Wednesday, August 18, 2010

A Net Neutrality "Grand Compromise" is Necessary, Not an Option

At the end of the day, unless the major stakeholders in the network neutrality debate can come to some enduring compromise, broadband investment in the United States is likely to be quite constrained.

That is why agreements such as Google and Verizon have struck, are so important. At the end of the day, unless private commercial interests can be persuaded there is a way forward that encompasses all the key interests, there can be no outcome satisfactory for the public interest, either.

This one graphic suggests why ISPs, as well as application providers, will have to reach a grand compromise. Voice, for over 100 years, has been the underpinning for all public networks, but that is not going to be the case in the future. For the moment, voice continues to underpin mobile and fixed networks.

But nobody believes that will last. ISPs and service providers must find ways to at least replace the lost voice revenues with new revenue sources. Application providers, specifically, and the public interest, in general, also require robust investment in the new broadband and IP networks of the future. But investments always require some expectation of profit. Absent that, investment will not happen.

ISPs are going to have to give up some possible revenue streams. That is what the Google-Verizon agreement stipulates, in essence.

But application providers are going to have to give some ground on network management. Without such agreement, broadband investment will be imperiled. Some do not believe that to be the case, to be sure.

But the investment community has spoken loud and clear, for decades, about broadband and capacity upgrades by cable and telcos that investors worried would not provide a financial return. If one believed that the federal government, or other units of government, could make those investments after private interest collapsed, then collapse would not permanently affect broadband deployment.

But there is not such option any longer. U.S. networks will be built by private investment, or not at all. Despite some carping, that is why the Google-Verizon agreement is so important, and why wider industry agreement on some grand compromise, is essential, not optional. Nobody is going to get everything they might want. But all of us need to get enough to keep moving forward.

The worst outcome for the public interest is continued stalemate.

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