Net Neutrality Friday

First, I want to point readers to a couple of websites. First, is Dan Grossman's Site at NetAccess Futures. He is a person that worked at my competitors in the past and is a good source for information on the topic. The other site is Light Reading and is a site that broadly covers the Telecommunications Industry.

This week I want to talk about the actual document from the FCC. The link is for the entire document and will allow you to read the entire thing. You won't directly find any comments that the FCC is going to allow for pay for priority service. What is going on is the FCC is asking questions and trying to get effective commentary. These questions are suggesting that the FCC might consider a large number of changes in the rules.

One of the misunderstandings today is that the FCC can directly reinstate Net Neutrality. The courts have made it abundantly clear that the existing set of Net Neutrality rules have to change or there needs to be another change to make them viable again. I am going to (I hope) set your thoughts on their head's as it pertains to a single service (U-Verse). I going to separately argue that by extension that if you accept my contentions there that these issues exist in Cable and FiOS.

U-verse is a form of DSL offering from AT&T. It can be a triple play service: Voice, Video and Data. In this particular case, the Video (TV service) is switched digital video over Internet Protocol (IP). Internet Service (ISP) is also IP data. U-verse shares the bandwidth provided by its physical connection to the TV service as well as the Internet Service. In fact if you are watching TV, you have less ISP. This is today and before the overturn of Net Neutrality by the courts. It was that way at the start of U-Verse.

If you have not noticed it already, the TV service is a "Fast Lane" service that everyone is up in arms about. The TV service on U-Verse gets precedence over the ISP service. So doesn't that make you nervous already? How about the content providers? Are they suffering? No they are not. The content owners get paid by AT&T. That's right get paid to allow AT&T to put their content on a "Fast Lane". I am quite sure that this is backwards from what you expect and why you need to take a step back.

The reality is that there are only a couple of content providers that need to worry about this and they are "Content Aggregators" like Netflix. The reason is that Netflix (outside of a couple of shows) makes no content. Netflix is reselling other people's content. Content owners get paid by distributors. Distributors only get paid when they have exclusive rights (like Sunday Ticket from DirectTV). Let me compare Hulu to Netflix in this context. Hulu is owned by Fox, Disney and NBC-Universal. Those companies are direct content owners and so are not going to pay for better service. Why? They are already getting paid for the best "Fast Lane" in the world.

Now I am a Comcast and a Netflix customer. I use the two services all the time and have had no trouble with either working together even though there was supposedly trouble in the earlier part of the year. So, my experience is that there are no problems yet. Not to say there won't be in the future, but not at the moment from my perspective.

Next week, I want to talk about why I think "Fast Lanes" are a really bad idea for a carrier to implement.

Jim Sackman
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