It was interesting to read some of the tech and media headlines this morning with the perspective of recent “net neutrality” news from the FCC. Maybe I just didn’t notice before, but the repositioning of strategies and the relegation of infrastructure to “dumb pipe” is now striking. Here is an example: a Wired Magazine story that hit the airwaves today, about Netflix and its eventual dominance of video entertainment on demand – any movie or television show at any time – using, among other distribution alternatives into the home, the cable infrastructure itself… in order to… kill cable.
Another example: a profile article about Skype and its plans to “dominate business telephony.” How awkward for the wireless and wireline telcos that, with net neutrality, the likes of Skype would be able to use the telcos’ own infrastructure, at no toll charge, to take away the telcos’ customers. And one more: “T-Mobile’s 4G Solution: Rent From Clearwire and MetroPCS?” This one at least contains the word rent, an actual payment in exchange for value received, but the idea nevertheless underscores an important notion: companies that we think of as entrenched in competition, becoming entrenched in relationships of a different kind, or simply demoted to subordinate status.
In all these examples, and countless others, (we haven’t mentioned Google Voice, although that’s a good one), there is a push towards innovation and improved technical efficiency. As this occurs, consumers benefit. And so who cares if virtual monopolies such as telcos and cable companies, which have enjoyed virtual monopoly status for decades, should suffer in the process? Right?
Perhaps. Still, one can’t help but feel that there is something not quite the way it should be in this picture. Despite the name – “neutrality” – one senses a market interference. In a true market economy, the optimal and most efficient mechanisms should find their way to an equilibrium naturally, not based on legislated “neutrality” that reshapes a competitive landscape.
And important questions arise. For example, is this neutrality for real, or just a taking away from one group to give to another? Would it really serve consumers and innovation if massive bandwidth hogs like YouTube, Hulu, and the multitude of music streaming services, come to dominate bandwidth utilization to the point where delivery of newer and possibly better services is slowed down? In such a “net neutral” environment, in which Skype, say, uses Verizon lines to take away Verizon customers, will Verizon’s incentive to keep investing in its infrastructure not diminish? If so, is this even to Skype’s own benefit, ultimately?
The issues are enormously complex, and there are at least two sides to any argument. One wonders though… maybe the only real “neutrality”, especially in light of countless angles and layers of complexity, is the market itself.
