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Cable, telecom companies see net neutrality battle
Companies born in the recession
By some time next year, telecom companies predict, you’re likely to be doing more online with video than anything else — including e-mail, surfing the web or downloading music.
This week, a Massachusetts company took a step toward making that a reality, by signing a Canadian cable provider for an Internet-based “TV anywhere” service. Newton-based ExtendMedia Corp. believes it won’t be long before cable companies such as its new customer Bell Canada will break their geographic monopolies and begin competing for customers with Internet-based video service.
That could mean more choice for the customer, but the Federal Communications Commission is set to vote next week on a proposed regulation, called net neutrality, that analysts said could prevent this breakdown of walls in the cable industry — by taking away an incentive for telecom companies to do the infrastructure upgrades needed to deliver reliable video service over an Internet broadband connection.
Through a partnership with Amazon.com, the Internet video rental service Netflix Inc. is already delivering video-over-Internet connections, said ExtendMedia president and founder Keith Kocho. “Our view is in addition to Netflix and Amazon you’ll see services from Comcast and AT&T,” he said.
Once the cable giants start delivering channels of video over broadband, it’ll soon be a free-for-all, in which customers can choose from a range of competing cable services, Kocho predicted. “As independent businesses, it’s only going to make sense for (cable providers) to play nice together for so long,” he said.
ExtendMedia provides software designed to let cable giants do battle in the Internet video space. “We’re effectively an arms dealer,” Kocho said.
Gartner Inc. analyst Adam Daum agreed that future is likely to come but said its advent could be halted by the net neutrality regulations set for a vote this week.
The regulations, designed to protect Internet video purveyors like Google Inc.’s (Nasdaq: GOOG) YouTube service, would require cable companies and other telecom operators to treat all Internet traffic equally, including video. The telcos say that as more and more video comes over Internet cables, they need the ability to discriminate, in order to prevent heavy video users from swamping their systems and pushing out other users.
To support the infrastructure improvements needed to deliver high-quality video, telcos who own the cables that connect homes and businesses to the web will need the ability to charge video-streaming companies a premium to deliver their heavy-bandwidth content, Daum said.
Net neutrality could shut those telcos out of the value chain and leave them no incentive to do the upgrades needed to deliver high-quality streaming video, Daum said. “They’re a dumb bit pipe, and net neutrality keeps them as a dumb bit pipe,” he said. “It means whether you can stream (video) over your broadband connection with good quality of experience is a bit hit or miss. Some people get great service and others don’t.”
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