Net neutrality: Not dead yet?

Network neutrality may be a cat with yet another life and the Comcast-Level 3 sparring match appears to be well-timed to get the debate rolling (again).

Network neutrality may be a cat with yet another life and the Comcast-Level 3 sparring match appears to be well-timed to get the debate rolling (again).

On Monday, Level 3 said that Comcast is charging a fee to deliver online movies---think a toll booth for Netflix. This charge equated to a toll, argued Level 3, which was wrapping itself in the net neutrality banner. Comcast said Level 3 was just trying to get over on the cable provider by gobbling up bandwidth without paying for it. Comcast argued that the deal it offered Level 3 is the same one other content delivery networks received.

All of this drama is quite interesting fodder for the Federal Communications Commission, which doesn't have much authority to act without a hand from Congress.

Some analysts, however, note that the FCC may get some movement on net neutrality yet.

Piper Jaffray analyst Christopher Larsen said in a research note that net neutrality compromise may be at hand. The FCC moved its last meeting of the year to Dec. 21 from Dec. 15. That move may telegraph a last minute push to support a network neutrality order. Bottom line is that there may be some compromise among legislators. The FCC had been weighing regulating broadband providers as Title II outfits (much like telephone companies) or Title I, a framework that is less onerous.

Larsen said:

The latest news reports out of Washington say that the FCC may now be looking to implement net neutrality rules using a Title I framework. This would ultimately be a more palatable and less restrictive framework for the telecom service providers, but we would expect them to continue to lobby against any form of additional regulation. We hear that the FCC may be looking at an order similar to the network neutrality legislation put forth earlier in the year by Representative Henry Waxman.

The Waxman proposal called for restoring the FCC’s authority to prevent the blocking of Internet content, banning wired broadband providers from unjustly or unreasonably discriminating against legal Internet traffic, applications and services, and prohibiting wireless providers from blocking websites and applications that compete with voice services. Telecom service providers loathe the thought of any additional regulations, especially in wireless. In fact, we believe the key issue for the telcos in their current lobbying efforts is the treatment of wireless. The Waxman proposal was lighter in its treatment of wireless, banning the blocking of websites and applications but falling short of banning packet discrimination.

In other words, the Waxman proposal isn't that far off from what Google and Verizon already pitched. The Google-Verizon proposal argued for a light hand on wireless and net neutrality provisions on the wired side of the network.

What remains to be seen is how this Level 3-Comcast flap alters the equation. Level 3 said:

Comcast is effectively putting up a toll booth at the borders of its broadband Internet access network, enabling it to unilaterally decide how much to charge for content which competes with its own cable TV and Xfinity delivered content. This action by Comcast threatens the open Internet and is a clear abuse of the dominant control that Comcast exerts in broadband access markets as the nation’s largest cable provider.

Comcast responded with:

Comcast has long established and mutually acceptable commercial arrangements with Level 3’s Content Delivery Network (CDN) competitors in delivering the same types of traffic to our customers. Comcast offered Level 3 the same terms it offers to Level 3’s CDN competitors for the same traffic. But Level 3 is trying to gain an unfair business advantage over its CDN competitors by claiming it’s entitled to be treated differently and trying to force Comcast to give Level 3 unlimited and highly imbalanced traffic and shift all the cost onto Comcast and its customers.

The ducks here line up almost too nicely. The Level 3-Comcast scrum gives FCC Chairman Julius Genachowski a few key talking points. The FCC will argue that it needs the authority to referee these cat fights. And new regulations may just give it to him. Simply put, net neutrality isn't dead yet.