Anyone who’s read my blogs knows I’m no fan of current FCC Chairman Genachowski. I’ve always believed his role in the VC-and-startup world has made him too much a fan of Internet novelty and not enough a fan of reality. In particular, I’ve been critical of the neutrality position he’s championed, which includes the preservation of bill-and-keep and a de facto prohibition against content-provider-pays models. Now he’s going, and guess who’s taking over? Many say a representative of the other side, the network operators. If that’s true, it may actually help new trends like SDN and NFV.
The newly nominated FCC Chairman is Tom Wheeler, who has formerly headed both the NCTA and CTIA, is not seen as an unbridled fan of the venture world. His nomination has stirred concern among the Internet-as-usual advocates, and I personally hope that he sponsors a revisiting of the whole settlement-and-payment process. Right now, IMHO, investment in the Internet as a network is hampered by the low return on investment, and that’s largely because the bill-and-keep model focuses on getting users a given ISP (so they can bill and keep) rather than on building connectivity among ISPs and in particular encouraging QoS peering. We’re not going to have Internet QoS without making ISPs settle among themselves; otherwise only the guy who owns the customer gets any reward for providing it.
We may see an opportunity for the FCC to rethink things coming just as Wheeler takes the helm. ESPN reportedly wants to do a deal with AT&T, Verizon, or both to subsidize mobile access to ESPN content, so it won’t count toward the users’ data caps. Such a deal would be just what Genachowski doesn’t want (which is likely why it won’t be requested as long as he’s in the game), but Wheeler could use this to set boundaries on the settlement issue.
The FCC is a Federal commission, and so under US law it’s kind of a court of fact. Unlike courts, though, the FCC is not bound by its own precedent, which means a newly constituted FCC could just change its mind. That’s happened from time to time in the past, but usually when a change of political power brings about the shift in the FCC. This time we’re just moving from one Democratic appointee to another. Still, the difference in Wheeler’s background is hard to overlook; it could be a signal that the Administration recognizes its policies have worked against the consumer, and against the Internet as well.
It’s fair to ask what the consequences of the move might be. The immediate effect would be to promote mobile video from the large players, providing more revenue to mobile operators. An additional revenue stream in the metro would almost certainly result in major remaking of CDNs. Operators aren’t going to build capacity where they can shortstop transport. They’ll push caching further forward, and the immediate impact of that will be to increase the demand for a more agile mobile delivery architecture, something to replace or augment the Evolved Packet Core. EPC is going to be pressured even without a reversal of content-provider-pays policies; small cell and WiFi cells both complicate the simple picture of mobility that the 3GPP codified years ago. Mobility, IMS, and EPC are big operator targets for SDN and NFV.
A broader change in policy is possible too, as I said. If the FCC went all-in on settlement, it would likely generate QoS peering among ISPs, and that would likely accelerate the transition from provisioned VPNs to Internet VPNs for long-haul branch connectivity in particular. It would accelerate the use of cloud computing because cloud providers could pay for QoS or even pay for network services under cloud contracts. In short, it could very well push a sane model of venture investment rather than pushing continued attempts to re-invent social networking. To me, the sooner the better. We’ve had a venture market funding riotous consumption without any regard for production, and it’s time we changed the rules here. I don’t think anything will happen immediately, but as I’ve said the FCC is not bound by its own precedent, and they could signal a shift with the ESPN deal (if it’s introduced) that would shake the industry—maybe even enough to shake it into normalcy.