Net Neutrality Doesn't Matter

NEW YORK (TheStreet) -- Following the highly anticipated U.S. Court of Appeals ruling against the Federal Communications Commission's 2010 "net neutrality" rules, Internet advocates fell all over one another to predict doom.

Some investors did as well, with Netflix (NFLX) falling 3.5% in a single day

Free Press CEO Craig Aaron's statement on the decision was typical: "The biggest broadband providers will race to turn the open and vibrant Web into something that looks like cable TV. They'll establish fast lanes for the few giant companies that can afford to pay exorbitant tolls and reserve the slow lanes for everyone else."

The problem is that TV no longer requires a fast lane. According to Netflix, a download speed of 3 megabits per second is plenty for most TV files, and you need just 5 Mbps for HD movies

An FCC report issued last February showed most DSL providers, and almost all cable providers, met these requirements easily, and the advertised data transmission rate was usually pretty close to actual performance

Most cable Internet services, in fact, already run at download speeds of over 10 Mbps.

If cable companies don't have to degrade service to give themselves an advantage, what about bandwidth caps that limit how much total data a subscriber can download from the Internet each month?

AT&T's (T) "sponsored data" program, for instance, will let mobile content providers pay carriers to prioritize their content when it is sent to phones. It's designed to play on the fear of data caps to push consumers into downloading the carrier's ads instead of content they prefer.

What happens if this model moves to the wired world?

Last summer, Stacey Higginbotham of Gigaom examined her own bill. Her home has three PCs, two iPads, two smartphones and two set-top boxes, but no pay TV package. Her usage never went above 125 gigabytes per month

Compare this with my Comcast data cap of 300 gigabytes a month, charging $10 per month for every 50 gigabytes above that figure.

But let's say the carriers press their advantage and start trying to shake down content providers large and small. Can Internet denizens fight back?

Yes. That's because the "last mile" data providers like Comcast  ( CMCSA) and AT&T don't control the core of the Internet. The cost of "peering," moving data between competing networks, has been declining by about one-third each year since the century began, according to a 2010 white paper at the DrPeering web site. It should get below $1 for each commitment of one megabit per second, a constant stream at that speed, this year.

This makes it cheap for someone to compete with a service provider trying to use its monopoly power to squeeze a market. Simply find the nearest fiber and use a network of WiFi radios to move data around. If carriers squeeze too hard, this becomes an opportunity. Especially if a large network with a commitment to open access, like Google (GOOG), decides to get involved.

There may be ways for carriers to charge for low latency, something gamers covet very much. A guarantee of quick reaction time for people playing games thousands of miles apart could really sell. The Court of Appeals decision means this can now be offered. That's a good thing.

But video isn't an Internet-busting service any more. What Internet advocates fear is cable operators getting between subscribers and the video they want, charging monopoly-level rents to access it, favoring their own video offerings and using their market power to squeeze out video competitors.

If that should happen, the Court of Appeals ruled, the FCC could still decide to treat the Internet services of AT&T and Comcast as common carriers, subjecting them to all sorts of rules they would want to avoid.

Ultimately, very little is going to happen. While Internet advocates were in Washington, engaged in their net neutrality debate, I think the technologists of the Internet have moved beyond it.

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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