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Will Net Neutrality Cost More Than Cable?

So far, it's working, both for big content companies and edge ISPs. The best example is Comcast (CMCSA), which is both an edge ISP and a content company. Its stock has risen 271% in the last five years, even more than Google's 248%.

Services like Netflix (NFLX), Amazon (AMZN) Prime and even Google's YouTube threaten this cozy relationship. Each can deliver consumers a wealth of content for literally pennies per day. My cable-Internet bill from Comcast comes to more like $7 per day.

These services use the economics of the core Internet. Those costs continue to come down. Comcast, and companies like it, are stuck with the costs of the Internet edge.

All this comes out in arguments over "peering," the traditional Internet business model for moving data between networks. 

Spurred by the U.S. Court of Appeals' takedown of the FCC's net neutrality rules in Verizon v. FCC, some edge ISPs have been slowing streams from competitors like Netflix and Amazon.

What they want are new financial arrangements for "peering," in which core companies like Netflix help pay for edge costs. This despite the fact that Netflix itself has been working to reduce edge ISP costs through the creation of a Content Distribution Network under open source standards, essentially making downloads a local call.

The trouble is, of course, that the cost of that local call keeps going up.

CDNs have been around since the last century, with companies like Akamai (AKAM) providing local caching that delivers core services closer to customers. Google also provides redundancy, both through its own data centers and "Google in a Box," delivering software and services at corporate premises.

But caching doesn't reduce the cost of running trucks or hiring cable guys to connect new customers or fixing lines that come down in a storm.

All this is in the hands of the FCC. They have a lot of goals, most of which have nothing to do with the present dispute.

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