Thursday, December 23, 2010

Net Neutrality: 4-6 Years of Uncertainty

Professor Tim Wu says the Federal Communications Commission's net neutrality rules mean at least four to six years of uncertainty, as it will take that long for court challenges to the FCC's authority to bubble up to the Supreme Court for final ruling.

"We’ll get an initial indication in about two years (the length of time it will take for the initial legal challenge), but a final answer may require the Supreme Court to get involved," Wu says. Meanwhile, if the new rule is struck down by a federal court, the FCC retains the power to reenact it using a different basis of authority (its backup power, so to speak). That will effectively reset the authority question for another two years.

The ruling will have other effects. There are lots of firms that sell software allowing service providers to create services offering priority handling of packets, and custom services built on the apps users care about most. It will now, in the U.S. market not make so much sense to try and sell such products to wireline operators, as they probably will not want to bother creating services other than "best effort."

That shifts the whole focus of sales effort to other countries where creation of such services is possible. Inside the United States, only the wireless providers will be able to create many new types of differentiated service. That's good for mobile providers, but not so good for the commodity providers of fixed broadband service.

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