the market, rewarding the cleverest and most innovative content and applications while ensuring the best possible experience for all consumers. NC

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