The Truth about Net Neutrality and Cable MSOs

Jan 16, 2014

Stuart Smith

Stuart Smith

Subscribe to Our Blog

The Transcendent Beat! Get the latest updates from us.


On Tuesday, January 14, 2014, the D.C. District Court of Appeals issued a ruling striking down much of the 2010 FCC (Net Neutrality) rules that were originally set to ensure that content providers and users had equal Internet access. However, the ruling which appears to be a clear victory for Cable MSOs and Telecoms may not be the gift they really want.

The Consumer Perspective

The first thing to understand is that Net Neutrality is a concept that has been evolving for several years. It originally started as a concern by people who believe all Internet content should be equally available to everyone. In this perspective, no website or content would have an unfair advantage over another of being found or seen by Internet users.

For example, with net neutrality, a local business website would have the same page download speed and visibility as a national business. Another example would be the ability of consumers to access the Internet, applications or services on any device of their choosing.

For consumers and businesses that depend on the Internet for their livelihood, the concept of Net Neutrality is very important. With Net Neutrality, consumers can find any product, anytime, anywhere in the world. The same principle applies to businesses as Net Neutrality assures visibility and the availability of equal access to online services.

The involvement of the FCC started when broadband providers began to block the access of subscribers to certain business. The original spark was when a broadband provider blocked file sharing downloads. However, The Court of Appeals noted three other instances of concern including:

  1. A broadband provider blocking access to an online payment service shortly after entering into an agreement with a competing service.
  2. A broadband provider restricting the availability of competing VoIP and streaming services
  3. A fixed broadband provider blocking VoIP applications

For consumers, the problem is that without Net Neutrality, it will be left to the wisdom of broadband providers to determine which apps or device can be used and which content can be seen. For business, the fear is that broadband providers can cut them off anytime a new competitor shells out extra cash for preferential treatment.

The Cable MSO Perspective

Consumers have a right to be concerned, but broadband providers also have a valid perspective. The issue for broadband providers such as Cable MSOs or Telecommunications giants like Verizon is that our Nation’s industrial infrastructure was built upon a free market society (Capitalism).

Under the rules of a free market, investments in broadband infrastructure and services have a right to be recovered and a profit made. Businesses have a right to charge “what the market will bear”. Conceptually, there is nothing wrong with charging a premium for a product that can give a competitive advantage to a business by being faster or better than a standard offering.

In addition, it makes good business sense to have a tiered pricing model based upon usage. Companies or individuals that rely heavily on streaming services should be expected to pay more as their upload and downloads use a greater percentage of the finite bandwidth resources.FacebookTwitterGoogle+

Courtesy of Sandvine and WSJ

Who is Right, Who is Wrong and the Court of Appeals Ruling

Broadband providers are simply a conduit for Internet accessibility. In a perfect world, consumers have a choice of which broadband provider they will use. As long as there are reasonably equal choices for consumers, broadband providers have a right to charge whatever fees the market will bear.

On the other hand, throttling content and unfairly limiting access is a real issue and it is not just limited to broadband providers. Google has the capabilities to control web searches and hence website visibility. Any true Net Neutrality resolution will have to be applied to them also.

The Court of Appeals did not rule that the FCC was wrong to try and establish some sort of Internet overview. The court ruled that the FCC does not have the legal authority to force Internet Service Providers to be net neutral because of the way broadband is classified. Broadband is not currently classified as national telecommunications and therefore is exempt from being treated as such.

For the FCC to be able to enforce Net Neutrality rules on broadband providers, they will have to rewrite the rules in the proper legal framework. In essence, the ruling has left the door open for broadband providers to be regulated in the future in what is sure to be a knockdown no holds barred fight.

For consumers, the ruling means that they will likely see different pricing structures and face possible censorship issues (throttling and limited accessibility) for several years. It is difficult to say how severe this problem will be or how long these issues will be around for.

The future of Net Neutrality depends on how involved the Federal Government wishes to become. With both sides (consumer and broadband providers) having valid concerns, change is sure to come, but this may take several years and the cost will be high.

Stuart Smith

More From Transcendent

Smart CAPEX Strategies for Your Hotel

Smart CAPEX Strategies for Your Hotel

It’s Monday morning and your hotel’s general manager requests a list of assets to include in next year’s capital expenditures (CAPEX) budget by the end of the month. As the director of engineering,...