Recently, the Federal Appeals court ruled that the FCC doesn’t have the authority to regulate an internet provider’s decisions regarding network traffic. This case came about after the FCC, in attempt to uphold net neutrality, restricted Comcast from blocking bit-torrent traffic in 2008. (Click here for a PDF of the full ruling, which we found on VoIP Tech Chat.) This blog is my commentary on net neutrality, this ruling, and how it may affect the VoIP Services Industry. Please feel free to comment. AT&T CEO Ed Whitacre has said, in reference to large portals such as Google and Yahoo!,
"Now what they would like to do is use my pipes free, but I ain't going to let them do that…" [Reported in BusinessWeek]
Based on this position, it appears that AT&T believes it has the agency to charge other providers for using AT&T's bandwidth – in addition to what’s already paid. (AT&T is already paid by customers using their bandwidth to download files, images, and web pages from sites like Google. And, Google likewise pays its Internet Service Providers for the bandwidth that it consumes.) Should this kind of pricing model apply to small providers as well, it could have some unfortunate results. While Google may be able to afford to pay AT&T and the several other large ISPs to prioritize [1] their traffic, smaller businesses would have a much harder time doing so. And, it would most likely be impossible for a teenager coding or blogging away in her basement to enter the ring at all.
I view this as an adverse outcome as it would raise the barrier to entry on the Internet. One of the best aspects of the Internet, in my opinion, is the low barrier to entry as it encourages rapid progress and collaboration. Compared to many high tech innovations, the Internet is extremely cheap to get in and get your voice heard. (Example: Facebook was invented by some 20 year olds in college.) There are additional problems for providers, such as VoIP services, that directly compete with services provided by the ISP. The majority of large ISPs provide packages that sell VoIP services. While ISP’s VoIP services are often cheaper than a traditional POTS lines, many are still vastly over priced compared to third party providers. And, they are even more vastly over priced compared to their operational costs for providing those services. This creates an incentive to throttle VoIP traffic that comes from outside the ISP. Even though VoIP doesn't use much bandwidth, it's likely, in my opinion, that it will be targeted to steer people towards the ISP-provided VoIP service.
Regarding the ruling, however, it appears as though the FCC overstepped its bounds[2], and the court rejected their claims. This opens the door to Comcast and others to engage in the tactics above, among others. All told, it's hard to say exactly what ramifications the ruling will have in the short term. The FCC has broad regulatory powers over common carrier networks, and there appear to be very strong arguments that ISPs should be classified as common carriers. Among other things, this would guarantee a neutral Internet.
Alternately, Congress could be pressured to give the FCC authority to regulate neutrality amongst ISPs without changing their classification. It’ll be interesting to see what happens next, but our hope is that consumers continue to support Net Neutrality. [1] Priority here is relative. If, by default, all traffic is throttled, then so-called prioritized traffic could be nothing more than the level of service you already get. [2] One popular hypothesis is that the FCC knew they wouldn't win in court, but fought anyway in order to pressure Comcast into protocol agnostic forms of bandwidth throttling. Having succeeded in that battle, a win in the appellate court was not necessary.