Monthly Archives: January 2015

Is 2015 The Year Of Hope For Net Neutrality?

As we have entered a bright, shiny new year, 2015 has us looking forward with hope and wonder about what BIG events will alter our futures the most. I’ve been thinking (and hoping) for quite a while that the most influential technology and business event of 2015 will be the solution of the Net Neutrality conundrum.  I inserted “hope” above because I don’t think it’s going to resolve itself anytime soon, but there is a huge amount of success or failure relying on a resolution.

Part of the problem is the confusion about whose responsibility it should be in the first place.  I don’t even claim to know all of the intricacies, so forgive me if I come across as naive in trying to simplify. There are certainly many (like Nick Castelli) who have different takes and do decent jobs of laying out what’s at stake. You can always do more research and come back to straighten me out…

To me, one of the main issues stems from the following:
In the United States, laws were set in place that – when telecom companies laid down cable, fiber, networks, infrastructure, they need to allow other companies to make use of their infrastructure. The companies using the infrastructure may be paying to use the pipes, but it was found to not fully cover their part of the costs – especially when they are able to offer services utilizing those infrastructures at a lesser cost than what the bigger companies paid to have them laid in the first place.  What happens is that any incentive to upgrade services is diminished because competitors can utilize those very same upgrades almost immediately with no capital expenditure. Because of this, you can find areas in major metropolitan cities who don’t have fiber network access and, therefore, slower connections than individuals or businesses residing just blocks away.

On the other side, we consumers don’t want to pay more to get the things we feel we’re entitled to. As has proven  lately, this is great when there is an entity willing to foot the bill (i.e. advertising supported) but not so good when the financial support dwindles so as to be inconsequential. This leaves entities searching for other forms of revenue – whether it be only providing content by subscriptions or fees.

Companies are jumping into the fray from left and right to serve the needs of the public and businesses via the internet – with huge distribution expenses offset by existing infrastructures. The concern is, the longer the lack of clarity continues, we’ll be seeing more executives like Reed Hastings of Netflix paying ISPs for a perceived fast-lane from one hand while lamenting the position ISPs are putting us in on the other. The confusion leads to many disjointed decisions that look to solve current issues (fleeting as they may be) and, perhaps, setting bad precedent for the future.

Ultimately, the question of Net Neutrality is much broader than who raises prices and who gets stuck with the bill.

Going to the basics of broadband, there have been studies on the effects of faster internet connections on the GDP, education and society. In 2013, Ericsson published a study with Chalmers University of Technology and the Arthur D. Little organization that pointed to a direct growth in GDP of 0.3% based on the doubling of broadband speeds between 2008 and 2011. Beyond the growth in GDP, there were other bumps that benefited society in ways that are harder to quantify.

Property of Ericsson, Chambers University and Arthur D Little. From the 2013 publication, ANALYZING THE EFFECT OF BROADBAND ON GDP.

Property of Ericsson, Chambers University and Arthur D Little. From the 2013 publication, ANALYZING THE EFFECT OF BROADBAND ON GDP.

In some ways, I question the wholeness of the data based on the years they were measuring.  For instance, South Korea had already installed a phenomenal broadband infrastructure that was inexpensive for it’s people and provided speeds far beyond most other countries. One example of the difference was illustrated when, in 2006, I was checking paid media creative maximums in many of the key countries I was working with around the world.  In the US and UK, the heaviest K size for standard banners was 12Kb.  In South Korea, it was 400Kb.  The reason is because their pipes were so wide, 400Kb needed as little load time for their consumers as it did for consumers in the US, UK, DE and most others. But, even in its simplest form, the study proves a point that there is much more benefit to fast connections than just being able to watch movies (or make more money for the ISPs.)

Now comes the part where my naivete or idealism comes into play – the truth is, I’ve been trying to find alternative solutions in my own head since before the United States Supreme Court struck down net neutrality rules in January of ’14.

As broadband is key to growth for any country – not just for GDP, but education and society as a whole, it seems that there needs to be a solution that the government foots most if not all of the bill. I get that there should be a true opportunity for industry to grow and not be dragged down by the masses, but in this age, the hottest commodities are digital solutions and the distribution and development of those products.

We usually get into trouble when we bring up politics and not just because of its divisive nature. It’s because politics has become more of a game of sportsmanship trying to move everyone toward their ideal – whether it be governmental or industrial. We can’t have our cake and eat it too.  We can’t abolish Net Neutrality AND feel that we are doing a service for the greater whole.  The wealthier will be able to pay for and get what they want and the large corporations will be able to quash the opportunities for upstarts to make a mark on any given industry.

Until there is clarity on the future (or not) of Net Neutrality, industries will be stunted in their ability to set strategy on how they address their business models and digital distribution of their product, content, marketing, communities and much much more.

With all of that being said, the ISPs should be paid to deliver the required broadband infrastructure that allows for as good of Net Neutrality as we can hope for. The government may be the only entity that can “afford” to pay for this deployment and convey whatever modicum of impartiality they attempt to convey at this point. If that doesn’t happen, 2015 will just be another year on the road to removing hope for most visionaries, innovators and hard-workers about reaching their dream (American or other.)