The greater impediments to the U.S.'s successful delivery of high-speed broadband, however, are political and economic. The Federal Communications Commission has incomplete authority to manage the broadband market—thanks to its 2002 decision to classify the Internet as an "information service" rather "telecommunication service," the latter of which the agency would have been able to control as part of the Telecommunications Act of 1996. This opened up the courts to shoot down the FCC's efforts to enforce net neutrality and keep Internet providers from limiting Web traffic, as the U.S. Court of Appeals for the District of Columbia Circuit did in April when it ruled in favor of Comcast. The FCC had objected to Comcast's blocking of subscribers' access to peer-to-peer software used to view bandwidth-hungry video.
What really scares ISPs is the potential that they would have to invest in a more robust infrastructure to support a steep increase in Internet traffic, without any reassurance that they could make more money from implementing new fiber optics. Internet protocol–based traffic will increase 4.3 fold between 2009 and 2014 worldwide, to the point where 750 exabytes (an exabyte is one billion gigabytes) of data per month are coursing through the Net, Robert Pepper, Cisco's vice president of global technology policy, said at the telecommunications forum. North America will generate the most Internet protocol (IP) traffic by 2014—19 exabytes per month, according to Pepper.
Much of this growth will be driven by video downloads. People cannot get enough of Web-based video, whether it is downloaded to their televisions, computers or mobile phones, Pepper said, adding, "Video to the PC is big, and video to the TV is growing."
Such predictions do not sit well with ISPs, which are reluctant to make large investments in infrastructure since the 2001 dot-com meltdown left many of them with lots of capacity to access the Internet but not nearly as many companies to pay for that access. Telecommunications companies are operating at a time when they are struggling to find new means of revenue growth, despite the demand for faster and more reliable fixed and mobile access to the Internet, Yves Gassot, CEO of French telecom research firm IDATE, said at the Columbia forum.
Time Warner Cable and other ISPs want to increase broadband capacity in step with demand. "From our perspective, it has to be driven by what consumers actually want, not what we hope they might want," Steve Teplitz, senior vice president of government relations for Time Warner, the U.S.'s second largest cable operator and third largest ISP, said at the confab.
Also weighing down ISPs is the FCC's National Broadband Plan, mandated by Congress last year as part of the American Recovery and Reinvestment Act. The plan aims to provide 100 million U.S. households with access to 100-megabit-per-second Internet connections by 2020.
"We think the government is ill-suited to make judgments regarding what infrastructure is required and the capacity level," Teplitz said. Whereas 100 megabits per second has widely been touted as a target broadband access speed, "maybe we'll learn that 100 megabits per second isn't enough. The government shouldn't decide what the speeds are."
Not surprisingly, Verizon has the same view as its ISP competitor. Looking even further out, Link Hoewing, Verizon's vice president of Internet and technology policy, said at the Columbia conclave, "Given the usage we're seeing, we can't justify gigabit delivery and the costs that would entail."
But ISP attempts to paint themselves as victims of increased demand for their services are hard to figure. Last year, Verizon's average revenue per user per month (ARPU) for data services grew by 17.9 percent to $15.20 compared with 2008 due to increased use of mobile broadband, e-mail and messaging offerings. The company's wireless data revenue grew 31 percent. (AT&T's wireless data revenue grew 33 percent in 2009.) (pdf) Likewise, Time Warner saw an increase in revenue for both its residential and commercial high-speed data services from 2008 to 2009, according to the company's 2009 annual report (pdf). Time Warner also reported that the costs to deliver high-speed data services decreased during that same time period.