Net neutrality, OTT and the FCC; limbo is a very bad place to be

Jim O'NeillEarlier this year, at OTTCon in San Jose, the best-attended discussions were those with the words "net neutrality" in their titles. In fact, the topic was so heavy on everyone's mind that some presenters started their discussions on other topics with a request that net neutrality questions be held until after their sessions.

Not much has changed in the ensuing months except, perhaps, that the topic has become even more of a talking point for anyone in the industry.

At last week's Cable Show, barely a day went by that some news, conjecture or opinion on the topic wasn't in the news. Publicly, at least, the topic is milk and honey with all interested parties looking for an amicable solution to a problem that needs to be dealt with. Both sides (all sides?) are issuing statements that sound like they come out of Coachspeak 101, where you never give your opponent "bulletin board material" before you play them. As Time Warner Cable CEO, chairman and president Glenn Britt said: "We remain willing to work with them."

Said Rep. Rick Boucher, the Virginian chairman of the telecommunications and Internet subcommittee of the House Energy and Commerce Committee: "We would be pleased to discuss with broadband providers, and with the proponents of network neutrality, the creation of a targeted set of principles to ensure network openness."

Sounds simple, but there's much more to be said.

"There has been no shortage of hot air on either side of the debate," said Strategy Analytics analyst Ben Piper. "I would suggest everyone buckle in tight, because this ride isn't over. While I think, in principle, net neutrality was decided with the election of Barack Obama in November 2008, the latest court rulings have insinuated more fear, uncertainty and doubt into the mix.  And markets don't adapt well to fear, uncertainty and doubt."

At The Cable Show, FCC chairman Julius Genachowski said the April appeals court ruling that overturned an FCC censure of Comcast for throttling P2P traffic on its network was problematic.

"That court decision in the Comcast case damaged the legal foundation underneath the policies of promoting broadband adoption, lowering the cost of investment (and) promoting investment, innovation and competition," he said. His solution reclassifying ISPs as common carriers and "forbearing" the majority of Title II regulations, is, in his opinion a "healthy, fair option."

But critics aren't convinced, saying it opens the door to potential pricing regulation going forward. As Piper points out, the key enforced provision, Section 202, prohibits carriers from making any "unjust or unreasonable discrimination" in the way it charges. Section 208, another provision on the table for enforcement, allows carriers, enterprises, and individuals to file complaints directly with the FCC for violations.

"The process will be slow, there will be numerous legislative challenges and speed bumps," he said. Like the one thrown out by Florida Congressman Cliff Stearns, who recently introduced a bill that would require the FCC to deliver a detailed cost-benefit analysis to Congress before moving forward.

Genachowski's take on the move?

The FCC, he said, "will work with Congress as a resource."

Coachspeak 101.

A bigger speed bump may be the legal challenges that Piper and others believe will inevitably be spawned from any action by the FCC to regulate the Internet, and they're likely to be the kind that go a long way up the ladder, possibly even to the Supreme Court. And that inertia could be a bigger hit to the OTT industry than any regulations that come out of an agency.

"The real impact, I believe, is for OTT ecosystem players," said Piper. "Over-the-top, by its very nature, is predicated on an open Internet. Twelve, 18, or 24 additional months of limbo is the last thing these guys need."

What do you think? -Jim