Sunday, October 4, 2009

Is Net Neutrality Possible?

It has been quite some time since the typical service provider executive has had confidence about the stability of rules governing the communications business. To greater or lesser degrees, there has been some element of regulatory instability and uncertainty since the mid-1990s, to go along with heightened market uncertainty.

Investors and executives do not like uncertainty. Yet greater uncertainty is likely what the industry now faces as the Federal Communications Commission ponders new rules about network neutrality, wireless competition and national broadband policy.

The latest reason for heightened uncertainty is the fundamental nature of questions inevitably raised by some of the regulatory discussions and rule makings, and the time it will take to sort out the application of the rules.

How does regulation separate "common carrier" obligations carriers may have from content rights they may have as providers of their own information and content services?

What does "common carriage" mean in an Internet era, for Internet-delivered services that might not work reliably and consistently in a strict "best effort" delivery mode?

What scope exists for "private IP" services provided to consumer users, much as business users have the right to buy "private IP" services that allow prioritization of packets?

How can regulation provide fair and equitable treatment of like services when the fundamental regulatory frameworks apply to different providers?

How does the framework handle instances where a "service" or "application" provider also acts as a "carrier"? When it is impossible to prevent a single legal entity from acting simultaneously as an information provider and a service provider and an application provider and a carrier, how does regulation handle the contradictions between treatment of roles?

Above all, will the sum total of new rules create more freedom, or less? And when freedom for one actor conflicts with freedom for another, how will balance be maintained?

The answers ultimately will matter for reasons other than perhaps-abstract notions about extending or squashing freedom; protecting individuals and companies from the power of government. At a time when everybody agrees that continued robust investment in facilities is in the public and national interest, how will the new rules affect investment and innovation?

The issue is not so much whether the outcome is greater freedom for application providers--that certainly will happen no matter what the outcome--but whether facilities providers also have freedom to change their business models to take advantage of new freedoms.

Virtually all regulators assume that the proof of deregulatory success is that incumbents lose market share and revenue. Some financial pain, inflicted on incumbents,  therefore is the whole point of deregulation.

But there is some point beyond which the infliction of pain must stop, or wider disruption of core facilities is impaired.

A rational observer might argue that "level playing fields" have yet to be fully created.. The issue is when such a point will have been reached, and how we will know it.

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