Dead Monopoly vs. Modern Myopia: AT&T + Time Warner

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Okay for those who don’t know, I am a bell head through and through. So my viewpoint is a skewed. If this were a regulatory rant, I would rage on that we have existing laws that date back to 19th century (1890s) and uses the terms “telephonic and telegraphic” as to what they are regulating. However, my current issue is one of policy. And though I have many causes where I am a liberal champion when it comes to Net Neutrality, I am unable to see the need.

My wife read me an editorial that was supporting Net Neutrality and I have friends who pointed to the day that Netflix gave in and bought connectivity into Comcast’s network. IMHO all of these arguments assume a need to bias in favor of “the little guy”. They argue that start-ups and innovation will be stifled by service provider partnerships and preferences.

Personally, I don’t get how the argument premise is the right starting point. The viewpoint that the service providers don’t pay for content is wrong just based on the fees the cable operators pay to broadcasters. And broadcasters proved they like the model when they went after Aereo and won at the Supreme Court.

This part alone should indicate that AT&T would have no more or less incentive to act in the same way with their competition.

So then we turn to the Internet side of the equation and people who claim they are speaking on behalf of the Internet and the Over the Top Services.

In this case, I drew my wife a picture.

I drew three clouds and labeled them Service Provider, Internet and Netflix. Now to me Netflix looks like a broadcaster, and if it was working on an ad based model the service provider would make a deal with them based on advertising revenue. However, Netflix bypasses that negotiation by going directly to the customer.

That in effect says to the customer. I am going to work with you independent of the service provider.

The simple question to ask is if Netflix only connected to the Service Provider through the Internet, the same way every other Internet application does would that be considered fair?

Now if the connection to the Internet is supporting every type of application and one application dominates the traffic? Whose job is it to solve the problem?

The customer bought Internet access from the service provider to the common infrastructure, but not a direct pipe to Netflix or any other application.

If watching a video gets hung up and stalled because it came through several meet points, the best solution is a more direct route.

Now the question is who pays for the direct route? Well if the service provider was a partner to the content as they are to broadcasters the answer is the content provider.

However, as an OTT service the customer’s relationship is independent of the service providers. Therefore, the company that knows how to improve the quality of service for the consumer is not the service provider but the content provider.

The content operator is likely to have their content hosted in a various content clouds. Which means they have optimized their network for distribution already.

The connection between the last mile and the cloud then is the bone of contention.

And if the best solution is for a direct connection between the service provider and the content provider the question then becomes who owns the customer? If the service provider were licensing Netflix or other content, I would say they are the customers. However, the relationship is between the end user and content provider, in our example Netflix. Therefore the ideal situation is a meet point directly to service provider that is based on what Netflix knows about the traffic generated via the service provider.

Which gets me to the point about equal access. In effect, Netflix made it harder for other Internet Applications to go through the meet point. So rather than the service provider, I would contend the OTT content is more responsible for delays.

Now, here is the weird part. We already have mobile operators partnering up with OTT content clouds, for example T-Mobile offering a Netflix subscription. We also have had the OTT crowd invest in having content of their own and looking more like broadcasters?

So why are they picking on AT&T?

I think its because the old rules and the old regulators that ended the monopoly, still are fighting that battle.

While power is still aggregated at the top the monopoly is gone. We can clearly see wireline and wireless competing at the same level.

The competition is vibrant and innovative.

Start-ups that want access should not fear a globe that looks like a death star.

AT&T should be able to own content just like anyone else.

 

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