News today on Google and Verizon’s net neutrality proposal which in Verizon’s case is best interpreted as “do as I say, not as I do.”
Net Neutrality is good for all participants, even the network owners. The network owners are in the network business. As content demands increase, consumer demands for better networks will increase. Despite infatuations with content, the network owners don’t make that much money from content delivery, particularly any network owners outside the top 5 largest companies. Network owners are positioned to make enormous profit from delivering consumers better network services. (I imagine if video content delivery were such a great business, Comcast would not have purchased NBC. Good content will demand a premium across all networks. That drove the purchase.)
Positioned creatively and wisely, the same network services like bandwidth management, which network operators are employing today without much consumer awareness, can be sold like applications to consumers at an application like 90% gross margin.
As the pipes fill with video content, consumers are going to want the network “managed” so that voice traffic is prioritized and the video streams managed around that voice traffic with buffering. Especially if the government mandates the network owner cannot manage the traffic, the owner will have no choice but to offer it to the consumer as a service. Once the consumer demands it, the network owner will have to manage that content throughout the network.
The network owner will pretty much end up in the same place from a network management framework, will deliver a high margin business the consumers wants, and avoid the monopolistic bullying which is the first and sometimes last instinct in the industry.
In Verizon’s case, they own a great network. The only way to invite other companies to duplicate their network build is to try to restrict consumer choice. Verizon should learn from the cable operators whose miserliness about network build created the market opportunity in which Dish and DirecTV jumped with both feet.