FCC 'net neutrality' ruling could hit Internet Service Providers hard

The Federal Communications Commission (FCC) in the US has recently announced plans to restrict Internet service providers (ISP's) – including mobile broadband companies – from discriminating against legal traffic from content providers. The FCC argues that 'network neutrality' needs to be maintained to not only ensure that all content providers have an equal footing, but also to preserve innovation on the Internet.

Tajinder Jagdev, Head of Communications, Media and Entertainment Practice SAS UK argues that if Ofcom decides to follow the approach taken by the FCC it will potentially have important implications for the UK market.

As the number of Internet users and content providers continue to grow exponentially, networks are being overloaded with data traffic and ISPs have pursued a variety of policies to manage network congestion – for example, throttling data-throughput speeds for popular sites, which generate large amounts of traffic. Under the proposed FCC 'net neutrality' regulations US ISP's will be prevented from discriminating against content providers, ensuring that there is equality between content companies competing for bandwidth.

But slowing data download speeds for some users of You Tube or catch-up-TV sites like the BBC iPlayer, that generate huge volumes of data traffic, inevitably results in slower Internet access for other users that are using less demanding services at the same time. This is despite the fact that the consumers are paying the same amount for the services. And whether or not Ofcom follows the FCC, the new regulations are not the answer to a real problem that is confronting the telecommunications industry – the balance between value delivered and reward.

Tajinder Jagdev from SAS UK explains: “The implications of the FCC ruling have wider ramifications, as in practice 'net neutrality' has the potential to undermine companies such as AT&T in America who want to restrict the use of Internet to companies like Skype on the smartphones. The ruling would benefit content companies like Skype but cut into the revenues generated by Telecom providers from phone calls. This ultimately raises outstanding issues that need to be addressed in order for the interests of all parties involved to be protected. If the FCC proposal is rolled out to other countries – especially the UK – content providers will be among those that benefit most from this proposal, but ISP's will need to review their existing services.

“SAS has already identified that a tiered billing model, in which users pay more money for higher bandwidth packages, is perhaps the most likely solution to remedy the problem of consumer inequality in the future and generate revenues,” Tajinder Jagdev continued. “By implementing specialised predictive Business Analytics techniques, they can anticipate areas with high data download and traffic demands to inform capacity planning procedures for the roll out of infrastructure. They can also identify where it is necessary to enhance internet speeds, for example, in areas of increasing demand or areas that have poor connectivity.”

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