FCC outlines four network neutrality principles

* But what do they mean for the Bells

Appended to its decision to regulate DSL as an information service (rather than a telecom service), was an FCC policy statement regarding network neutrality for providers of content accessible via broadband.

The statement outlines four principles to encourage broadband deployment and "promote the open and interconnected nature of the public Internet." These four FCC principles are:

* Consumers are entitled to access the lawful Internet content of their choice.

* Consumers are entitled to run applications and services of their choice, subject to the needs of law enforcement.

* Consumers are entitled to connect their choice of legal devices that do not harm the network.

* Consumers are entitled to competition among network providers, application and service providers, and content providers. 

Although the commission did not adopt rules in this regard, it said it will incorporate these principles into its ongoing policymaking activities.

Some analysts viewed the statement as a warning sign to the Bells as they build out their next-generation, fiber-based broadband networks upon which they plan to offer IP video - specifically, IP TV - to compete against bundled services from cable TV providers. The Bells are counting on being the primary providers of video content on their new fiber facilities to return their multibillion investments in building out those facilities.

"We believe that network neutrality could tie the carriers' hands in their efforts to avoid being disintermediated from higher-value services for a portion of their target market," states UBS Warburg Analyst John Hodulik in a bulletin on the FCC position. "This could become an issue when residential fiber is broadly deployed, allowing third-party providers of voice and data to deliver high-quality services directly to users while 'free-riding' on the carriers' networks. We believe this could be a big long-term win for content providers, technology companies and backbone companies at the possible expense of the Bells and (cable multisystem operators)."

RBOCs say they are not concerned and are not dissuaded from pumping money into their buildouts.

"Our plans haven't changed," a Verizon spokesman says. "We'll continue to look at wholesale on the fiber-to-the-prem side."

"Net neutrality…is a policy statement, it's not part of the order," an SBC spokesman says. "We have never blocked any access to content or applications. It's a problem that doesn't exist."

"We note that the guidelines (the FCC) gave are not binding," says a BellSouth spokesman. "Assuming that that is the direction it goes…we're fine with that. We certainly intend to be a video content provider - the marketplace will tell us whether or not we become the predominant provider."


Copyright © 2005 IDG Communications, Inc.

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