Net Neutrality: Will Broadband Giants Win Against Content Providers?

As I mentioned in one of my early posts, my background is in telecom. I have been in the telecom space since 1993. I have been through the ATT/MCI/Sprint wars and competed against the major European Telco’s.

“But what does the telecom space have to do with blogging and live blogshows,” you might ask? Well, unfortunately the telecom giants happen to believe that they not only own the pipes your data and content travel through, but that they should also own a piece of all that content—and charge all of us to create and access it.

Jon Stewart even covered the issue on “The Daily Show”:

This is detrimental to the blogosphere and to free access to information as we know it. So bear with me here as I give you some background regarding this issue. It affects us all and we need to take a stand.

The Rise and Fall of Capitalism in Telecom
As you may or may not know, telecommunications deregulated roughly a decade ago to allow free competition and break up the monopolies each company had on its local market. This led to the recent emergence of the CLEC business.

For the non telecom people out there, CLEC stands for Competitive Local Exchange Carrier. Basically this platform, called UNEP (yes, another acronym, but it basically means the same thing as CLEC), allowed any telecom company (whether a telecom giant or an emerging newbie) to buy local service from the resident telecom company and resell it at an acceptable margin.

Hooray for capitalism, right? Well, a few years back the FCC basically killed the competitive local resale industry by doing away with the UNEP platform. It seems the regional giants didn’t appreciate competition. So under significant lobbying by the RBOCs (Regional Bell Operating Company – the original local exchange companies), the FCC and Supreme Court threw out the UNEP platform and wiped away the CLEC space. That’s why ATT and MCI sold out to Verizon and SBC.

The whole point of deregulating the telecom space was to get rid of the monopolization of telecommunications. Of course, during the last 10 years, the six or seven RBOCs have essentially become two (SBC is currently planning to buy Bell South). What used to be a monopoly in ATT, which was disbanded by the Telecom Act of 1983, has now simply become a duopoly.

Again the RBOCs’ huge political leverage has allowed them to dominate local connectivity throughout the country.

But this is only the start of our problems as content providers and consumers.

Now enter the cable companies…

Telecom Goes to Bed With Cable
In my view, this is the biggest red herring of them all. Yes, the cable companies and Vonage have done a good job taking residential phone service share away from the RBOCs. But you need to understand that the RBOCs are far more interested in business voice and data services.

It’s just incredible!! Any company wishing to compete in the telecom space through selling such services can only compete by buying circuits from guess who: their main competitor. The cable companies can take residential market share away from the RBOCs, but won’t take important share away from the business segment – they don’t have the infrastructure for it. That means buddy up or get left in the dust.

So now, all of a sudden, Verizon and SBC are best pals with Comcast, Time Warner, Cablevision, etc. Mortal enemies become best buddies. It’s like Israelis teaming up with the Palestinians. They fight tooth and nail against one another for decades and then suddenly they’re best of friends.

Why you might ask?

Well, if you can’t beat ‘em, join ‘em. The cable companies can’t win enough high-end market share from the RBOCs. Plus they share new common enemies: Yahoo!, Google, and Skype. They believe it unfair that such companies are so easily and profitably gaining market share while these bulky utilities spent so much money building out their networks.

But I don’t buy their boo-hoo story. We each pay a lot of money for our broadband service (much more by the way and for far less bandwidth than other wealthy countries). We pay to use the pipe. Some of us use the pipe a lot and others only a little.

Their Brilliant Answer to a Mutual Problem
So all this background leads us to the present day: where the telecom giants and cable providers have put their heads together and devised a grand solution that is only spectacular in its complete violation of our rights as creators and consumers of free information.

The Answer: Broadband providers want to charge
content providers more money to access the consumer (already paying for their
right to access content) to see, or listen or watch such content.

Let’s not even get started on the ethics of this. Just looking from a management standpoint, how can this ever be measured and regulated? Not only would it be the mess of all messes to figure out from a financial standpoint – but there are huge conflicts of interest embedded in this plan that NO ONE is talking about.

And so the War Begins…
Verizon Wireless competes fearlessly with Apple to try and convince their users to use the cell phone as opposed to the ipod. The only reason Apple is winning this and other battles is because their products are superior.

But imagine if Verizon decided to increase the “toll” for itunes and didn’t increase the toll for Verizon downloaded songs? Do you see the conflict here? Same holds true for Comcast’s TV content or Time Warner’s movie content.

Finally, the clip below, featuring Jon Stewart, is brilliant and clearly summarizes the challenges we content providers face today. As you will see, the Senator in charge of the commerce committee, which is deciding this monumental decision, is simply clueless.

What a dangerous and unfortunate position we find ourselves in when the person deciding our fate is one such as this…

I urge each of you do whatever you can to stop the momentum of the broadband providers as they attempt to control not only the pipes but what goes through them.

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