Welcome to the Internet's new toll lane

The recent Net neutrality ruling gives ISPs unprecedented freedom to charge a premium for preferred services

There are lots of reasons to be dismayed by the recent appeals court ruling striking down the U.S. Federal Communications Commission's Net neutrality rules. But one of the most upsetting aspects about it is how it now gives Internet service providers all the latitude they need to charge more for whatever services they deem to be deserving of a premium cost.

First, let's get the most paranoid speculation out of the way. I don't believe for a second ISPs are going to start arbitrarily blocking common sites or services wholesale. It's too obvious, there's too much risk of a backlash, and it wouldn't garner ISPs anything but bad karma. Instead, it's more likely they'll find ways to monetize the relaxed oversight this court ruling has granted them.

In fact, there already exists a good example for how such things might work: Comcast's Xbox Xfinity app.

For those who don't remember, Comcast announced back in 2011 that subscribers to its network who also had the Xbox 360 could add a service known as Xfinity On Demand. What's more, any content delivered through Xfinity On Demand was exempt from Comcast's monthly 250GB bandwidth cap -- but any other Xbox 360 video content, such as from Netflix or Hulu, did count against that cap.

Needless to say, this provoked the ire of Netflix CEO Reed Hastings, who saw this as an obvious slap at his company. Comcast shot back with a rationalization: Anything supplied through Xfinity On Demand technically counted as cable service and not data service, and was therefore exempt from the data cap.

Comcast's argument had some technical merit. If Xfinity On Demand content is delivered from Comcast's own internal content delivery network (and it is), it means that much less data Comcast has to fetch from the outside, and that much less in the way of peerage (charges for access to the common backbone) that the ISP has to pay for.

But if other ISPs started offering similar deals, Netflix -- and most any other online video service that isn't partnered with an ISP -- would find itself more and more on the losing end. Plus, if watching something on Netflix eats into your monthly bandwidth allotment now, that hit will only get worse when Netflix starts offering 4K streams.

Several things about the Comcast example make it seem like a portent for future behavior. For one, it's a sterling example of how an ISP doesn't have to actually block or downgrade anything to nudge customers toward its preferred services. All it has to do is make it that much less cost-effective to use anything else, especially as demand explodes.

Second, it would encourage that many more thorny tie-ups between ISPs and service providers. One of the promises of the Internet as a level playing field for content delivery was that end-users wouldn't need to buy $120-a-month cable packages, all for the sake of watching a few channels they could in theory get delivered digitally from a website anyway. Granting ISPs a free hand to create these kinds of preferential bargain bundles would undo all that.

Third, it could also bode poorly for developers of as-yet-unveiled competing services, who could find themselves preemptively locked out of competing for consumer attention. Fred Wilson of the VC outfit Union Square Ventures wrote a satirical piece about this problem, which concluded with these blunt words: "Telcos will pick their preferred partners, subsidize the data costs for those apps, and make it much harder for new entrants to compete with the incumbents."

Finally, ISPs can ultimately construct any arguments they feel like for what content gets a pass and what content doesn't. It wouldn't have to be limited to video, either: it could be streaming music providers, social networks, photo or video services, or anything else ISPs can argue imposes a drain on their network resources.

That's what's most unpleasant about this ruling. It doesn't destroy everything in one swoop, but rather leaves open a door for first one kind of neutrality, then another, then another, to be constricted in turn. And it's unlikely it's only going to be limited to the likes of Netflix.

This story, "Welcome to the Internet's new toll lane," was originally published at InfoWorld.com. Get the first word on what the important tech news really means with the InfoWorld Tech Watch blog. For the latest developments in business technology news, follow InfoWorld.com on Twitter.

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