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Taking Sides over Neutrality

Telecommunications companies push for the right to charge a premium for faster and better Internet transmissions, but probably to no avail.
Scott Leibs, CFO Magazine
November 1, 2009

Given the attention that finance executives must pay to a bevy of emerging and expected regulations in banking, finance, and health care, they can be forgiven for missing what seems like an arcane technological brouhaha. But proposed rules governing so-called net neutrality could have both direct and indirect impacts on companies in all industries.

Net neutrality refers to the current set of principles whereby telecommunications companies and other providers of broadband services do not restrict or favor content types transmitted over the Internet, and agree to impartially speed all content to its destination.

Telcos have pushed for tiered pricing, arguing that they should have the right to charge some Websites, or users, higher fees in exchange for faster transmission, enhanced services, or atypically high volume.

Critics counter that the democratic, unfettered treatment of data transmission has been a "First Amendment" principle propelling the Internet's explosive growth and should not be tampered with. The Federal Communications Commission (FCC) seems inclined to agree, and has pushed to codify current principles into law, possibly extending them to apply to wireless as well as land-based networks.

One issue for many companies is whether such codification will help or hurt them. Would a car maker eager to provide video demonstrations of its vehicles, for example, benefit from the status quo, or from an arrangement by which its site offered superior response time because it paid more? "All of our customers are watching this debate," says Shawn White, senior director of external operations for Keynote.com, a provider of Website testing and measurement services that address the end-user experience, "because, while there haven't been any major Internet slowdowns or outages, as traffic increases, performance and access become bigger concerns." Telcos are investing billions of dollars to expand network capacity, and they would love to recoup some of it through an easing of current guidelines, but comments from FCC chairman Julius Genachowski and others indicate that net neutrality is here to stay.




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