This past week has been very busy on the Net Neutrality front. In particular, Chairman Wheeler of the FCC did two things that I think can highlight the issues around investment that I have been talking about. First, he stated that he is leaning toward Title II for Internet Services. Second, he wants to raise the definition of Broadband from the 4Mbps Downstream/1Mbps Upstream to 25 Mbps Downstream/3 Mbps Upstream. Okay, here is the question that I ask. Suppose the FCC does impose Title II for Residential Internet and raises the definition of Broadband. Do you think the ISPs will install new equipment to meet the new rates of Broadband? All of this assumes that there are no lawsuits around either change - okay so I live in a Fantasy Land.
Today, I would have to say no and that is the problem. We need to create an environment that begs for more capital to be deployed not one that caps the money that can be earned by investing dollars. If I were operating an ISP, I would look to more profitable places to invest money. This could be in business services, applications or content. So how do we create an environment that allows incremental network investment to create additional returns?
Before I go on from that question, we need to also be careful about how Title II is applied and what it ends up meaning. Not all Internet connections are likely to have Title II applied. If you are an Enterprise and are using the Internet to connect to a Data Center, you might want the ISP to provide some level of Quality of Service (QoS) to your connection. This would be engineered into the network and would be invisible to consumers as they access web services. This goes on today and nobody notices it. The question comes around the type of connection that Netflix now has with Comcast and many smaller competitors do not.
In this direct peering connection, Netflix (and its network suppliers) do not have to abide by Net Neutrality up to the peering point with Comcast. This would fall under the kind of exception described above. The thing if congestion occurs before the peering connection, it will affect the smaller vendors and not Netflix. The challenge with it will be that Net Neutrality is not violated and people will still see some companies/services having preferred connections.
I hope to have some thoughts around an investment paradigm next week. Have a great weekend and remember to listen to others on Net Neutrality with a critical ear. Many of them have an agenda - and it may not be yours!
Jim Sackman Focal Point Business Coaching Change Your Business - Change Your Life! Business Coaching, Sales Training, Marketing Consultant, Behavioral Assessments, Business Planning