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Don't Be Neutral on Net Neutrality

  |  March 17, 2006   |  Comments

What's net neutrality, and why should marketers care?

Ready for a privatized Internet?

If the net neutrality debate exists only on the fringes of your consciousness, it's time to sit up and take notice. The U.S. Congress has. Lawmakers are currently weighing whether to allow the major telcos and cable giants to have their way in creating a two-tiered broadband Internet: one for the haves, the other for the have-nots.

Here's how it would work. Say Yahoo pays a fee to Verizon for preferred treatment on that network, but Google does not. Verizon broadband subscribers, who already pay for bandwidth, would then get Yahoo pages (and ads) delivered much more quickly than Google's. Verizon could potentially even cut off access to Google altogether.

Why Should They Be Allowed to Use My Pipes?

Farfetched? AT&T CEO and chairman Ed Whitacre told "Business Week," "Why should they be allowed to use my pipes? The Internet can't be free in that sense, because we and the cable companies have made an investment, and for a Google or Yahoo or Vonage or anybody to expect to use these pipes [for] free is nuts!"

Following Hurricane Katrina, BellSouth spokesman Jeff Battcher told "The Wall Street Journal," "During the hurricanes, Google didn't pay to have the DSL restored. We're paying all that money."

Funny. I thought as a broadband subscriber, I was paying all that money -- together with the 68 percent of Americans who are broadband subscribers (up 13 percent from last year, according to Nielsen). We pay those same companies for telephone and television access, too. The difference is they don't determine who we call or what we watch on TV.

Net neutrality advocates include virtually all the Web heavyweights: Amazon.com, Yahoo, eBay, and Google. Bill Gates just came out in favor. Opponents, unsurprisingly, are primarily in the telco industry: the Bells, Qwest, and major cable providers such as Comcast.

If the anti-neutrality behemoths get their way, they'll change the rules of the game for online content, marketing, advertising, and media buying.

Telcos and cable operators want to charge more for faster access to content in part because they claim to have invested so heavily in their networks. Demand is only increasing for online video, music, multiplayer games, and other bandwidth-intensive activities, so, they argue, their pipelines are increasingly clogged with data.

Bruce Kushnick, chairman and cofounder of Teletruth, makes a pretty good case that the big telcos have already charged consumers and state governments plenty for broadband infrastructure they've never delivered. They're also feeling threatened by services that compete with their other core businesses, such as VOIP (define), and future offerings. Verizon, for example, is planning to deliver video services via its fiber optic network. That makes virtually any other online video player, from Time-Warner owned AOL to YouTube, a competitor, doesn't it?

Impact for Marketers and Publishers

Video content and video advertising, two of the fastest-growing online sectors, could be slowed to a crawl or stopped in their tracks by a two-tiered system. Even larger players such as AOL (owned by broadband provider Time-Warner) are going to think long and hard before paying a toll to Verizon -- a competitor for both eyeballs and subscribers.

Media buying could turn into a whole new animal. Will advertisers be willing -- or required -- to pay a bounty for space on a "premium" (i.e., fast-loading) site? Isn't that the broadcast television model: going for the (presumably) mass audience instead of targeted, contextual, or behavioral buys?

What of syndication deals? Say Publisher A syndicates content to Publisher B. B pays the toll and runs ads against that content, but A, the content creator, has a site that doesn't. What happens to that deal's fee structure?

What of smaller publishers and sites: mom-and-pops, local businesses, and all the corresponding SMB (define) ad dollars? If the Bells can take over that corner of the Web, they have yellow pages offerings. Is that enough to attract smaller and local businesses online? I doubt it very much.

Consider all the flack Yahoo and AOL are getting for their planned certified email offerings. It's been dubbed "email tax" and "email toll" by consumer groups, non-profits, Internet activists and consumer groups, who are making it clear the issue here isn't stopping spam. Rather, it's about a level playing field for everyone.

In "The Nation," Jeff Chester posits a very grim scenario:

Imagine how the next presidential election would unfold if major political advertisers could make strategic payments to Comcast so that ads from Democratic and Republican candidates were more visible and user-friendly than ads of third-party candidates with less funds.... [I]f an online advertisement promoting nuclear power prominently popped up on a cable broadband page, while a competing message from an environmental group was relegated to the margins. It is possible that all forms of civic and noncommercial online programming would be pushed to the end of a commercial digital queue.

In a tiered system, what happens to the long tail and to consumer-generated media (CGM)? I'm betting the blogging software providers, such as TypePad, Blogger, and Six Apart, are never going to buy into this. Yahoo and Google, the long-tail gateways, say they won't either. Suddenly, the Internet looks a lot like it did in 1998: far, far away. Back then, it existed for most novice users somewhere outside AOL's walled garden. A proprietary ad format called Rainman reigned supreme, and if advertisers didn't like it, well, they knew what they could do about it.

The difference today is not only are the major Internet players up in arms against a non-neutral net, this time users will be, too. If there's a mantra in this industry, it has to be "It's all about the user." I see several potential user scenarios unfolding if a two-tiered system comes into play. None are pretty.

First, it will open up opportunities for a host of new players (from Google, which has been buying up all that dark fiber (define), to smaller companies) to come out with neutral net offerings. Given a choice between the Internet and a tiny wedge of corporate content, subscribers will defect in droves. This, after they blame every slow-loading Web site, premium or otherwise, on their ISPs. Cities and municipalities will be spurred to accelerate public Wi-Fi plans, creating pockets of broadband non-subscribers.

Worse, maybe a two-tiered Internet system just quietly falls into place. And the Web becomes very boring indeed.

Want to support net neutrality? Send a letter to Congress asking it to protect freedom and openness on the Internet. Educate yourself and spread the word. And if you have a large user base, follow eBay's lead. It's working to leverage its vast online community to make the pro net neutrality case with regulators.

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ABOUT THE AUTHOR

Rebecca Lieb

Rebecca was previously VP, U.S. operations of Econsultancy, an independent source of advice and insight on digital marketing and e-commerce. Earlier, she held executive marketing and communications positions at strategic e-services companies, including Siegel & Gale, and has worked in the same capacity for global entertainment and media companies, including Universal Television & Networks Group (formerly USA Networks International) and Bertelsmann's RTL Television. As a journalist, she's written on media for numerous publications, including "The New York Times" and "The Wall Street Journal." Rebecca spent five years as Variety's Berlin-based German/Eastern European bureau chief. Rebecca also taught at New York University's Center for Publishing, where she also served on the Electronic Publishing Advisory Group. Rebecca, author of "The Truth About Search Engine Optimization," was ClickZ's editor-in-chief for over seven years.

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