You’ve probably been hearing about net neutrality for a while now. But perhaps you haven’t considered its impact, especially on the wireless and electronics industries. The Federal Communications Commission wants to formalize net neutrality into a hardcore set of rules that will have a huge impact on the industry and the consumer.

With net neutrality, all Internet traffic will be treated equally. There would be no discrimination against any form of data, whether it’s a Voice over Internet Protocol (VoIP) phone call, short text message, music downloads, or streaming video. That in itself is a good thing. But that’s what we have now, with a few exceptions.

The downside is that the new rules wouldn’t let carriers “manage” their networks to block or slow any traffic for any reason. Carriers already essentially practice those guidelines without regulation, except in cases where such traffic overloads the network and keeps others from using it. Video is the killer in most cases, and it is a real problem in wireless networks that weren’t designed for video. And it could get worse despite the forthcoming Long-Term Evolution (LTE) upgrades to basestations and the new OTN infrastructure.

The carriers need to be able to manage their networks to provide service to all those who pay for it and to ensure quality of service. There have been very few cases where carriers have had to “control” the traffic, and these cases have been dealt with successfully on an individual basis. So the big question is why is there a need for regulation when there has been little or no abuse or problem. The answer is pretty clear. It’s political.

Net neutrality pits the broadband and wireless carriers against the application providers. The biggest lobbyists for net neutrality have been Google, Amazon, Microsoft, Yahoo, and several others. These companies provide services to consumers for “free” thanks to broadband connections provided by AT&T, Verizon, Time Warner, Comcast, and all the others in the DSL/cable/wireless broadband business.

The proponents of net neutrality want consumers to have unlimited access to their information and services no matter what their impact on the network traffic will be. It is part of their business model to have access to the broadband connections but not to have to pay for them—nice arrangement, for sure.

But providing that kind of connectivity everywhere is going to cost the carriers big time, and it will lead to complications and denial of service in some cases, especially if video downloads overwhelm the capacity of a wireless network. The typical YouTube video is the equivalent of about 100 cell-phone calls, so you tell me if that won’t become a problem at some point. It could also minimize the carrier’s ability to make a decent profit so it can continue to upgrade its networks and employ technical workers.

In a free market, which we have had up to now in the Internet and wireless businesses, industry does just fine growing itself and dealing with problems that arise. Why tamper with success? And with so few abuses of the net neutrality principles, we should let businesses work out the details among themselves. Regulation doesn’t make sense. Let capitalism guide things, as it has been a successful approach in the past. Like most regulation, we otherwise will surely get some interesting if not bad surprises because of unintended consequences.

What we have here is political payback to Google and others who supported Obama for president in the election—government business as usual. Pay your friends but ignore the consequences on others. If the government regulates something, it should be to help or protect its citizens. The proposed net neutrality regulation does not seem to offer the consumer anything new or better, and it hurts many businesses for the benefit of a few others. The carriers pay the bill while the Web companies essentially get a free ride. That is the government favoring one group over another.

The Bottom Line

We are going to get the regulations despite protests from carriers, operators, and other companies. In fact, the FCC commissioners recently voted 5-0 to go ahead with the rule-making to make all this happen. Go to www.fcc.gov and print out the release. You can also print out the entire 107-page Notice of Proposed Rule Making (NPRM 09-93). The NPRM asks for comments by January 14, 2010. Definitely chime in and give your opinion.

This administration seems to be determined to regulate the Internet and those who implement the networks. We will all pay more tax as well as for the products and services we want and need. Where is the benefit? The consequence is we will still get the mobile broadband that we all want, but it will force the wireless carriers to perform more upgrades sooner at a huge cost.

As a result, the telecom companies will have to adopt what is being called usage-based pricing. You will have to pay for the amount of data you use—no more flat-rate pricing. If you use a lot of bits, you will be charged more. In the end, we all will pay more. I sincerely hope the FCC will be fair and balanced on this issue. I’m not sure I can count on that, but I can hope.

The Good And Not So Good

Net neutrality is only the latest example of the FCC’s power to help or hurt us with its decisions. Since communications affects everything we do today, we should all be concerned about what the FCC does. I urge you all to investigate the many various actions of the FCC at www.fcc.gov on a regular basis.

For example, the FCC recently auctioned off about 50 MHz of spectrum in the 700-MHz range that became available after the complete switchover to digital TV earlier this year. The FCC collected more than $19 billion from the various carriers and operators. That was a great move, as it opens the door for greater expansion of wireless services and with greater bandwidth to support video and high-speed data apps. But the carriers paid dearly for it. Guess what? They will pass those costs on to you.

Also, the government set aside $7.4 billion of stimulus money in an attempt to find a way to bring broadband access to the millions of underserved consumers in the U.S. That small amount won’t even begin to fund a rollout of a nationwide high-speed network to the small towns and rural and remote areas that would like to get faster Internet access. The government wants all citizens to have fast Internet connections for informational and educational purposes. That is a good thing. But new rules and regulations will bring about the need for the government to spend additional billions to help roll out that network. You will pay for it through higher taxes.

And, the FCC now has a chief diversity officer. What is that all about? Why does the FCC need to get into the diversity issues that only seem to divide us more? That person is Mark Lloyd, one of more than 40 “czars” appointed by President Obama to help him implement his policies within government. The concept of czars is a bit scary to many, as these people are not approved by Congress or anyone but the president. These political appointees have the opportunity to change our lives without our approval. Are we witnessing one more step to the end of government by the people?

What are your thoughts? When it comes to net neutrality or any of these other decisions, where is the benefit to consumers or the electronics industry? Let me know at lou.frenzel@penton.com.