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Here’s the problem in a nutshell. People are watching more video over the Internet than ever before; by some accounts, Netflix streaming alone accounts for 20% of all Internet traffic in the U.S. at peak times. Streaming video can place a strain on the available bandwidth for some service providers, such as cable companies. The streaming video companies do pay for access to the Internet for their data, but in some cases, the carriers feel that they don’t pay enough.

The question is what happens if a service provider wants to charge one data provider more than another? Or if the service provider wants to give data from one source preferential treatment? Or even block data from a source altogether?

The issue is complex and anything but clear cut. Some groups feel that Internet access is essential for free speech, and anything that allows the establishment of arbitrary obstacles is wrong. Others view the Internet as a business operation, and businesses should be free to make deals that they believe to be in the best interest of their customers and themselves. And then there are those on both sides who question whether or not the FCC has the right to regulate the situation at all.

After hesitation, delays, and mixed signals, the FCC finally took action this week and established new rules to protect “net neutrality”. Needless to say, opponents on both sides complained loudly about these rules. While the rules have not yet been published, they apparently will prohibit wired service providers from blocking data from specific sources. Wireless broadband operators will be allowed to limit access to specific sites and services, persumably because their bandwidth is more limited. But even the wired carriers will be permitted to adjust access to sites and services as part of “reasonable network management”. That would appear to be a loophole large enough to drive a truck through. And the rules apparently will allow “paid prioritazion” that will give packets from some services faster handling than others.

As a result, there’s something to upset just about everyone involved. At this point, about the only thing for certain is that provisions of these new rules are bound to be tested in the courts. It may well take Congressional action with new laws to provide a final resolution. This is not the end of the net neutrality issue, but instead probably marks the beginning of hammering out a solution.

Posted by Alfred Poor, December 23, 2010 5:00 AM

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About Alfred Poor

Alfred Poor is a well-known display industry expert, who writes the daily HDTV Almanac. He wrote for PC Magazine for more than 20 years, and now is focusing on the home entertainment and home networking markets.