Time Warner Cable Inc. TWC, the second largest cable MSO (multi service operator) in the U.S., is facing a serious complaint for allegedly violating the new set of net neutrality rules adopted by the Federal Communications Commission (FCC). Recently, Commercial Network Services (CNS), a virtual server and streaming media provider, has filed an informal complaint with the FCC citing that Time Warner Cable has violated net neutrality law's "no paid prioritization" and "no throttling" sections.
Notably, in Feb 2015, the FCC had accepted the new net neutrality laws which classify high-speed broadband (Internet) as a public utility under Title II of the 1934 Communications Act instead of section 706 of the 1996 Telecom Act. Importantly, the latest regulations will be applicable to both mobile and fixed broadband networks. The reclassification of Internet makes a radical change in the way the government treats high-speed broadband service and Internet Service Providers (ISP). The FCC can strongly regulate the ISPs now.
Net neutrality implies an open-Internet atmosphere which will prohibit ISPs, especially the telecom and cable TV operators, from discriminating against applications. In order to control the flow of bandwidth-consuming applications such as video streaming, the ISPs have been discriminating against several web-based contents and applications. Content developers have to pay heavy sums to ISPs for accelerated data transfer.
The implementation of the new law will ban common ISP practices such as data traffic blocking, slowing any data traffic and paid prioritization. Notably, paid prioritization is a method through which content developers strike deals with ISPs for quick and smooth transmission of their data traffic. Following the adoption of new set of regulations, the FCC closely monitors and puts a check on all such deals. Moreover, the FCC also supervises interconnection deals, in which content developers pay ISPs to connect with their networks.
In its complaint, CNS has stated that Time Warner Cable allows access to its contents only through congested traffic routes and refuses to deliver its content through low-latency connections until CNS pays more. In its defence, Time Warner Cable has argued that its deal with CNS does not qualify for free arrangements that the company has with other operators. Management remains confident that FCC will rule in its favor.
Telecom behemoths Verizon Communications Inc. VZ and AT&T Inc. T have vehemently opposed the new net neutrality rules. Major cable MSOs, like, Comcast Corp. CMCSA, Time Warner Cable and Charter Communications Inc. CHTR have also strongly opposed FCC’s decision to accept the new regulation. This group made clear that though they have no abjection against the open Internet concept, enforcement of stricter regulations by the government is not acceptable.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment