Since the news on Wednesday, both activists and editorial pages have pushed back strongly against the FCC’s plans to create a fast lane for video streaming sites. I think the opponents of the plan misunderstand the future of Over The Top (OTT) video services and what it will take to make them viable.
Our approach in 2006 was to make sure that Internet Service Providers (ISPs) provided a basic access broadband service that was totally neutral and sufficient to carry the most standard video protocols such as YouTube. In 2006, we thought that was 1.5 megabytes per second (MBPS); today that should be 5 MBPS.
But in an era when Netflix is planning to deliver 4K ultra high-definition video to the television, an ISP may need to deliver up to 100 MBPS, assuming that more than one TV is on in the home. Clearly someone is going to have to pay for the investment to deliver such a service and in seeking a compromise between the OTT players such as Netflix, Amazon, Apple, Google and the Internet Service Providers, the FCC is creating a path toward sharing the investment costs to deliver the next generation of TV services.
What will prevent companies like Comcast from abusing this system is real competition in the home broadband market of the kind we see in the mobile marketplace.
Last month, the new FCC Chairman, Tom Wheeler released a statement on “Open Internet Rules” in the wake of a Federal Appeals Court decision on Network Neutrality. In a section on enhancing competition, he wrote, “one obvious candidate for close examination was raised in Judge Laurence Silberman’s separate opinion, namely legal restrictions on the ability of cities and towns to offer broadband services to consumers in their communities.”
In the case to which Wheeler is referring, Verizon vs. FCC, Silberman suggested that the FCC’s primary obligation was to promote competition and remove barriers to infrastructure investment. Those barriers have been constructed by the cable and telco incumbents and their lobbyists, who have convinced over 20 state legislatures to pass bills barring municipalities from entering the broadband market. Judge Silberman described these laws as providing “an economic preference to a politically powerful constituency, a constituency that, as is true of typical rent seekers, wishes protection against market forces.”
So perhaps the FCC should rule that such local preemption is illegal and states cannot prevent cities or companies like Google Fiber from competing in the broadband market. Then, as part of its merger approval decision, Comcast would pledge that it and its lobbying arm, the National Cable and Telecommunications Association (NCTA), would refrain from opposing the FCC decision.
If that happened, the kind of broadband innovation we are seeing in cities like Chattanooga, Kansas City and Austin could spread throughout the country.
Jonathan Taplin is a Professor and the Director of the Annenberg Innovation Lab at the University of Southern California.
Photo: Shutterstock/Panom Pensawang