The debate here, crystallized in the Comcast/Level 3 dispute, was recently punted by the FCC even though no formal complaint has yet been filed. But not only may Level 3 file such a complaint, Netflix is making noises that it might do the same.

Cable MSOs are particularly sensitive to OTT video competition because of the fear that cord-cutting will catch on. They’re similarly concerned that HD and 3D services, when streamed, will create even more traffic and pose major congestion issues unless cable companies build out more. Remember, their cable spans are shared-capacity, so they may have to make more radical changes to scavenge bandwidth for online services. And they want somebody to pay.

Well, we’ve got the usual regulatory flap, with the same players and the same issues. Republicans in Congress are looking for a way to derail the FCC’s net neutrality order, and the strategies range from a disapproval vote (which only buys some time) to pulling funding for the measure (a cop-out that has no chance of passing and getting by a veto). It’s hard to say how much of this is politics, how much is lobbying, and how much is posturing to get on the “right” side of an issue the courts are likely to throw out eventually.

The FCC, meanwhile, has said explicitly that its neutrality order doesn’t cover the dispute between Comcast and Level 3, and this statement could be good or bad depending on your slant on the neutrality order’s legality. Presuming that the FCC could craft something that passed legal muster, it would make sense for it to cover the critical issues in the industry rather than let them blunder on some random path. The question of Internet settlement is one of the most critical of all, and so I would have liked the FCC to take some strong steps there. You can’t take a strong step from an order without legal foundation, however, and given the questions on the neutrality order, it may be best that the FCC doesn’t intend to intervene in key issues based on its authority.

Many of you who have read my stuff through the years know that I’ve been a strong supporter of explicit Internet settlement, to the point of being a co-author of an RFC on the topic in the mid-90s. I believe that any business ecosystem that can’t settle payments according to proportional involvement of parties will eventually fail. In particular, premium handing and services are hard to imagine in a bill-and-keep space, unless everything is “on-us”. Thus, the lack of settlement is one of the biggest issues to address if you really want an “open” Internet.  The FCC is saying that the market can decide, but of course that will work only if Congress doesn’t get in the way. And in any case the market hasn’t decided up to now.

One obvious shift is the increased interest of portal players in having their own content, something that we can fairly say is extended into the TV space by the recently approved Comcast/NBCU deal. Ads have to live in something that consumers want in order to be pulled into view, and so all ad sponsorship (and pretty much all of the online world) has to have that magnetic content.

It used to be that you could act as a portal by simply aggregating everyone else’s content, a move that played to early desire by practically every business and content producer to have a web presence. AOL’s decision to buy the Huffington Post (a growing liberal media site) reflects the reality that most content sites are now looking at monetization on their own. That means that portal/aggregator sites have less to work with—unless they start becoming producers.

What’s interesting about both the Comcast and AOL decision is that the choice is one of buying professional content and not going with the “crowdsource” trend that’s obviously cheaper. Google’s challenge in monetizing YouTube is most likely the reason, and the fact that crowdsourced portals would start to look a lot like social networks. Been there, done that.

Yahoo! is the poster child for the other shift—we’re seeing the semantic web not as an Internet trend but as an aggregator trend. Think “semantic portal.” The idea is to combine search and context with portals and targeting to produce relevant content for consumers. The relevance factor makes the portal more attractive, and presumably would therefore help Yahoo! monetize its higher overall scores at serving content to consumers (Yahoo! beat Google slightly in unique visitors, for example, in comScore results). That might let Yahoo! pay more for content and dodge the pay-wall trend.

What all this means, of course, is that the bloom is off the rose. We’re past the growing-up phase of the online world and into the hard business middle-age. I’ve noted issues of maturity as they apply to the ISPs in the last couple of posts, and the new trends show that maturity is upon even the OTT players. The question is how much of the online revolution is a fad. Here in the U.S., where alternative channels of information dissemination are the richest in the world, we have the lowest online penetration and the least interest in getting online among those not there already.

Does that mean that we’re already seeing an opt-out effect? It doesn’t seem so, but it does appear that we’re seeing the lack of universal opting in. That could be a result of a lack of “fad sensitivity” among a segment of the population. If so, the effect could spread as having your own personal website or being on Facebook or Twitter, or even playing with a smartphone at a party, ceases to be cool. Not only do we have to worry about reinventing the Internet as a network, we have to reinvent the coolness model every year or so, because the requirements to achieve the cool state shift rapidly. Good thing I gave up years ago!

Cisco took what could be a giant step for itself at CES with its new video ecosystem. Cisco’s Videoscape combines in-home tools and software to centralize the mediation and management of video relationships, creating what’s probably the most architected video service layer available to network operators today. Since Cisco was already doing well in the early content monetization project trials, Videoscape could be a real winner for the company.

But despite the positives, Videoscape still has some issues in my view. Paramount is that Cisco is developing a content strategy in the absence of an overall service-layer strategy, or at least is creating the latter by simply assembling pieces instead of creating an architecture. Most of the elements in the Videoscape Conductor (the back-end) could easily be helpful in other missions, but it’s not clear how they’d be applied outside the video context. There’s also a strong push for video sharing and uploading, which generates traffic for operators and has essentially no potential for monetization. That makes the product a bit of a risk in itself, but it also shows that Cisco may pursue its own aspirations (which are to generate so much consumer video traffic that operators are essentially forced to buy tons of Big Iron to carry it) more than support the operators’ business cases.

Overall though, Videoscape is a strong achievement for Cisco because it plays to the company’s strength—breadth in the video market. The net effect of deployment could be a kind of “TV Everywhere,” and with Comcast pushing that very thing already, the timing couldn’t be better. ]]> http://itknowledgeexchange.techtarget.com/telecom/ciscos-videoscape-a-good-video-service-layer-move-with-caveats/feed/ 0 http://itknowledgeexchange.techtarget.com/telecom/considering-the-dual-logic-behind-the-fccs-net-neutrality-order/ http://itknowledgeexchange.techtarget.com/telecom/considering-the-dual-logic-behind-the-fccs-net-neutrality-order/#comments Mon, 20 Dec 2010 15:07:33 +0000 Tom Nolle http://itknowledgeexchange.techtarget.com/telecom/?p=2112 The FCC will be releasing its net neutrality order tomorrow, though it’s not fully baked at this point and might still be pulled from the agenda. The order appears to be a curious mixture of a logical application of net neutrality and an illogical legal foundation. I’ve reviewed the Court of Appeals ruling in the Comcast case, and it’s hard for me to see how this dodges the legal issues the court has already raised. The only avenue forward would be for the FCC to now assert (and justify) the view that Section 706 of the Telecom Act gave the FCC “new” powers to encourage broadband, and not just a specific justification to exercise the powers it already had. To this point, though, the FCC has consistently taken the opposite position.

Republicans in Congress are rattling their sabers, threatening to pass a bill that offers no funding for the FCC’s neutrality rules. Apart from whether this is even legal, it’s pretty obvious that it could never pass in the divisive political world of Washington. Similarly, it’s clear that net neutrality legislation more aggressive than the FCC proposes — mandating no traffic management, no premium handling except for free, and full wireless regulation — wouldn’t pass, either.  So whether either extreme is the right answer doesn’t matter.

What does matter is having a set of rules that will pass legal muster, and that’s where I’m concerned. The FCC’s “third way” was the right answer. It was clearly legal and it would have offered exactly what the situation needed. Some of the Democratic commissioners want it, and frankly, I’d rather they held out. I disagree that this order is better than no order — if it’s not enforceable, then it truly is “no order.”

The holiday season is always dominated by consumerism, but it should be pretty clear to everyone that networking itself is increasingly dominated by the consumer. We’re headed very quickly for a time when the consumer essentially funds all public networking, creates the design paradigms and the economic trade-offs. Along the way, though, we’re facing some potentially significant hurdles and shifts in the course.

The Internet has already made public IP infrastructure the basis for public networks, though of course that infrastructure tends to be less homogeneous than many see. Ethernet is a smarter edge strategy, for example, because most consumer services will haul traffic to either a metro off-ramp or a metro cache/server farm. You don’t need a lot of connectivity to get to one place. Still, the Internet has won IP a victory at the service layer, where the IP address space is the only framework we could expect to see in the network of the future.

This month, we’re heading to a kind of financial watershed with public network services. There’s been a surge of growth in online services funded by advertising, but advertising represents only a fraction of the money needed to fund a public network. Recent legal disputes (on Interclick’s history-tracking, for example) show that advertising-related sites are pushing the limits of public and judicial tolerance in a quest to tie up those limited dollars.

Ultimately people have to pay for stuff to fund a $3-trillion worldwide industry like networking. The FCC is likely to set the boundaries of where pay works and where it doesn’t in its December 21^st order on net neutrality. But whatever they do, there’s no turning away from the fact that advertising isn’t ever going to fund the public network, so something else has to.

Consumers would love a free Internet, just like they’d like free automobiles, homes or cheese. That doesn’t make the concept practical, even in a political climate where give-aways are the rule and not the exception. We’ve taken “free-ness” about as far as we can at this point. Even Google, I think, understands that it has to move from being totally ad-driven to having some set of for-pay products and services.

The FCC’s order will establish the legal framework for an Internet that’s cooperative in a broader way than at the pure connectivity level. What’s needed is the same today as it was in the mid-90s when I participated in an attempt to bring financial order to the Internet by creating a formalized mechanism for peering and settlement that included QoS. We have the technical means to do what’s necessary, but we don’t have regulatory air cover. The question now is whether we can get it.

Genachowski’s attitude on net neutrality appears to have undergone a transformation, and at the same time the Comcast/Level 3 settlement seems to open the door for settlement between content providers and CDNs and access providers. Any settlement at all here would be better than we have, but Comcast/Level 3 doesn’t go far enough. It comes down to a question of whether the relationship is “peering” or “transit,” and neither of these concepts goes far enough because both are simply different ways of viewing the permitted traffic balance. There’s still no QoS-based settlement, and without that, the Internet can’t provide pan-provider quality of experience.

There will be a transformation of investment and a transformation of Internet architecture if we can’t settle QoS-based relationships across ISP boundaries. Such limitations favor investments in caching over interconnection and favor larger and larger players to create fewer and fewer inter-provider boundaries. We may start to hear some details on the forthcoming order leaked this week, in advance of the meeting.  Pay attention; it could be critical.

Google let the industry have its first look at its Chrome OS, which it sees as the framework for a “cloud client” device, as well as a platform that combines Google’s desktop position with one in the smartphone space (Android) and a service-side position (Google’s cloud services) to create a new and complete (yes, and completely Google) solution for future computing and communication. I don’t think Google has grandiose visions of owning the computing/networking world, but I do think that it’s thinking through the process of ecosystemic computing more seriously and effectively than most. The commercial launch of Google’s Chrome OS may be delayed, but some of the impacts may be visible even before then.

If you look at Chrome OS and Chrome (the browser on which the OS is based) , what you see is a reflection of the fundamental truth that cloud computing is not ceding computing to the cloud, but rebalancing computing activity between the cloud and the client. In effective cloud computing, the process-intense tasks of information editing and display should be pushed outward to the client to reduce the impact of these tasks on central resources and to insure that the network connection to the client doesn’t become congested with a lot of unnecessary display-oriented babble.

A good example comes from a Google demonstration of the WebGL 3D rendering framework. If you want to show sharks swimming, you can either send pixel-by-pixel information on the successive positions, compressed information on the same thing, or objects that can be locally rendered. The latter will be better than any of the former choices from a cloud performance perspective.

I think it’s clear that’s what Google is thinking. What’s not so clear is whether it can actually achieve its goals of creating cloud dominance, and if it does, whether it can monetize its success there. Some of Google’s recent ventures, like Nexus S and Editions, seem to be a bit less than half-baked in terms of maturity of the business plan. Conceptually, Chrome OS has been around for a long time, and so have Google’s cloud aspirations. That the two were related is no secret, but it’s how they might relate in a business sense that’s hard to see. Does Google think it can sell ads to enterprises that display during their work-day applications? Seems doubtful. Does Google then think that Chrome OS and its cloud approach is a consumer solution to computing? If so, why make such a fuss about things like replacing Microsoft’s Exchange or SharePoint?

Whether Google makes a success of Chrome OS or not, though, it’s going to show us some things about computing in the future. The network isn’t going to be the computer, I think, but it’s going to be one of the computers, a new kind of partner in a much fuzzier relationship between users and computational tools. In that new relationship, there will also be a lot more to worry about in terms of how each piece integrates with the other pieces, and likely more functional segregation of tasks than administrative segregation. The GUI-versus-application thing is an example. A cloud application, like all applications, will have a network subsystem, an application subsystem, and a database subsystem that serve the user appliance. Some smarts will reside in all of these places, and those smarts will be marshaled in some coordinated way to serve the mission. We’re creating a future that blends SOA principles with principles of GUI design, database design, device design, security, and connectivity. It’s the creation and sustaining of that complex web of stuff that forms the opportunity for the future, and also its challenges.

But there’s more! Part of the Google Chrome OS preview was a comment that at least the prototype netbooks that will be deployed in the extensive pre-release test will be equipped with Verizon wireless services. Google and Verizon, once seemingly irreconcilable enemies, are showing increased coziness. Their net neutrality proposal, which was hated and criticized by everyone, including FCC Chairman Genachowski, looks a heck of a lot like what’s likely to emerge from the FCC’s December 21^st public hearing on the topic. It’s all about ecosystems, again.

Yet a pride of lions that eats all its prey species quickly dies off. Google knows that as the OTT giant du jour, it can’t afford to let the problems of disintermediation become critical enough for operators like Verizon to reduce network investment or impose usage pricing with tiers that result in what effectively become taxes on new applications. When I survey users about pricing sensitivity, the results are probably unsurprising at one level. They want unlimited-usage pricing the most. They want low-threshold usage pricing the least. In between, what they’d prefer as an alternative to the latter is application-specific pricing, meaning that they’d like to see any premium charge for usage bundled into the charge (which they or advertisers pay) associated with the application or experience. That way they don’t have to worry about a secret price being added to the visible price and called due later on with their monthly bill.

So it may well be that Google recognizes that the Comcast/Level 3 deal , whatever the rights and wrongs of how it should be characterized might be, is still the right industry answer. Charge for what the user wants, all at once. That means having the content provider collect and settle with the access provider.

What about the kiss Genachowski blew at usage pricing, then?  It may be that he’s simply waving a troll at the kids, creating a threat that makes a spindly carrot look more appetizing.

Today, Comcast and Level 3 revealed a fundamental problem with transport with the former demanding that Level 3 pay for transport of Netflix video that Level 3 is being paid to cache and deliver as a CDN. Level 3 is crying foul under net neutrality, but Comcast was the company whose appeal of the FCC’s rules resulted in the Court of Appeals declaring the FCC had no right to enforce such principles. While many will see this as yet another example of Comcast being the bad boy of ISPs, it’s really a sign that ISPs are fed up with people creating business models that depend on Internet access and transport and not paying for either one.

There’s only one thing that’s clear at this point, and that’s the fact that we can’t go on the way we are. Market forces worldwide are speaking the language of profit, and that speech won’t be ignored.

This will be a very interesting case to watch because it may be a test over just how much public angst is caused by another “violation of net neutrality,” even though it’s not clear there’s any official neutrality policy to violate. It may be that the RCN case will determine how far the FCC and Congress will go to create an enforceable policy.

We don’t think FCC Chairman Genachowski will fold and pull the process. He can delay in the transition from the NPRM stage (where it is now) to the rulemaking phase for as long as he likes. The FCC could also introduce another NPRM, this one suggesting that broadband be classified as a telecommunications service. Or it might use comment from the public to “validate” that idea.