The Net Neutrality Debate: You Pay, You Play?

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"It is not inconceivable that the optimal number of networks may be greater than one," Yoo says. In general, he adds, it is in network owners’ best interests to make their product compatible with everyone else’s. However, if people develop a new technology that they believe is a large enough improvement on what came before, Yoo argues they should be free to try to sell it and let the market either punish or reward the decision. And that prospect concerns CIOs and other observers.

"If you had to have a different architecture for every single provider that is out there, it would mean Balkanization of the Internet," Bachula says.

How to Navigate the New Terrain

One thing’s for sure: It will be up to the CIO to make sure that his company can negotiate the new landscape. Tiered service alone "is going to transfer a lot of responsibility to the [CIO]," says Steve Novak, CIO of the law firm Kirkland and Ellis. Telecommunications costs will go up, and these decisions will become more strategic, says Novak, because they will no longer just be about how much bandwidth to buy, but also what level of service to purchase from each carrier.

John Ambler, an Accenture consultant who is in charge of telecommunications decisions for the state of Arizona, says that lack of security and the inability to deliver high-bandwidth traffic without interruption are obvious problems for CIOs. And if the network owners build and sell a solution to these challenges before application vendors do, so be it, says Ambler. "If I have an expanding business or I create a [high-bandwidth] application, I’d gladly pay for better service," he says.

Hilton, on the other hand, worries that paying for improved services is positive spin on a more sinister reality. "Frame it the other way," he says. "Would you pay to prevent someone from degrading your service?"

Longer term, a telecommunications company may try to introduce a new standard—having the freedom to do so is an explicit part of the telecommunication industry’s vision. And as Bachula suggested, CIOs would then need to rearchitect their systems so they work with more than one network technology. "Everything we do is IP-based," says Novak. "The investment [required] to move from the IP standard would change a tremendous amount for us."

Hilton says that he likes the idea of better networks; after all, it’s impossible to come out against innovation, but he worries that if a company the size of AT&T decided to introduce its own standard, it wouldn’t necessarily have to be a better technology. CIOs would be forced to adjust their applications to conform to the new standard simply because of AT&T’s market share. "The last thing I want to do is negotiate a bunch of closed proprietary networks," says Hilton.

The Legislature Picture

Such arguments are already being aired in the halls of Congress. But between the money involved and progression of draft legislation, it doesn’t look good for net neutrality advocates. The U.S. Telecom Association alone spent more than $16 million on lobbying in 2005. AT&T spent more than $11 million, Verizon at least $7.5 million [Verizon’s filing is incomplete] and Bell South $7.4 million. In contrast, Microsoft, which spent $8.7 million, was the only proponent of net neutrality to break a million.

Not surprisingly, drafts for a new Telecommunications Act have had progressively fewer protections for net neutrality. An early version adopted the term, a later version watered down neutrality protection, and the most recent draft didn’t have any at all. Even the most hard-core advocates see the handwriting on the wall. "We’re up against a bigger, more powerful player," says Public Knowledge’s Brodsky.

In the meantime, CIOs need to prepare for an Internet and economic arrangements that will be quite different. And for CIOs who don’t want to pay? Tough luck, says Vanderbilt’s Yoo. "No one ever promised that the business environment that you started in will be the business environment of tomorrow."

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Copyright © 2006 IDG Communications, Inc.

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