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Broadband Giants Stay Neutral on Network Funding

It looks as if the big boys like AT&T, Verizon and Comcast are passing on the stimulus money. The official reason is that they don’t need it, that they enough cash on hand to build out their networks on their own. Fair enough. Perhaps the funding should be reserved for those more in need, those that just need a boost to fund a new business model or expand service.

But there are probably other reasons.

One is that they would rather not be tied to any Government stipulations regarding executive compensation. After the harsh publicity and public outcry the banks received regarding the bonuses they paid out after they accepted taxpayer bailout dollars, anyone would be gun-shy to accept funding if it might limit their ability to reap the rewards their business sows.

The other reason is your favorite and mine: network neutrality. It is likely that the big providers would rather not have to adhere to network neutrality stipulations that dictate how they engineer and manage their services, particularly if they don’t really need the money in the first place. The fines and pressure levied on Comcast last year set the precedent that may have scared them off. Strict hands-off-my-data regulations can undermine broadband business models and network management techniques that are designed to help deliver quality service to the majority of the subscriber pool while keeping prices within reason. It may annoy the super users—the P2P file sharers, the movie watchers, the YouTubers—or the purists that advocate application indifference or privacy. But the big boys would rather make the business decisions themselves rather than be strong-armed into a compromise that may bite them later (again, see executive compensation and bonuses.)

So, does that make the network neutrality purists happy, sad or indifferent?

On the one hand, the funding is left to the smaller players to enhance their services, increase competition, hopefully build out to underserved areas and perhaps eat into the behemoths’ subscriber base. I guess we’ll see.

At the same time, perhaps the larger providers would have been better able to expand their coverage area to remote regions while increasing speeds and features for everyone, assuming the funding came with some way to require and ensure such expansion. But then again, we are back to whether they see an incentive in such expansion beyond the funding grant and would make such a business decision regardless. To date they really haven’t.

Based on the recent bailout-bonus outrage and on last year’s FCC-Comcast saga that is ongoing, if they do indeed have the cash on hand then it looks like sitting this one out is the best move.

By Dan Campbell, President, Millennia Systems, Inc.

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