TELECOMNEXT: Speakers oppose 'Net neutrality laws

LAS VEGAS -- TelecomNext provided a diversity of keynote speakers on its opening day but they all agreed on one issue – Internet neutrality.

Although Disney CEO Robert Iger was the only one to actually mention the term “net neutrality,” all four keynoters mentioned either their opposition to government involvement in regulating the Internet or their concern that service providers be able to recoup the cost of building infrastructure to deliver more broadband content. Only USTelecom President Walter McCormick avoided the issue entirely, devoting his brief remarks to promoting the show itself, which is his organization’s first solo trade show effort.

Television producer Dick Wolf, who closed the program in an onstage conversation with Publisher Charles Koones, avoided telecom issues as well, to bemoan the financial woes Hollywood faces as more content is downloaded versus viewed in its entirety in an ad-supported broadcast.

Proving the universality of the ‘Net neutrality debate, NTT President and CEO Norio Wada said he was concerned about a “cost-sharing model” between network operators and content service providers that allows for “recovery of investments, assuring broadband Quality of Service and fairness to the end user” and creates a “win-win relationship” for the parties involved.

Iger said he “does not support legislation at this time” to promote ‘Net neutrality and generally supports the free market.

Time Warner Cable President and CEO Glenn Britt was more blunt, saying “huge companies far bigger than all of the cable industry” (i.e., Google and Microsoft) are pushing the government to “reimpose old telecom regulation on all of us,” an outcome that would likely dry up capital investment in broadband networks and “severely cripple the telecom infrstructure.”

“This is industrial engineering, where the government picks winners and losers,” he said. “Make no mistake – the cable supports light regulation and will oppose any efforts to impose regulation” of the kind sought by ‘Net neutrality advocates.

Wada said his company is adding 200,000 fiber-to-the-home subscribers each month and will this launches a next-generation network architecture that will be in place by the end of 2008. He also said NTT DoKoMo today has 44% of its customers on 3G phones, with 90% using its iMode wireless data service and 21% using the newer mobile wallet capability to pay for goods and services using their cellphone.

Verizon CEO Ivan Seidenberg pointed to South Korea as a model of what investment in broadband infrastructure can do, noting that the country made a commitment to broadband following an economic downturn in 1998 and now boasts a thriving economy that has attracted foreign investment and raised consumer electronics makers Samsung and LG “from second tier to world beaters.”

While eschewing the exact model the Koreans followed – it included extensive government mandates and subsidies – Seidenberg said the U.S. could heed Korea’s example.

Wolf said content creators everywhere should be frightened by the economic trends that are shifting distribution of content onto mobile phones, iPods and other devices, since that will gut revenues from secondary markets such as syndication and DVDs.

“This is either going to save the business or destroy it,” he said, and, when the audience responded with laughter, was quick to add, “It’s no joke.”

USA Networks paid $2 million an episode to syndicate his Law and Order: Criminal Intent series, Wolf said. In a download model, if 22 million episodes were downloaded at a cost of $5.99 each, the series would be considered wildly successful but would generate $44 million in gross revenues, but one-third of that goes to the download provider, such as Apple iTunes. That leaves the show’s creator with a paltry $30 million for an entire season of shows, he said, and would also discourage advertisers that today pay for the free broadcast of shows such as his.

A pending strike by the Screen Actors Guild and the Writers Guild of America, to get a bigger slice of the digital content pie, would also be bad news for the industry. The last strike, a six-month stoppage in 1987, “was the beginning of the decline of network TV,” Wolf said.