The Death Of "Net Neutrality" (CMCSA)

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The FCC is going after Comcast (NASDAQ: CMCSA) for cutting bandwidth to some file-sharing services which use huge amounts of capacity on the cable company’s network. The agency believes that all telecom and cable companies delivering broadband should abide by "net neutrality", a concept that all consumers and websites are treated the same no matter how much bandwidth they use.

According to The Wall Street Journal "Comcast stands accused by software companies, public-interest groups and academics of degrading customers’ ability to use file-sharing software, which enables users to send high-quality video files over the Internet." Leaving aside the fact that much of the file-sharing on the internet is an illegal transfer of material which carries copyrights from content companies, broadband providers do not have limitless capacity on their systems.

The FCC and other groups want operations like YouTube, which uses a lot of bandwidth by sending video over the internet to be treated the same as a website which contains only text and uses very little capacity. The idea that both should be charged the same is egalitarian, but it puts broadband providers in an untenable position.

As the amount of video and data moved on the internet increases, broadband providers can spend billions of dollars to upgrade their fiber capacity, or they can limit demand by charging different tolls based on different levels of bandwidth usage.

The government would like to mandate a practice without any consideration of what it costs companies or their shareholders.

Douglas A. McIntyre