Major ISPs Already Said to Follow Network Neutrality Rules
Major wireline Internet service providers are already acting as if network neutrality rules had been imposed, so their businesses won’t be affected much including raising money from investors if the FCC adopts them, analysts said on an FCBA panel Monday. But it would be much different if the commission put broadband service under Title II of the Communications Act, one said. “I think from an investment standpoint, it would totally freak people out … which is not what the FCC is looking for right now,” said Rebecca Arbogast, Stifel Nicolas analyst.
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If the FCC takes a slow approach to regulating network neutrality through its current rulemaking, there probably won’t be much reaction, Arbogast said. Craig Moffett of Sanford Bernstein said, “On the wireline side, in some ways net neutrality is almost a non-issue.” Even before the FCC came down on Comcast for blocking BitTorrent traffic, “everyone was walking around afraid of their own shadow,” he said.
The net neutrality proceeding is much more important to the wireless industry, Moffett said. Because carriers get a high proportion of their revenue from low-bandwidth applications such as voice and SMS text messaging, applying neutrality rules to wireless networks could be very bad for them, he said.
Video distributors and programmers may be in for major changes as the economy continues to struggle and additional consumers experiment with online video, the analyst said. “The distribution platforms seem stable,” Arbogast said. “Everything else is in total chaos.” Instability on the programming side is challenging the belief that “content is king,” Moffett said. Content is easy to copy and drain of value, but distribution systems are expensive to build and maintain, he said. “For the last 30 years there has been a fairly constant shift in value from content to distribution,” he said.
But the economy may threaten pay-TV distributors’ status quo of selling large bundles of programming, Moffett said. “It is not an overstatement to say that about half of our population has almost no money” to spend after paying for basic needs such as food and shelter, he said. That may lead to some experimentation with smaller pay-TV bundles or other ways to buy programming, he said. It’s wrong to “assume we're going to be able to sustain the broad distribution models where the price of entry is $70 a month,” he said. Still, the a la carte model has a lot going against it, he said. Disney would have to charge a $16 monthly wholesale rate for its ESPN network to maintain its revenue in an a la carte world, he said. “The idea of $16 per month for a single cable channel starts to make clear the problems of a la carte,” he said.