Telecoms Battle Net Neutrality With New Initiatives While Channel Remains Split On Debate

Telecom giants are going head to head with net neutrality regulations by rolling out sponsored data programs and other initiatives that seemingly skirt the spirit -- if not the actual rule -- of net neutrality. While these programs are largely geared toward consumers, the degree of fallout from the ongoing debate in the channel is yet to be seen.

Verizon last week rolled out its sponsored data program, called FreeBee Data. Via the initiative, providers can pay Verizon directly for data consumed by their apps or services to keep their services exempt from the carrier's data caps. This will allow users to view streaming content that won't cost them in potential overage charges.

AT&T has a very similar program, AT&T Sponsored Data, introduced in 2014. Competing programs with subtle differences from fellow carriers also include Comcast's Stream TV and T-Mobile's Binge On.

[Related: Channel Sounds Off On Net Neutrality]

While these programs are geared toward consumers, carriers' pushback against net neutrality in the form of these initiatives is shaping conversations in the channel, said Vince Bradley, CEO of World Telecom Group (WTG), a Malibu, Calif.-based master agent and carrier partner.

Some in the industry view sponsored data programs and "zero-rating" initiatives as being against the spirit of a free, open Internet, because sponsored data can favor the telecom provider's own apps or partner apps, while competing apps or smaller content providers are disadvantaged. Those opposing these programs have accused carriers of taking advantage of perceived loopholes in net neutrality rulings.

The carriers have defended their programs by claiming that sponsored traffic is not prioritized over other Internet traffic, and that the programs don't prevent users from accessing any content that isn't sponsored. Still, the future of some of these carrier-sponsored data programs is up in the air. The Federal Communications Commission last month asked telecom providers Comcast, AT&T and T-Mobile to explain their initiatives that exempt certain types of content from end customers' data caps.

The channel remains split on whether net neutrality will be a positive force in the telecommunications industry, and partners are waiting to see how the regulations will impact the channel.

"Like anything political, we are seeing both sides," Bradley said.

As a rule, partners like options, said Andrew Pryfogle, senior vice president of cloud transformation for Intelisys, a Petaluma, Calif.-based master agent. Net neutrality ensures more competition, options and room for innovation from smaller providers. Without it, most Internet traffic could end up consolidated onto just a handful of providers, he said.

"There are times when regulations protect innovation. It allows for two guys working in a garage somewhere in the country to have a path to market and not be potentially squashed by an 800-pound gorilla," Pryfogle said. "I personally lean on the side of innovation and I want to see that protected."

The flip side of that argument is that many in the channel are very dubious of government intervention within technology markets, he said.

"Net neutrality is probably the biggest regulatory change to happen to the Internet -- it's basically like the FCC [has] treated the Internet as a public phone network," Pryfogle said.

For the most part, agent partners have been sympathetic to carrier arguments against net neutrality because they'll have to live with any decisions the carriers make, WTG's Bradley said.

"[Net neutrality] regulations could mess with the ability to give enterprises the advantage they need when comes to services and mission-critical apps. For those reason, you're going to see more people not liking than liking it," he said.

Alongside initiatives like sponsored data programs, another net neutrality topic that's hot in the channel right is Internet "fast lanes," and the effect they could have on the industry. One of the chief concerns around fast lanes is the role they could play in cloud adoption, Bradley said.

"The big concern is around delay-sensitive apps, because if an enterprise, midmarket and even small business isn't able to go as fast on the Internet without paying a premium, it will definitely impact cloud pricing. It's just a matter of how [great] the impact will be, and that's hard to determine right now," he said.

But partners are already selling faster, lower-latency connections for mission-critical applications and customers are already used to paying for a better underlying network for a higher level of performance. Customers probably won't object to the option of paying more to travel in the "carpool lane," Intelisys' Pryfogle said.

"I think the market will settle that out and there are still enough competitive alternatives," he said.

PUBLISHED JAN. 25, 2016