FCC Gets Firm with Comcast

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Yet such upgrades are expensive, costing billions of dollars. "Comcast may say, 'We need to pass these costs onto our customers,'" says Jan Dawson, an analyst with consultancy Ovum. Another option may be different pricing schemes, depending on network usage. Comcast and other service providers, such as Time Warner Cable (TWC), could expand their trials of tiered broadband pricing (BusinessWeek.com, 1/18/08) to charge higher fees to consumers who download movies. Time Warner expects to test such a plan later this year in Beaumont, Tex.

Alternatively, to avoid new and expensive network investments, Internet access providers could establish stricter usage caps, limiting how much bandwidth an individual consumer may use. That way, they would still effectively block peer-to-peer applications, which tend to require the most bandwidth. And such practices are "perfectly legal," says Turner of Free Press.

The cable company could also try to find loopholes in the FCC's order. It may claim a right to slow down certain bandwidth-thirsty applications, such as movie downloads, during peak hours. In the past, Comcast slowed use of such applications in off-peak times as well as part of an effort, the company said, to improve network performance for every user.

Network Traffic and Neutrality

The FCC order may also not move the needle as Comcast is already well on its way to complying with most points of the order. In June, Comcast published some of its network management policies on its Web site, three months after it pledged to change how it manages network traffic. By yearend, the company will no longer track individual applications, but instead examine total traffic generated by a customer account.

Comcast started testing the new network management technique in two markets in June. Two additional markets, in Florida, shortly will begin testing the new method to track network traffic. Comcast has also struck agreements with peer-to-peer network BitTorrent and, on July 9, with Web-calling company Vonage (VG) to collaborate on ways of managing network traffic.

But here's the most important reason why the net neutrality debate is far from over: The current FCC will be disbanded within months, and the policies and political leanings of new commissioners, to be appointed by a new President, are as yet unknown. "We'll get a new FCC chairman, and we don't think the new chairman will be so aggressively negative toward the cable industry," says Laura Martin, an analyst with Soleil–Media Metrics. "We don't see any near-term economic consequences." In other words, don't think the net neutrality debate is anything but far from resolved.

Kharif is a senior writer for BusinessWeek.com in Portland, Ore.