The FCC’s upcoming neutrality order, presuming that it goes forward, isn’t the only thing that the Commission has commented on that could change industry direction. Chairman Genachowski has also indicated that:
Our work has also demonstrated the importance of business innovation to promote network investment and efficient use of networks, including measures to match price to cost such as usage-based pricing.
This comment seems to put the FCC behind the industry on the issue of broadband pricing rather than behind the consumer or the OTT players, a marked shift for Genachowski and one that’s raised comments inside the Beltway that he’s sold out to the big ISPs. It’s not as bad as that, I think, but it’s unfortunate the comment was made because it doesn’t solve the problem. The big thing the Internet needs is settlement and not just usage pricing. Collecting more from your own customer in a pure bill-and-keep framework does wonders for your own bottom line, assuming they’ll pay, but it doesn’t help the ecosystem. The big questions, which we can’t yet answer, is how the FCC might respond to the Comcast/Level 3 deal and whether Genachowski and his clan will continue to rain on the Google/Verizon proposal. An open commercial framework that lets anyone who wants special treatment pay for it is better than a system that just lets consumers pay incrementally.
The whole issue of more money for access, whoever pays, isn’t going to resolve the issue of monetization either, but it might take some pressure off and that would be a bad thing, I believe. Ultimately, usage pricing will curtail usage. ISPs tell me that their intention, which they’ve conveyed to the FCC, would be to set usage tiers high and hit the 8% or so of users who are massive bandwidth consumers. They’re also proposing to set download and upload tiers independently, which could be used to punish file-sharing without going to court to block access. Whether this comes about as planned, it will certainly still make people think twice about how much capacity they consume, and that may make things like online video less popular. The best approach is a framework for operators to monetize things, which means a service-layer approach.
Cisco has long been absent from this space, but today they’ve revealed that they’re buying a small network management firm called LineSider, a company who makes software that uses policies about user/service/resource relationships to manage the network. The Cisco move may be a counter to service-layer announcements by rivals Alcatel-Lucent and Juniper, both of whom have been touting service-layer goodies for over a year. Cisco gained a big credibility boost in the service layer just by having blade servers and a complete data center story, but they lost some of their edge in our fall survey for lack of a complete service-layer execution. They may now be working on one, and if they are it’s likely to make that space much more competitive and interesting. Cisco, unlike its rivals, is a marketing machine.