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Parsing Obama’s Net Neutrality Statement

By Michael Turk 2 February 2010 No Comment

Telecom and tech bloggers were abuzz yesterday as Obama’s response to a question about net neutrality made it’s way through the ether. (video is embedded after the jump)  The question, asked as part of the YouTube interview with the President, may have generated more controversy than intended.

“We’re getting pushback, obviously, from some of the bigger carriers who would like to be able to charge more fees and extract more money from wealthier customers. But we think that runs counter to the whole spirit of openness that has made the Internet such a powerful engine for not only economic growth, but also for the generation of ideas and creativity.”

On its face, that may seem relatively innocuous, but GigaOm raises a serious question. (Updated: to include a link on 2/3. My apologies for the oversight in not originally including it.)

The idea of carriers extracting more money from wealthier customers could apply to the large ISPs pressuring the big content providers to pay more for delivery, but Obama may be tying the idea of net neutrality to those same ISPs trying to extract more money from the end consumer through tiered pricing plans or higher fees. It’s unclear…

So-called “consumer groups” like Free Press have tried to tie tiered pricing for subscribers and bandwidth caps to the net neutrality debate.  At the same time, the FCC has pushed cellular companies for information on early termination fees and handset exclusivity.  Read in that context, could the FCC and the Administration be planning an assault on ISP pricing models?  Could part of the broadband plan stipulate limits on what ISPs can charge both content providers (double ended payments) and customers (tiered service and consumption based billing).

The reference to pushback from carriers echoes the populist tone of his remarks on banking and health care companies.  Is this going to be the next front in the war on corporate America?  Or was this simply an overbroad statement that could easily be misconstrued?

The language of the President’s statement – gatekeepers, the next YouTube is being thwarted, etc – reflects the far-left-leaning talking points distributed by Free Press; which themselves display a lack of depth on engineering and business issues. By repeating it, Obama gets the facts exactly backward. Enhanced services wouldn’t allow YouTube to keep others down. These services would allow anybody to compete on a level playing field with YouTube.

YouTube already has a multi-billion dollar network behind it – Google’s – so managed services wouldn’t help YouTube a whole lot. Meanwhile, to compete with YouTube, you would have two choices – pay for enhanced services, or build your own multi-billion dollar network. Care to guess which one would be cheaper?

Does Obama’s misunderstanding of that key point telegraph an over-reliance on Free Press and Public Knowledge cheat sheets or should ISPs be gearing up for a more protracted exchange?

At a Free State Foundation Event on Friday, FCC Commissioner Robert McDowell spoke almost exclusively to the idea floated by some groups for reclassification of Internet service under Title II.  As Public Knowledge said in making that suggestion, Title II “would expand the range of opportunities for more aggressive regulatory steps.”

Were McDowell’s comments merely meant to weigh in on the debate? Or was the speech a prebuttal to what he perceives as a likely move by the Commission to more strictly regulate Internet service providers? Title II reclassification, it would seem, could easily be used to implement the type of price controls GigaOm suggests. Was McDowell warning telecom players of what’s to come?

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