CHICAGO – Don't expect Verizon to take net neutrality regulations laying down.
With the FCC due to vote on new net neutrality rules tomorrow, Verizon Communications CEO Ivan Seidenberg warned the commission against passing rules barring carriers from favoring certain types of content or applications over others or from degrading traffic of Internet companies that offer services similar to those of the carriers. Seidenberg particularly attacked the idea that carriers should be considered "dumb pipes" whose sole job is to neutrally push traffic from content providers.
"There is a false dichotomy out there right now that network providers like Verizon and application providers like Google occupy different parts of the Internet," he says. "That is an analog idea in digital universe. It understates the role of sound network management practices and it ignores the real benefits that smart networks deliver."
As an example, Seidenberg points to Verizon's security team and its network infrastructure, which he says "intercept the vast majority of breaches" in network security.
"We have never provided dumb pipes," he emphasizes. "And in the future customers will rely more on product differentiation between networks."
Finally, Seidenberg says restricting carriers' ability to favor certain content and to create tiered services would take away their financial incentives to invest in network upgrades. Seidenberg pointed out that his company has invested tens of billions of dollars in building out its infrastructure to offer customers fiber-to-the-home services as well as its upcoming 4G LTE deployment. These sorts of upgrades would vastly decrease, he said, if Verizon could not earn a healthy return on its investments.
"The same digital elites who are pushing for network neutrality regulations are also pushing faster mobile connections," he says. "These two don’t add up."
Seidenberg says he thought the government did have a constructive role to play in the telecom industry, but that it should concentrate more on fostering innovation than regulating how carriers manage traffic.
"Rather than impose rigid, structural rules, the FCC should increase the availability of spectrum and overhaul the subsidy system for the Universal Service Fund," he says. "We can't move forward by pitting network providers and application developers against each other."
Broadly speaking, net neutrality is the principle that ISPs should not be allowed to block or degrade Internet traffic from their competitors in order to speed up their own. The major telcos have uniformly opposed net neutrality by arguing that such government intervention would take away ISPs' incentives to upgrade their networks, thus stalling the widespread deployment of broadband Internet. Internet companies such as Google, however, have come out in strong support of net neutrality and have called it an integral part of preserving the open Internet.
When FCC chairman Julius Genachowski first proposed new net neutrality rules last month, he said they were necessary to preserve the openness of Internet architecture and to ensure that carriers are accountable to consumers. He also added under the rules carriers would retain the rights to manage their networks and that nothing in the rules would stop carriers from ensuring that "very heavy users do not crowd everyone else out" during peak traffic hours.
Most countries around the world have what are known as "common carrier rules" in which incumbent telecom companies are required to allow ISPs to buy space on their DSL broadband networks at discount prices. The idea is to have incumbents wholesale access to their networks to other ISPs that would compete with each other to sell Internet services to consumers and businesses. However, the incumbent telecom carriers successfully lobbied the FCC to revoke these rules in the United States four years ago by arguing that rival cable companies weren't required to let other ISPs use their networks and thus had an unfair competitive advantage over the telcos. This ruling led many consumer advocacy groups and Internet companies to promote strict enforcement of net neutrality rules as a second-best alternative.