The Gold In Net Neutrality

By Keith Machen & Dwayne Goldsmith -- Multichannel News, 3/13/2006

Like a savvy miner, the cable industry should recognize that siding with the giant phone monopolies on the hot-button issue of “net neutrality” is fool’s gold. The real gold is not to be found in charging fees for guaranteed delivery of video programs or other big files. It’s to be found in winning over as big a base of broadband customers as possible, based on the value delivered.

The facts are very simple. The companies most opposed to keeping use of the Net “neutral” — as far as what traffic is carried for a flat, unrestricted fee — are the companies that control the backbone of the Internet. They also are the companies who, through that control, can carry their own traffic for free, essentially.

Three of the largest of these companies are Verizon Communications Inc., AT&T Inc., and Level 3 Communications. Cable-system operators must pay a fee every time one of their customers accesses a system connected to the backbone possessed by a member of this quasi-cartel. More pointedly, cable’s broadband customers draw on Internet resources at a much higher rate than the telephone companies’ digital subscriber line customers. In the end, cable operators will be asked to pay the cartel a disproportionate amount for use of backbone bandwidth.

From a users’ perspective, cable companies have built a superior network, with the speed of cable modem-service generally beating out digital subscriber lines. However, from a transportation viewpoint, cable networks are inferior. The only companies that experience the luxury of free transit across the country are the phone giants and Level 3.

Without a guarantee of “net neutrality,” cable companies are likely to fall prey to the phone-company strategy of converting the Internet into a Public Broadband Telecontent Network (PBTN). Like the extant PSTN — or Public Switched-Telephone Network — tolls will be charged for use of the PBTN.

Large cable companies have pursued a strategy to avoid paying these fees by interconnecting the CATV networks in an attempt to form a large network of networks, or Internet, of the industry’s own. This model has two shortcomings — about 50% of the traffic continues to be passed back to the cartel, and small cable providers are left to connect exclusively with the cartel or their customers. Ironically, the NCTA opposes Net Neutrality, when in reality cable companies need it to prevent AT&T and Verizon from becoming unwanted toll collectors, as video content increasingly surges onto and off the Internet.

Here’s how to pursue the real gold: Create connection centers where Web service operators can place their content at low cost and get reliable access to lots of bandwidth. Instead of charging tolls at every turn, cable should be ready to offer a high bandwidth home to those providers that want to move content to its end users. Making your customers’ Internet experience the best on the planet. At low cost.

This is the true gold —and industry protection — found by embracing Net Neutrality.