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TheStreet Open House

FCC Net Neutrality Debate Obscures 'Last Mile' Dilemma

Stocks in this article: CMCSA T NFLX GOOG

NEW YORK (TheStreet) -- The people protesting the Federal Communications Commission's "net neutrality" decision, claiming it will "ruin the Internet," need to answer a hard question.

How do we pay for the last mile?

Specifically, how do we pay the estimated $100 billion cost of bringing fiber to every home, or even most of them?

The FCC is saying that it will let last-mile ISPs -- carriers like Comcast (CMCSA - Get Report) and AT&T (T - Get Report) -- create a "fast lane" for content and charge for it. This follows Comcast's recent agreement with Netflix (NFLX), under which Netflix pays for the fat pipes needed to deliver massive streaming to customers.

The Internet's rules don't forbid this. They endorse it. Peering is based on equal traffic going in both directions. When you're streaming video, traffic is mostly one-way -- Netflix is sending bits and Comcast is taking them for you.

TheStreet's Leon Lazaroff reports Comcast insists this is the way things should work, regardless of the regulatory scheme. 

It sounds like bullying but it's accurate. Lazaroff also writes that content companies will win, regardless. Again, he's right.

What net neutrality advocates like Craig Aaron, writing at MSNBC, demand is the FCC "reclassify broadband," treating it as a common carrier, the way phone companies have been regulated for a century.

That's how we got into this mess. Utilities like AT&T don't invest new money without a guarantee they can get it back and more.

Before Google (GOOG) will consider running fiber to homes, it demands concessions. Its fiber-ready checklist includes fast, cheap access to a city's whole infrastructure, with detailed plans aimed at cutting Google's costs.

AT&T has a competing offer called Gigapower, but the hidden costs are high.

State legislators are being told that if they want AT&T GigaPower, they have to completely deregulate, eliminating limits on prices and the requirement that the company serve all customers.

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