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Sep. 23, 2009

FCC Chairman Julius Genachowski's opening speech at the Brookings Institute yesterday could spell lasting implications for any entity that operates in broadband, wireless or a similar field of communications.

In his opening statement, Genachowski signaled the FCC's determination to release a Notice of Proposed Rulemaking (NPRM) that would enact a set of new rules regarding net neutrality.

Internet Service Providers (ISPs) gave a whole range of responses. AT&T voiced its concern that "the FCC appears ready to extend the entire array of net neutrality requirements to what is perhaps the most competitive consumer market in America, wireless services."

However, not everyone believes there's a problem with net neutrality. VoIP provider Skype responded with applause, as its service would stand to gain from Genachowski's outline yesterday, which noted concern over broadband providers that have "unilaterally blocked access to VoIP applications."

AT&T, which has already realized the struggles inherent in managing a wireless broadband network in the face of bandwidth-gobbling devices like the iPhone, claims that net neutrality is based on the assumption that broadband networks are infinitely expandable.

"To base policy assumptions on such fallacies is to conduct a risky experiment with American broadband investment, nearly all of which is private investment on which our nation depends," AT&T stated in a public response to Genachowski's speech.

For its part, CTIA released a statement that raised concerns about the implementation of net neutrality rules. The statement highlighted the differences between fixed and wireless broadband and questioned how a single set of rules would apply to very different situations and services.

Julien Blin, analyst and founder of JBB Research, says that while he doesn't believe the FCC will have an easy time implementing these kinds of rules, he does think that this is the right time to tackle some of the problems surrounding net neutrality.

Blin added that he understands the wireless carriers' interest in protecting their voice ARPU (average revenue per user), yet "I don't see any reason why Skype is allowed to run on the iPhone but Google Voice is not. It's really time for the FCC to step in and say enough is enough."

"I think it comes at the right time. You can really see from the carrier's standpoint, they're all saying they're ready to open up their networks. As far as VoIP applications, those are still a sensitive topic. Maybe the FCC is trying to force the carriers a little bit to open up and talk," Blin says.

There's no question that the topic of net neutrality is a big controversy and that it risks getting more complicated going forward. In the next few weeks, expect to hear from some of the largest ISPs and hosting providers in the world with a view of what they have to say.

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Source: The FCC.