Net Neutrality and the Netflix Effect

While Net Neutrality is headed to the next FCC meeting on December 21 for a vote, commentators are talking about the negative and positive effects of new regulations. One such commentator is ZDNet's John Carroll, who sees services like Netflix as a big problem for both pro- and anti-net neutrality camps.

On the one hand, Carroll believes that regulation is important because it keeps service providers from controlling content it does not own and prioritizing content it has a vested interest in. This argument has been made against companies like Comcast, who wants to buy up NBC Universal. Net Neutrality advocates point out that there would be nothing stopping the new mega-company from prioritizing the content it owns - even if it does not actually slow down or block services out of its control.

On the other hand, services like Netflix could prove to be problematic when online video consumption makes up the majority of online traffic. A report from Juniper Networks that appeared in the Bloomberg Newsweek article "Will Video Kill the Internet, Too" paints a scary picture:

The report predicts that carriers such as AT&T and Comcast will see Internet revenues grow by 5 percent a year through 2020. Meanwhile, traffic will surge by 27 percent annually, and carriers will need to increase their investments by 20 percent a year to keep up with demand. By this math, the carrier’s business models break down in 2014, when the total investment needed exceeds revenue growth.

By 2014, video will account for more than 90% of Internet traffic. As Michael Hatfield, founder of Cyan Optics, noted in the article, “this is the most dramatic change in the network that has ever occurred.”

The author concedes that Juniper Networks has an interest in such a dire forecast because it helps sell its networking equipment to gateway owners. Still, Carroll feels that even if consumption eclipses profit and infrastructure investment at a later date, it's still a serious problem. 

In the end, he believes that some kind of regulation balanced with some good old-fashioned capitalism is the real solution. Nevertheless, those who want net neutrality and those that have a stake in less government intervention cannot seem to meet somewhere in the middle. Much like our current political atmosphere, the net neutrality fight is an "all or nothing" battle.

You can read the rest of the article here. The article raises a lot of interesting points no matter what your stance on net neutrality is.