Net Neutrality

The net neutrality issue has raised its head again, and this time Asia is getting involved in the debate.

According to Verizon (November 2010):

“A key reason why the FCC doesn’t consider the activities of those who control operating systems or applications is that the FCC looks at the world from the standpoint of its jurisdiction rather than from the perspective of the consumer. Given the outdated statute, that’s somewhat understandable. But from a reasonable person’s perspective, that approach makes no sense. That is why we need Congress to update the law.” (http://www.enterprisenetworkingplanet.com/news/article.php/3914446)

According to the IDA in Singapore (November 2010):

“ISPs and telecom network operators are allowed to offer niche or differentiated Internet service offerings that meet IDA’s interconnection, information transparency, minimum QoS and fair competition requirements.”

In August 2010, Google and Verizon, traditionally on opposite sides of the debate since one wants its traffic carried and the other carries it, came together with a policy position that would pretty much exempt wireless carriers from the strict enforcement of net neutrality rules.

The key issue from an analytical perspective seems to be the impact on innovation. As ever there are two sides to the argument. On the one side, corporate giants like to have freedom of action which they argue will give them the space they need to invest in innovative services. On the other side, are those who argue that innovation comes mostly from new entrants and any barriers will dampen their efforts. For apps, the latter argument seems to be a strong one. But it leaves, as always, the open question: where will the investment in networks come from?

Given that in jurisdictions such as Singapore the state is involved in financing the infrastructure, the case for net neutrality would seem stronger. Google’s shift of position appears not unrelated to its move into network infrastructure. As ever, industry will argue for its own corner, and that is why it requires a pinch of salt when a company invokes the public interest, or the consumer interest. Yes, many consumers may be willing to pay for a higher grade of service, but is it consumers who really lead this process, or the vendors?

Regulators do, as Verizon says, see things in terms of jurisdictions, and the Internet is almost by definition a challenge to that perspective. Sometimes jurisdiction becomes a constraint, such as when a government wishes to impose its own restrictions, but at other times it becomes a matter of genuine public interest, such as coordinating cyber security. But net neutrality is about competition, innovation and an equal opportunity for new entrants to serve users, and regulators do have to ensure flexibility. Flexibility does not necessarily mean reducing the powers of the regulator, just the way they are exercised.

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