The net neutrality train wreck

With the usual caveat that it can be a mug’s game to try to predict the outcome of a legal appeal from oral arguments, the FCC’s net neutrality rules are pretty clearly teetering after yesterday’s arguments before the DC Circuit. At a minimum, there appear to be the votes among the three-judge panel to throw out the FCC’s non-discrimination rule that currently prevents ISPs from charging content providers like Netflix and Google for proprietary access to the last mile.

The likely result, should that happen, would be the emergence of a two-tier internet, where those with the wherewithal to pay for delivery, such as Netflix, agree (however grudgingly) to pay while those without such means would have to run a gauntlet of throttling, capping and other quality-of-service exigencies.

While obnoxious, at least to some, that dynamic may turn out to be only one of several conflicting forces at play in the coming struggle for leverage between broadband providers and content services. By blocking access to its online content by Time Warner Cable broadband subscribers as part of the companies’ recent retransmission dispute, CBS was effectively able to turn Time Warner Cable’s broadband business into another form of pay-TV,  subject to the same sort of retransmission consent terms as apply to TWC’s cable service. Among other things, that basically reversed the the logic of the FCC’s net neutrality rules, which are premised on prevent broadband providers from harming consumers’ access to content. In this case, it was the content owner causing the harm.

If the court throws out the FCC’s rules, and all bets come off, we could be looking at a highly complex market, where some content owners — those that enjoy the leverage of retransmission consent — are able to dictate terms to some broadband providers — those that also operate pay-TV services over the same pipes and must pay for content — while other content owners that lack that leverage are subject to the whims of broadband providers.

How the consumer is supposed to navigate that mess is anyone’s guess.