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FCC Will Probe Managed Services As Part of Net Neutrality Push

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600px-US-FCC-Seal.svgUpdated: Both the telecommunications industry and proponents of a free and open Internet have put the rhetoric machine into overdrive in the run-up to the release of a series of proposed rules on network neutrality by the Federal Communications Commission tomorrow.  Telecommunications firms are even getting their employees involved (a fairly common tactic with AT&T).

Sources in Washington tell me that the hyperactive response is driven not by the FCC’s plan to codify the four broadband principles regarding non-discrimination of certain types of traffic and add two more, but by the fact that the org plans to ask a bunch of questions about managed services that travel over carriers’ pipes.

In general, managed services are ill-defined, but most carriers will tell you they include features that customers pay extra for and as such, require guaranteed levels of service — things like IPTV or virtual private networks back to a corporate office. For example, AT&T (s T) allocates a chunk of its pipe for delivering IPTV and won’t let other web traffic interfere with that. In practice, this means a set percentage of AT&T’s pipes are walled off from regular web traffic so customers paying for the telco TV product get a great service. But it also means that when the percentage allocated for the regular web is congested, regular service degrades. If a subscriber is trying to watch web video such as Hulu, for example, they may get a subpar experience. Update: AT&T tells me the “walls” can be porous if there is enough capacity on the IPTV network and the best-effort traffic needs more, it will allow the best-effort traffic to bleed over into the IPTV traffic.

However, this practice isn’t inherently bad, as no one paying for telco TV wants to let VoIP calls or Hulu interfere with the Big Game when they’re watching it on U-verse. But the FCC apparently wants to know how far carriers can take that. If taken too far, then carriers could protect their revenue streams and get around any net neutrality provisions by allocating more of their network for managed services rather than for the public Internet. The FCC is worried that a neutral public Internet that gets forced through a smaller pipe so that carriers can invest more on upgrades and capacity for managed services won’t be able to support the innovations of tomorrow.

In his speech last month before the Brookings Institution, FCC Chairman Julius Genachowski made mention of the managed service issue, saying:

“I also recognize that there may be benefits to innovation and investment of broadband providers offering managed services in limited circumstances. These services are different than traditional broadband Internet access, and some have argued they should be analyzed under a different framework. I believe such services can supplement — but must not supplant — free and open Internet access, and that we must ensure that ample bandwidth exists for all Internet users and innovators. In the rulemaking process I will discuss in a moment, we will carefully consider how to approach the question of managed services in a way that maximizes the innovation and investment necessary for a robust and thriving Internet.”

So we expect the FCC to ask some probing questions aimed at exposing how the carriers view this managed services, as well as how, from a technical perspective, they currently wall such services off. In his speech at the Supercomm trade show today in Chicago, Verizon (s vz) CEO Ivan Seidenberg not only spoke out against net neutrality, but cited a handful of offerings that could be optimal managed services, saying:

“If we can’t differentiate between packets, we can’t prioritize emergency communications for first-responders…telesurgery or heart-monitor readings for digital medicine…videoconferencing over spam for telecommuters. The truth is, we have never provided ‘dumb pipes’ — and as more and more commerce takes place on the Internet, customers will rely even more on the quality of service, reliability and product differentiation that network operators provide.

More broadly, if we can’t earn a return on the investments we make in broadband capacity, our progress toward a connected world will be delayed, if not halted altogether. This is ironic, in that the same digital elites and Silicon Valley investors who advocate net neutrality regulations are also pushing for faster mobile connections, more broadband deployment, and faster progress toward a 100-megabit society.”

The FCC’s attention on managed services is an effort to make sure that the fat pipes the carriers are building will be available for innovations that aren’t delivered through a carrier-created and controlled managed service. The threat of ensuring a quality-of-service guarantee for some offerings means, at its heart, that certain traffic is shunted aside when traffic deemed to be a priority comes through.

15 Responses to “FCC Will Probe Managed Services As Part of Net Neutrality Push”

  1. Christian M

    This continues to be more high quality reporting by Stacey. I kinda get sick and tired of the screeds on some tech news sites. There are actual stories behind these disputes between these companies. Om Malik himself could learn a few things from Stacey’s reporting.

  2. MrktMind

    I agree with RKoo – government should not be telling the duopolies how to run their business. Therefore I think we should combine federal money with state and local money to build a public network that is then leased to any ISP who wants to use it. The public can then control their own network and the duopolies can shove theirs up their ass.

    If the duopolies don’t want to be in the dumb pipe business and be happy with billions in profit they can just buy NBC and create content. Or build a better search engine and COMPETE for profit. Profit by lining politicians pockets has got to stop. Otherwise the rest of the world will kick our asses in very short order.

  3. I know Gigacom is in favor of ‘network neutrality’. So my comment would not be popular.

    As the issue evolves, the FCC is getting deeper and deeper into regulating how the ISPs run their business. I can sort of see a rationale for wireless broadband as the amount of spectrum is limited and that the FCC should play cops in making sure of some sort of fair play in the use of the spectrum. I continue to be amazed that while ISPs spent billions of dollars on spectrums, Google can come along and insists that the spectrum owners may not give preferences to their own contents or applications.

    But the case for FCC doing the same thing on the wired broadband is much less compelling. There is no natural limit to wired broadband. If it is a lack of competition issue, then the government can mandate market share cap rather than getting into the details of how an ISP allocates its network resources. The regulators are not in position to do that level of balancing.

    • @Rkoo, you make a good point , rather than have the FCC attempt to tinker with a model that has held back the U.S., relative to the global leaders, it’s time to start over. I also agree that wireless spectrum should NOT be sold, since that’s apparently not “in the public interest.”

      There must be a workable plan for America to catch up to the global market leaders of broadband supremacy. IMHO, it’s going to take take bold action by the Obama adminsistration. Regulation tweaks won’t break the current logjam that’s designed to mantain the staus quo.

  4. Michael Yokitis

    It sounds as if the FCC is considering fixing something that isn’t broken.

    Instead of risking an adverse impact onnetwork investment I think it would be more prudent to consider regulations like this only once it becomes a demonstrated problem. That is, only if the non-managed pipe becomes adversely constricted.