Saturday, September 19, 2009

New Net Neutrality Rule Impact: Good and Bad

More use of network-delivered applications (software and applications as a service), more over-the-top VoIP, more mobile VoIP, more over-the-top video services, higher prices and more-stringent usage caps are among the likely new trends if the Federal Communications Commission extends wireline network neutrality rules to wireless companies as well, a move that seems nearly certain as the FCC begins a rulemaking on further network neutrality rules.

If traffic-shaping mechanisms cannot be used to manage congestion by selectively slowing some applications on either wired or wireline networks (the FCC already bars this practice on wired networks), service providers might have few tools to regulate use except by raising prices to discourage bandwidth-intensive use.

That likely would include a mix of new usage caps and higher prices for users who really want to use video and other bandwidth-intensive applications heavily.

What remains unclear is whether any new rules would also restrict the ability to create enhanced tiers of service that a customer wants to buy. For example, a user might want a service that prioritizes his or her own video or voice services over software upgrades or Web surfing. Business users, for example, often can buy services or appliances that allow setting of business priorities.

Sometimes those priorities include setting priority for voice traffic from desktop phones instead of Skype, for example. It isn't clear whether "positive" innovations (additional things users can do) will be prohibited by any new rules, as "negative" regulation ("thous shalt not") is put into place.

In any case, it is likely that providers of over-the-top applications in the voice, conferencing and multimedia communications areas, not to mention other forms of "software as a service," will be better placed to sell their wares.

The issues are quite tricky, though. Though the FCC rules ostensibly are aimed only at ensuring that users have access to all lawful applications, the rules also step over into the realm of business models and permissible marketing innovations.

It is not clear that network neutrality allows creation of enhanced services that work by prioritizing applications of any sort, even when that is what the consumer wants, and the service provider wishes to sell.

Most observers would agree that it is a proper regulatory effort to allow competing applications and services to have a chance to compete fairly with service and applications owned by the IPS itself.

The unknown danger is that laudable efforts to ensure competiton then overstep and retard competition and innovation by prohibiting positive innovation (new things people have the right to do) by prohibiting all forms of application acceleration.

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