Does open access matter?

Last month the Supreme Court ruled that the FCC was justified in exempting cable companies from sharing their cable data service with competitors, because they were providing an information service, not a telecom service. FCC Chairman Kevin Martin then indicated the FCC would take steps to level the playing field by exempting RBOC DSL service from the requirement, too. Big government loves big business?

We all should have figured out, based on the way the competitive local exchange carrier business model shook out, that real competition isn't having one supplier and a bunch of resellers and that a market based on this will eventually see everyone but the supplier die or change to a different business strategy. Similarly, if ISPs are really companies that buy access from an RBOC or cable company and pay to link to an Internet they do nothing to build, then they're not contributing much to the advance of networks or creating a survivable business model.

But beyond the historical lack of success for overlay players dependent on access to another company's infrastructure, who cares? Typical Internet users probably know who provides service based only on who bills them every month. Those who actually see their ISP in some direct way most likely do so because they use the ISP's home page as their browser default, or because their e-mail address has the ISP's domain name in it. In effect, the ISP is a portal player that may also be getting some revenue from reselling access and perhaps assigning the customer an IP address. They become "access players" only to get control of the customer.

The question is whether that strategy still works. Portal players are important because their role as the customer's starting point for an Internet experience guarantees them eyeball share. As such, they're in a position to sell you services over the Internet-a better position than the ISP may be in if you, the user, elect to point your browser home page somewhere other than the ISP's home page.

Interestingly, portal players such as Google are looking to create their own Internet backbone by peering not with other ISPs but directly with the access incumbents, such as the RBOCs and cable companies. They want to add value to their offerings - the stuff they hope to sell from their portals, including voice and video - by improving delivery performance to the user. It's ironic that portal players try to build infrastructure while ISPs try to exploit the infrastructure of others. Viewed in this light, the FCC and Supreme Court, by discouraging the discredited overlay model for the Internet market, might be advancing the state of the market and even encouraging real competition - from the portal guys.

So why do the RBOCs want some form of regulatory parity with the cable companies? I think it's because of their IPTV offerings. The regulatory framework for IPTV is much murkier than for Internet service. Nobody has offered it, so it hasn't been tested in the courts. IPTV also is a big competitive risk. Video demands a lot of high-quality, low-cost bandwidth. If the RBOCs had to share that bandwidth with others, what's to prevent those other parties from offering Internet service over it?

A portal player such as Google, which builds out a backbone network that touches every U.S. city, could become a formidable competitor if given access to inexpensive, good-quality RBOC IPTV pipes. But even without access to such pipes, and even without open access at all, Google and other portal players could be potential killer competitors. Access bandwidth requirements for IPTV depend primarily on whether the material has to be streamed in real time. If you add just a bit of caching on the premises, streaming video over DSL or cable could work if a new backbone with low delay and good QoS delivers it to the access edge. If you're willing to store the entire video for play, almost any consumer broadband connection would allow for video delivery.

Open access? Who needs it? We've got Google.

Nolle is president of CIMI Corp., a technology assessment firm in Voorhees, N.J. He can be reached at (856) 753-0004 or tnolle@cimicorp.com.

Learn more about this topic

Supreme Court ruling a triumph for cable operators

06/27/05

Martin's FCC: More of the same?

04/18/05

FCC to regulate IP services early next year

06/07/05

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