Net Neutrality, Part II: The Road Ahead

15543567837_528f750d31_zNet Neutrality, Part I discussed the FCC’s selection of a Title II regulatory framework. In February 2015, broadband Internet service was reclassified as a heavily regulated “telecommunications service,” superseding its thirteen-year-old status as a lightly regulated “information service.” This change occurred after a loud clarion call emanated from Silicon Valley and consumer advocacy groups, culminating with nearly four million comments submitted to the FCC. The debate was cleverly framed in such a way as to equate Title II with an open Internet, deceptively branding those opposed to Title II as being against net neutrality.

The FCC decision was more preventative than punitive. Comcast and AT&T, representing 40 percent of US broadband subscribers, had already committed to net neutrality. If other broadband ISPs transgressed, they likely would have been stopped in their tracks.

The biggest risk is the law of unintended consequences. Assuming Title II survives its legal challenges, however, the doomsday scenario depicted by its staunchest critics will not materialize. There is simply too much at stake.

At least for now, it will be business as usual. Netflix and YouTube will continue growing, bursting through the Internet’s seams while demanding prodigious amounts of bandwidth. Broadband ISPs, operating mostly with limited competition, will continue to collect lucrative subscriber fees. And telecom lawyers will have a field day challenging and defending Title II.

A host of new Internet TV services is launching this year—HBO Now, CBS All Access, Sony PlayStation Vue, Dish Network’s Sling TV, Showtime, and Apple—on the heels of Netflix, Hulu, and Amazon. They face substantial technical hurdles, however, in providing high-quality Internet TV, especially with regard to all simultaneously obtaining sufficient bandwidth.

The FCC banned “paid prioritization” in its new net neutrality rules. But it left open a big gray area, allowing exemptions for “managed or specialized services.” Such a zone of privileged toll roads would present a paradox. While the express lanes would facilitate the viability of these over-the-top services, they would contravene a fundamental tenet of net neutrality. Perhaps the ultimate litmus test will be Ultra HD, a new video format providing four times the resolution of today’s HDTV pictures, but requiring two–to–five times the bandwidth.

More than ever, we need cable, telco, and wireless operators to invest tens of billions of dollars upgrading their Internet bandwidth capacities. Critics of Title II claim the regulations will put the brakes on our broadband infrastructure, just when Internet video is becoming front and center in our homes. But acceleration is more likely. A broadband ISP scaling back its capital investment plans would be shooting itself in the foot, ceding market share to others.

FCC Chairman Tom Wheeler promises to use “forbearance” (restraint) in applying Title II to the broadband Internet. Let’s take him at his word, especially given the lessons learned from the “CableCard” fiasco of the last decade. (In this case, the FCC required separation of the set-top’s encryption/security element from the rest of the box, in an attempt to facilitate retail distribution of cable boxes. The unintended result was higher consumer prices, diverted R&D resources, and a lower level of security. And the intended result—a vibrant retail market for set-tops—was not achieved.)

Our broadband priorities should now pivot toward promoting competition and increased investment. Most US homes have a choice of only one or two high-speed Internet providers. Yet help is on the way. Google and AT&T are building 1 Gbps fiber pipes in certain areas, providing up to 100 times the speed of a typical household. Comcast is planning to one-up both of them with a 2 Gbps service available to a significant portion of its national footprint, but likely at a high price. Cable operators (including Comcast) are planning to keep pace by launching Gigasphere, the next-generation DOCSIS 3.1 cable modem technology. Telcos will deploy, a speedy next-generation DSL technology. Satellite-based Internet is becoming more competitive, and 5G wireless will someday arrive. Even some municipalities are getting in on the action with local high-speed fiber.

The biggest challenge facing our future Internet is the creation of much more bandwidth (per home) at a competitive price. The FCC recently redefined broadband speed to be at least 25 Mbps (versus 4 Mbps). Achieving this ambitious goal nationwide in the next five to ten years will require FCC forbearance on Title II, massive capital investment, aggressive deployment of new technologies, and more competition. Title II may have been overkill, but it will not prevent us from reaching our broadband destiny.

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