Net Neutrality Friday

Well, now that the new FCC Chairman is in place we have a number of NPRMs being floated and issues being discussed.  In the grand scheme of things, I don't think the outcome of all of this will amount to much in practice.  As you are probably aware by now, that the way I feel about the implementation of Title II for Internet Service in response to the question of Net Neutrality.  I don't think that Service Providers have slowed the rollout of new services and networks.  I don't think that anybody was slowed and now sped up.  I think this whole thing was much ado about nothing.

I do have one thing that troubles me with the discussions as they are held now.  The changes seem to have some political methodology in both the old FCC and the new one.  They have models of economics (which in this context is a political exercise) with more or less regulation and control.  I think that having these models is a wondrous thing but really don't apply to this little branch of the world.  I have two reasons for saying so:  Technology and Natural Monopoly.

To address this first point, there is an ongoing evolution of technology.  If you go back 30 years, we had separate cable and phone networks and they served different purposes.  Today, these networks serve essentially the same purpose and that purpose is converging.  In the long term, there will be no residential and few business services not delivered over the Internet.  Some things will take more or less time to get there and it will be decades for this transition to complete.  Now, the only question is if there will be something to replace this connectivity that gets invented in the next 20 years or so.  It is possible, but going over the Internet is the trajectory we are on today.  There is significant change going on in the transmission world with the rise of mobile devices.  Internet connectivity of embedded devices under the IoT moniker is another change.  All of this and more will keep froth around the whole network in technology.

The second point is that there is this notion of Competition to drive behavior.  This works in some parts of our business and not in others.  Capitalism wants lots of competitors and allow them to compete with differentiation in the marketplace.  We work in a business of significant capital outlays.  Service providers work very hard to evaluate the Return on Investment on that Capital Outlay.  It has turned out to this point that we want more people choosing to deploy than are actually deploying.  I don't think there is much we can do to change this.  If municipalities choose to add to the competition, it will likely mean the withdrawal of other Service Providers over time.  I think a more practical approach is to assume 2 - 3 (or some other low number) of providers in any area and manage to those numbers.  That is the method to overcome the Natural Monopolies in the Service Provider business.

So, I implore those in the regulatory world to be more practical and less dogmatic when they approach regulating the network.  The economy needs the network to be growing and robust, but also broadly available and affordable.  Those should be our common goals.

Jim Sackman
Focal Point Business Coaching
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