Posts for 'Net Neutrality'

The explosion in broadband video consumption is creating a significant and growing hairball for broadband Internet Service Providers, content providers, regulators and others. The core problem is that ISPs' networks are getting overwhelmed by the sheer volume of video being consumed each day.

ISPs have several ways to address the situation, but unfortunately none are perfect. For example, Comcast's approach until recently has been to use network management tools to block or slow certain kinds of traffic, such as peer-to-peer. P2P is a particular issue for cable ISPs because it uses scarce "upstream" bandwidth. Network management is highly technical, making it hard for policy-makers to understand it, let alone legislate it. So Comcast is now facing a sanction from the FCC over its network management practices (which it says it's moving away from anyway), because the FCC didn't consider them "reasonable" by its own vague definition.

Time Warner Cable is experimenting with another approach: tiers of service carrying bandwidth caps for users. This is a little bit like today's cell phone model - you buy a package of minutes, and if you go over, you pay extra. Though that may sound reasonable, it invites all kinds of confusion for consumers (e.g. "do I watch that show on CBS.com? Maybe I'd better not, I think my kids have watched a lot of YouTube clips this week and I don't want to go over my cap."). Content providers are justifiably concerned about this potential scenario. Separately, for its part, AT&T recently tried to clarify what its users can and cannot expect from their broadband subscriptions.

Yet another route is for broadband ISPs to adopt a much more expansive technical approach to how content is hosted in their networks and delivered to their users. Equipment vendors like Alcatel-Lucent and Cisco believe that ISPs could convert the current bandwidth problem into a full-fledged business opportunity. This would involve ISPs deploying hardware and software that would enable "managed services," each to be delivered at a specified quality level and for a specified price. So rather than a consumer buying a tier, they would buy a specific service offering (e.g. unlimited Hulu, with HD delivery guaranteed).

This wouldn't be a totally unfamiliar concept. Content providers have been buying managed hosting/delivery services for years from CDNs like Akamai, Limelight, Level 3 and others which guarantee certain delivery metrics. But these CDNs' guarantees can't reach into the "last mile" the ISPs' networks serve. So as ever-more bandwidth intensive content is launched such as HD and long-form, content providers should have an increasing motivation to see last mile ISPs offer comparable managed services offerings from ISPs as well.

However, ISP managed services would require fundamental changes in how these companies currently work together, and also invites concerns from "net neutrality" advocates that ISPs could bias in favor of one content provider or another when making their deals. Though compelling in concept, there are many details to sort out in the managed services approach, making it a longer-term option.

All of this just scratches the surface of the growing bandwidth hairball. Layer on the free-speech advocates like Free Press and Public Knowledge and the politicians looking to make hay with constituents and it's evident that the debate over bandwidth is only going to intensify.

What do you think? Post a comment now.

At the end of each month I plan to step back and recap a few key themes from recent VideoNuze posts. Here are three from February '08:

Brand marketers embrace broadband video

One clear theme from the past 4 weeks has been brand marketers' accelerating moves into the broadband video space. This was on full display by select Super Bowl and Oscar advertisers. We are witnessing an unprecedented commitment by brands to create their own entertainment/information video content and also to induce consumers to create brand-related video through user-generated contests. As I detailed in yesterday's webinar, examples in the former category include Kraft/Tassimo, J&J, CIT Financial and GoDaddy.com, while examples in the latter category include TideToGo/MyTalkingStain.com, Heinz/Top This, Dove Cream Oil Body Wash and T-Mobile/Current TV.

Through VideoNuze I track all brands' broadband video initiatives, and it is clear that their involvement in this new medium is intensifying. Faced with splintering audiences, ad-skipping DVRs and changing media consumption habits - particularly by younger demos - brands have no choice but to get into broadband video. This results in an entirely different awareness/engagement paradigm than we're accustomed to from the world of interruptive TV advertising. Brands today increasingly recognize that a key way to create loyalty (and generate sales!) is by engaging the audience on its terms, using broadband and other technologies to accomplish this.

Monetization is the #1 challenge

Another key theme of the past month was the ongoing quest for broadband video monetization. As I also mentioned in yesterday's webinar, this is the number 1 business challenge for all broadband video industry participants - both content and technology providers. Two companies I wrote about this month, EveryZing and Veveo, are focused on improving content discovery, which leads to more consumption and revenue-generating opportunities. I also wrote about Jake Sasseville, a young entertainer who is pioneering multi-platform initiatives to forge a new revenue model.

Innovation is key in this space. Next week I'll be writing about Freewheel, an innovative startup that's just surfaced, which is providing a new approach to managing broadband video advertising. And yesterday, Magnify.net, one of my favorite early-stage companies, which focuses on enabling video content distribution, announced that it has raised an additional $1 of financing.

In addition, the big dogs of the technology and media landscape are in hot pursuit of improved video monetization as well. This month alone brought news of Yahoo's acquisition of Maven Networks, an ad-centric video platform, Google's beta rollout of AdSense for video, and the hostile bid by Microsoft for Yahoo, a deal that has vast longer-term implications for online and broadband video advertising. In short, monetization is a key focus for all large and small industry participants - cracking this nut is crucial to the long-term health of the industry.

Net neutrality re-surfaces

Lastly, this month also brought a lot of news on the regulatory front. Twice I wrote about "net neutrality," a regulatory concept its proponents believe will keep the Internet free from discrimination by broadband ISPs. While I don't agree with their viewpoint, what is clearly true is that net neutrality is being spurred by the massive adoption of broadband video, which places an unprecedented load on broadband ISPs' networks.

So that's it for this leap year month. Three themes you'll be hearing much more about going forward: brand marketers' broadband video initiatives, video monetization and net neutrality. See you on Monday for the start of a new month!

I have written two posts on this recently, "Net Neutrality Rears Its Head Again" and "Net Neutrality in 2008? Let's Hope Not," and so my views on the subject are well-known.  For today, I just want to offer some quick observations about the FCC's meeting and what this implies about how the fight over net neutrality is likely to play out.

The agenda for the day-long session is here. I stayed until the lunch break, so I got a pretty good flavor for the proceedings. On the policy panel I witnessed, all of the non-Comcast/Verizon panelists were in favor of greater government intervention. Despite their articulate views on the subject, one thing that was entirely absent from all of their remarks was any factual data about whether there is currently a market failure necessitating government intervention. Even Vuze CEO Gilles BianRosa, who prior to the panel provide a demo of his company's service, and said his company is playing a "cat and mouse" game trying to stay ahead of Comcast's management practices, did not offer any specific evidence or data of how his company is currently being harmed.

On the other hand, Comcast's EVP, David Cohen emphatically denied that Comcast blocks any kind of Internet traffic. He allowed that the company manages its networks, just like all other network providers and has six guidelines. Cohen said Comcast only manages traffic during limited periods, in limited geographies, only for upstream traffic, and then only when there's no simultaneous downstream traffic. It only delays traffic, and only when there's real network congestion that needs to be alleviated. All of this would only impact a small number of customers, and only then imperceptibly, Comcast believes. Comcast's goal is "vigilant restraint," with an eye to helping the vast majority of its customers have a superior Internet experience.

All of this leads me to believe that while Comcast may have the facts on its side, this war will be waged on the PR battlefield. Proponents wrap themselves in the flag, emphasizing the Internet's free-flow of data is paramount to our country's free speech and commerce, while disregarding the fact that to date this has been accomplished with a laissez-faire regulatory policy. Meanwhile network operators like Comcast argue they're already abiding by current regulatory principles and are sufficiently motivated by profit motives to do the right thing. Picking sides, especially in an election year, will be a challenge for all.

What do you think? Post a comment and let us all know!

Last November, Jeff Richards, VP of VeriSign's Digital Content Services, suggested to me that "net neutrality" would be the hottest broadband video topic in 2008. I was skeptical, believing that this was a classic "solution in search of a problem" and that yet again this topic would fail to gain traction among regulators and policy-makers. Based on events of the past week, it looks like Jeff may be right and I may be wrong.

Before getting to what happened this week, let's quickly understand what net neutrality means, and why it's important to all of us. To date the Internet has functioned as a level playing field of sorts. Anyone putting up a web site could be confident in the knowledge that broadband ISPs would neither favor nor disadvantage one player's access to users over another's.

Big online content and technology companies now want to codify this tradition in legislation commonly referred to as net neutrality. Big broadband ISPs (i.e. cable operators and telcos) regard this as needless regulatory meddling that would insert the government in network and technical matters it can barely understand, let alone figure out how to regulate.

This week brought news that Congressmen Ed Markey and Chip Pickering have introduced the "Internet Freedom Preservation Act of 2008" which would make net neutrality the guiding U.S. broadband policy, give the FCC additional oversight powers to ensure broadband ISPs weren't discriminating against certain traffic, require the FCC to hold 8 public "broadband summits" to bring together parties to "assess competition, consumer protection and consumer choice issues related to broadband Internet access services" and finally to report all this to Congress along with any recommendations for how to "promote competition, safeguard free speech, and ensure robust consumer protections and consumer choice relating to broadband Internet access services."

Broadband ISPs have precipitated some of this renewed interest in net neutrality with the recent news that they're de-prioritizing or blocking illegal video file-sharing traffic from services like BitTorrent (all of which was already widely understood in the Internet community). Net neutrality proponents have publicly seized on these incidents as evidence that broadband ISPs have discriminatory tendencies in their DNA, and that we're on a slippery slope to a world where broadband ISPs willy-nilly block certain traffic (i.e. their competitors) while favoring other traffic (i.e. their own services).

Last November in "Net Neutrality in 2008? Let's Hope Not." I wrote that there is no substantive current evidence to support this concern and that preemptive net neutrality legislation is unwise and unwarranted. In fact, I believe it's a net positive that broadband ISPs are proactively trying to manage their networks to ensure that legal traffic, generated by paying subscribers, is not adversely affected by the few heavy video file-sharers who diminish the network's performance for everyone. Broadband ISPs' actions help them run more efficient networks and better manage their investments, to the benefit of paying users.

Unfortunately, like many things in Washington, net neutrality is boiling down to a PR battle about how to shape policy-makers' perceptions, regardless of the underlying facts. For its part, Google is unabashedly framing this debate in populist terms, saying "net neutrality is...about what's ultimately best for the people, in terms of economic growth as well as the social benefit of empowering individuals to speak, create, and engage one another online." Huh? How does all that patriotic-sounding babble address the reality that network operators are grappling with 15 year-old kids downloading pirated HD movies, causing real and serious network congestion for everyone?

To defeat net neutrality, broadband ISPs better sharpen up their PR efforts. Congress is notoriously IQ-challenged and politically-motivated. My cynical belief is that its knee-jerk reaction will always be to do what looks best, rather than what actually is best. Then there's the current FCC chairman Kevin Martin, who has a serious anti-cable bias and will likely welcome an opportunity to smack operators. Regrettably, when taken together, Jeff Richards may indeed be right. This might be the hottest broadband video topic of 2008 and the year when net neutrality legislation finally does succeed.