The Obama-era rules that prevent Internet Service Providers (ISPs) from favoring one type of data traffic over another are designed to prevent ISPs from blocking web traffic, or slowing it down. But on Wednesday, the Federal Communications Commission unveiled its game plan to regulate Internet traffic.
This goes back two years ago, when rules were passed preventing ISPs from throttling or blocking content online. Now those rules are under review, not only in the US but by governments around the world.
A polarizing topic, net neutrality is often framed in dramatic terms. The bad guys are big ISPs: telcos and cable operators. The heroes are scrappy, web-based start-ups (or companies that used to be start-ups, at one time). These are often content providers such as Netflix or Google, or companies such as Skype, which deliver services “Over The Top” of the network, earning them the label OTTs.
The stakes are high: the future of the Internet hangs in the balance. It’s a compelling story that simplifies a complex topic.
Lost in the drama are a few realities. First, the world has changed. In the battle between the big ISPs and the scrappy OTTs, the OTTs have clearly won. The market capitalization of Google, the top Internet company, exceeds that of the top four ISPs combined, while the five largest Internet companies account for more than 60% of all Internet traffic in North America. The Internet is no longer dominated by small startups, but by some of the wealthiest companies on the planet. Many are OTTs that no longer need the government’s protection.
Second, innovation today depends on a fast and robust network. While innovation may take the form of a new service or app, it is the network that delivers it to the user. When the network lags or fails, so do all the apps and services that depend on it – which is pretty much all of them. Although largely invisible to the end user, the network plays a central role in modern life, and our dependence on it is growing by the day. Driverless cars, cloud computing, big data, virtual reality, and technologies not yet created will only deepen society’s reliance on broadband infrastructure. By 2025, 7 billion people will have some form of digital connection.
Finally, a deluge of video is putting immense pressure on the network, potentially threatening its ability to provide the very services that net neutrality proponents hope to safeguard. Soon, 80% of the world’s consumer Internet traffic will be video, according to Cisco. Ultra-high definition, or 4K, which consumes four times the bandwidth of regular high-definition video, could drive this percentage even higher. The Internet of Things (IoT) and Augmented Reality (AR) are also on the horizon.
What comes next is anyone’s guess. But although we may not know what the future will look like, we do know that it will be digital. All those bits and bytes will flow across the network, creating a rising tide of data that puts ever more pressure on the pipes.
Against this backdrop, the real threat to innovation on the Internet is the performance of the network. ISPs will have to invest heavily to support the next generation of services. Yet with current business models, nearly all of the revenue for these services go straight to the OTTs. Effectively, ISPs are subsidizing a large part of the OTTs’ cost of doing business.
With hundreds of millions of dollars at stake, it is understandable that all sides will fight hard to protect their various interests. The important thing to remember is that this is not a fight with clear winners and losers. We must create an economic environment where the revenues generated by OTT services help fund the infrastructure needed to deliver those services to the consumer. Otherwise, the incentive for ISPs to invest in upgrading and expanding network disappears – a Lose/Lose outcome if ever there was one.
The spirit of net neutrality is grounded in an admirable desire to keep the Internet free and open. Let’s find ways to do that, while acknowledging the paramount need to continue investing in broadband networks, the digital infrastructure on which the Internet – and, indeed, nearly all future innovation – depends.
Brian Chamberlin is market director of video solutions at Huawei Technologies Company Limited.