Net neutrality

Broadcasters must understand its implications.
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During the recent year-end lame duck session of Congress, the FCC adopted a set of rules aimed at assuring open access to the Internet. After adoption of the rules, known widely as net neutrality, FCC Chairman Julius Genachowski said, “For the first time, we'll have enforceable rules of the road to preserve Internet freedom and openness.”

What possible controversy could there be with rules that are intended to provide a level playing field to developers and to ensure unfettered Internet access both for those availing themselves of Internet-provided services and those companies providing those Web-based services? Welcome to Washington, D.C., where no potential political controversy stone is left unturned.

Ostensibly, net neutrality assures equal access for users and service providers alike by imposing rules on the pipe owners — such as Comcast, Cox, AT&T and Verizon — that essentially preclude them from being arbitrary and discriminating in throttling back the bit rates of the services flowing through their pipes.

With a straight party line vote by the commission, it seems that neither political party was entirely happy with the rules as adopted. Claims on one side that the rules did not go far enough and left too many loopholes were offset by claims on the other side that the FCC overreached its authority and was imposing unnecessary controls over business.

Complicating matters even further, the rules adopted by the FCC treat wired Internet access somewhat differently from wireless. Incoming Speaker of the House John Boehner, R-OH, has already gone on the offensive. He stated that the new net neutrality rules “will hurt our economy, stifle private-sector job creation, and undermine the entrepreneurship and innovation of Internet-related American employers.” He went on to say that “the new House majority will work to reverse this unnecessary and harmful federal government power grab.”

On the Senate side, Minority Leader Mitch McConnell, R-KY, has vowed to lead the fight in the Senate “to push back against new rules and regulations.” So, the battle over net neutrality will be an interesting one to watch over this congressional session.

For the broadcaster, this battle over access and delivery speed of Internet-supplied content has wide-ranging implications. We live in an era of increasing consolidation of media and new media. News Corp., for example, owns newspapers, broadcast and cable networks, a stations group, and satellite delivery of both owned and nonowned broadcast and cable channel content. Comcast owns sports franchises and cable networks; with 23.6 million cable customers in 39 states and 15.9 million high-speed Internet customers, it is the largest provider of such services in the country. Comcast has consummated its deal with GE to take over control of NBC Universal.

In our new media age, Web delivery of both expanded and repurposed news and magazine show content for the broadcaster has become increasingly more important and is not insignificant to advertising revenue. In the broadcaster's own version of a perpetual motion machine, smart station managers increasingly use content to drive website traffic and use website traffic to drive on-air viewership. As Apple/iTunes, Google TV and a myriad of other such Internet-based television delivery services get their business models together, in the future, the Internet will take on an even larger role in the delivery of broadcast station content. Another nascent television delivery vehicle, mobile DTV, is still in the business model formative stages, and some of those models envision a tie-in to the Internet.

The mind boggles at the havoc that could be created by the handful of owners who control all of the nation's broadband pipes. Not that any have done so in the past, nor have any even threatened to do so, but it is easy to imagine a scenario where the intended “level playing field” goes askew.

This year will be interesting for net neutrality. Congressional leaders are on record to overturn the rules. Some broadband pipe owners are already making lawsuit rumbles. Net neutrality will be in the courts and in Congress; the outcome is certain to affect broadcast revenue streams. Broadcasters need to follow the net neutrality happenings, understand the issues and strategize accordingly.

Anthony R. Gargano is a consultant and former industry executive.

Send questions and comments to: anthony.gargano@penton.com