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Will Net Neutrality Cost More Than Cable?

Stocks in this article: GOOG CMCSA NFLX AMZN AKAM

The FCC wants to maintain subsidies for rural networks, which it calls "universal service," it wants to keep old phone services like 911 intact and paid for. It's willing to replace the old phone industry rules with new regulations that all Internet companies will have to follow.

Competition, in the form of wholesaling of capacity and interconnections, is said to be among the "conditions and presumptions" of the agency. But the result is almost certain to be a shifting of costs from the edge providers, which have been subject to regulation by the FCC for over a century, to those in the core, which have been kept unregulated up until now.

Whether you call the present conflict one over "peering" or net neutrality, here is the bottom line:

  • The government wants Internet providers to maintain old phone industry services, costs and business arrangements. But the Internet was designed to sidestep these things.
  • Cable operators want to guarantee that their profitable control over customers and content is protected.
  • Core Internet services want unrestricted access to consumers in order to keep growing.

The arguments over growth and gatekeepers come down to a question of who will pay the costs of the edge and what they will get for that. Google has learned what those costs are in its Google Fiber experiment in Kansas City. 

In the process Google has changed its stance on net neutrality, denying consumers the power to run servers off their home lines, and citing the experience of other edge companies in doing so.

Even Google acknowledges that bearing the costs of the edge should give the edge some power. 

It's no longer a question of whether consumers and core Internet companies will surrender on net neutrality, but how much they will be forced to give up.

At the time of publication, the author held no positions in any of the stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

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