- Transmission providers are charging money to content providers to a) make additional revenue, and b) hopefully improve certain services that customers complain don’t work well.
- Those transmission providers will not likely raise any rates to the customers.
- The content providers will use trickle-down economics and raise their rates to the customers. See Netflix’ rate plan for this year.
There is a big fight going on. The fight is over net neutrality. Everyone seems to think they have the answer on this. The funny thing is, they don’t. I’m a person that sits in a very unique position at the heart of this debate.
Let’s get some thing clear first, though. Net neutrality is all about money. When the first rules were enacted, they were immediately challenged in court because that limited carriers and their ability to pull additional revenue. Want any more proof? Just see discussion about Verizon’s battle against the FCC. Don’t think they are the evil empire in this case. If you read that article closely, you’ll see that the author (and probably countless others) believe that AT&T fired the first salvo. On the other hand, a letter was sent to the FCC today that demanded that the FCC bow back up against the companies who want to make money off weak net neutrality rules. If you notice, the companies that put their name to that letter do include some mid-weights, but heav yweight as well (read: all the companies who aren’t greedy money-grubbers and believe they are doing good business without getting these over the top fees from content companies).
So, what are the highlights?
So where do we get to the good news? Well, broadband is about to be crowned king for this new era.
For those who don’t know, rural areas are underserved. Sometimes you get companies that will go ahead and serve an area, but not very well. I live in an area like that. I had average service from one provider that slowly deteriorated in to horrible service. So I signed up with the other company that was advertising amazing service for a tolerable price, but the service started out just a shade above average. I can’t get any rememdy because those companies only put the money they had to in this area.
I work a short drive over in an area served by an ILEC. That stands for Incumbent Local Exchange Carrier. What that means in lay terms is that the company is the only one willing to go the last mile to provide service. These ILEC’s are regulated. Pricing has to match certain numbers. In return, they get recovery based on subscribers to their service and the amount of plant buried in the ground to deliver that service. It comes from a fund that every provider in the country contributes to. However, they’ve only been regulating telephone. That means all the Internet connections that are tolerable in areas like mine and really good in urban areas are average at best in these rural areas. Oh, and for an expensive price compared to the non-regulated companies! While the young crowd in the urban areas are big users of content over the Internet, the other big group of users comes from these last mile customers. They really can’t afford these rate increases on these services since they are already paying a bundle.
I can sell my Internet connections at $1/Mbps and still make money under current regulatory conditions. However, those regulatory considerations indreictly jack these prices up. But, the new FCC Chairman comes from the world of broadband. It’s expected to be not “if”, but “when” on changing the regulations. When that happens, you will see Internet connections go down in price. Why? Because the last mile companies will start getting recovery on those connections instead of the POTS (Plain Ol’ Telephone Service) landline phone connections.
When you combine that picture with the further dropping of wholesale bandwidth pricing that providers pay to get their customers on the Internet, the small guys will be able to provide high speeds to their last mile customers, provide enough bandwidth to support all that those customers do, and not have to worry about what is going across their network (with exception of illegal activity of course). Then, the net neutrality rules won’t even matter.