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In our previous Cable CPE post, we provided a brief overview of the largest Cable MSO companies and a brief overview of some of the challenges they face. In this article, the issue of net neutrality is looked at in a little more depth.

What is Net Neutrality

Net neutrality is a highly contested concept that theoretically would ensure that all Internet traffic remains stays on the same playing field. For example, net neutrality would ensure that a local business website would not be given any less priority (slower page downloads, blocked or otherwise restricted by other national business sites willing to pay more. The same principle would protect the rights of people to use the Internet as they see fit.

Net neutrality would in essence prevent any cable or Internet service provider and large commercial sites from unfairly controlling the content the public has access to. Proponents of net neutrality argue that Cable MSOs are starting to act like gatekeepers and have the ability to charge a premium fee for higher quality access. This could mean that websites would have to pay a fee to have their content be accessible to all or download content at the same speed as content that is sponsored.

Opponents of net neutrality argue against any form of government regulation of broadband and that the market should remain a free market. There is also genuine concern that government regulation would be a violation of the First Amendment.

Specific Net Neutrality Issues

Some of the net neutrality issues Cable MSOs face include:

  • Should consumers should be able to download and utilize any software applications, content, or services they want?
  • Should consumers be able to connect to the Internet with any handheld device they want to?
  • Should there be tiered pricing for Internet access, speed or right of access (gate keeping)? Tiered pricing for speed refers to charging different amounts to different customers for the same speed without regard to content.
  • Preventing control of key Internet access points to companies that could choke off traffic (unfair competitive practices and censorship).

Comcast vs. the FCC

There was a case running through the American court system that pitted Comcast against the FCC. The heart of the issue was a decision by the FCC to penalize Comcast for blocking BitTorrent file sharing downloads. After years of legal maneuvering the Court of Appeals decided in favor of Comcast but only because current law did not give the FCC authority to regulate broadband. This has set off another round of battles as the government has set out to reclassify broadband under telecommunications so that the FCC would have jurisdiction.

“The FCC has long sought to impose rules requiring Internet providers to offer equal treatment to all Web traffic, a concept known as network neutrality. But in a unanimous decision, the U.S. Court of Appeals for the D.C. Circuit found that the agency lacked the power to stop cable giant Comcast from slowing traffic to a popular file-sharing site.”

Source: The Washington Post

The Double Edge Sword for Cable MSOs

Whether you are in favor of government regulation or against government interference, the whole issue of net neutrality is a double edge sword for Cable MSOs. A lack of government oversight allows Cable MSOs to control or charge for services that have traditionally been uniform. Tiered pricing for the supply of services based upon market demand can be very profitable. This is the basic fundamental law of supply and demand.

On the other hand, changing the way in which the Internet is used and accessed will force many customers to look for alternative Internet providers. Some of these alternative providers such as Dish TV or telecommunication companies could easily pick up a large chunk of lost subscribers.

The key for Cable MSOs, ISPs and Telecommunications companies is to find a happy middle ground that does not force the government to step in to meet consumer outcries. To do this they must find the right balance to protect their ability to charge for connectivity and cover infrastructure costs yet avoid restricting equal access and other net neutrality issues.