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Do No Evil, or Let’s Redefine “Neutrality”

Posted on: January 15, 2010

Google’s proposed arrangement with network providers, internally called OpenEdge, would place Google servers directly within the network of the service providers. The setup would accelerate Google’s service for users. Google has asked the providers it has approached not to talk about the idea.

At risk is a principle known as “network neutrality:” Cable and phone companies that operate the data pipelines are supposed to treat all traffic the same. It is a fundamental democratization of information transfer that has enabled the ‘net to be the anarchy it is.

This is coming to a head now because in AT&T’s 2006 acquisition of Bell South, the FCC made AT&T agree to shelve plans for a fast lane for 30 months. That moratorium expires in just a couple weeks.

Comcast got themselves into a whole lot of trouble with a not dissimilar strategy way back in 2002, which they claimed was just for their own efficiency then, much as Google does today.

It’s funny, one of the things that regulators have to be wondering about is why ISPs have not been permitted to do what third parties have been permitted to do, (witness Phorm’s and NebuAd’s follies, as they attempted to enable other ISPs to do essentially what AOL could do after integrating with Tacoda.) Back in 2002, Comcast’s troubles were described as “privacy” troubles.

And that is very charged word… Just refer to something as having “privacy concerns” and you can almost guarantee whatever the project, it hits the skids immediately.

See what I mean about the difference? When Google does it, nobody screams about privacy, but it’s against Net Neutrality, and thus inconsistent with Google’s own stated position.

The only question is whether web regulation will look more like TV/media regulation, electric/utility regulation, or Cable/telecom regulation in 10-20 years. People in our business want it to look most like TV/media regulation, which is to say not that regulated. But, I’m betting it will look more like Cable/Telecom, with a few cap-ex intensive players making/controlling the most money.  (hint: if Pew is right, those players who win will be the ones controlling wireless access to the majority of us who, by then, will access the web via our handheld devices. Think about how different Apple’s approach is now in wireless than it was then on the desktop, and you’ll see why this makes them even sexier now than they were then.)

Think of how you watch TV and who gets paid when you watch, versus the same question 20 years ago to understand the dynamic I am describing. Today, the cable company gets paid no matter what station you watch because they control the T&D (transmission and delivery.) That wasn’t true back when HBO launched 36 years ago and any one of us could get the three major networks for free with an aerial antenna. Today, there are hundreds of stations and this media proliferates – yet what is regarded as “premium” content is largely not advertising-supported, you pay a premium for it, and you pay a premium to see it in HD.  “Free,” advertising-supported TV is no longer free either though, is it?

One could argue that the media industry as a whole has benefitted from the regulation of the T&D segments. I might even be on that side. However, it’s only when the regulations against cross-media ownership were relaxed in 1996 that innovation – and our industry really took off.

The next stages of this evolution should prove interesting to watch. Even in retrospect, reviewing what our landscape was like ten years ago makes me wonder what the strategic conversations were like at AOL, which was the largest media company on the web and also the one company that controlled so much of the consumer T&D – both at once. Had AOL danced independently with AT&T or Verizon instead of so intimately with Time Warner, I wonder…

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