“Got a good reason for taking the easy way out” is a good old song, and it’s also a pretty good theme on which to hang the analysis of a couple of news items.  Apple had an OK quarter but the financial sector thinks it’s coming to an end of the easy money period.  The FCC has formally indicated it will end the broad interpretation of “neutrality” that VC-biased Chairman Genachowski had initiated, and that may mean the end of the social-network-startup craze.

What do these things have to do with my song, you ask?  The answer is that there’s a good reason why Apple has relied on consumer faddism for profit, and why OTT players and VCs have flocked to build consumers of capacity and forget the production side.  The reason is that it was easier that way, but we should know by now that all easy things tend to end someday (to paraphrase a different song).

Let’s start with the FCC, and here I want to point out that in the mid-90s I was the co-author of the first RFC to address the need for peering and settlement on the Internet.  At that time, which was before the notion of media-driven tech hype waves and the dot-com boom, the Internet community itself was largely behind settlement.  Boardwatch, the ISP pub of the time, even suggested that if the Internet didn’t police itself with respect to peering policies and prices, they’d have to recommend the FCC step in.  That says a lot.  But neither of these things happened; we took the easy way out and to promote “growth” we initiated practices that were based on unlimited usage and bill-and-keep.  Since that time, we’ve seen two levels of distortion in the Internet created by our ad hoc decisions.

First, the need to have content delivery with some reasonable QoE encouraged providers to cache content locally to the access ISP to eliminate peering transit delays.  This gave rise to CDNs, and make no mistake, CDNs are “paying for handling” just as much as Internet QoS for a fee would be paying for it.  Make no mistake, CDNs would inhibit the entry of “small” players into the multimedia services markets just as much by raising the charges VCs would have to cover and lowering their ROI.  And worst of all, we spent money on researching and deploying ways of generating traffic and not on carrying it.

SDN and NFV and the cloud are not in any way at risk because of a shift away from Genachowski’s position on settlement and provider-pays QoS.  The opposite is true.  If we are forced to face the rational truth—everyone in an ecosystem has to profit to sustain their role—then we know that rational exploitation of these new technologies depends on creating a sound financial path toward that profit for all concerned.  All three could help operators, could improve our whole notion of “the Internet”.  But investing in them is going to be critical, and operators are the ones who build the network.

What we have to watch out for here is insuring that “best-efforts” doesn’t become “explicitly crappy” by osmotic pressure.  If operators can charge for premium handling then they have an incentive to let non-premium handling slide.  The key to making sure that doesn’t happen is the notion of full settlement.  If any player online knows that there are some paths better than others, and if consumers know that too, then ISPs who decide to widen their premium opportunity by suppressing normal QoE will find the market is more effective at stopping them than regulations.  And in any case lowering the “effort” of “best-efforts” isn’t much of a risk because that could have been done all along, even under Genachowski’s unenlightened leadership.  The more we let Internet transport become a business end-to-end, the faster it can become a good one.

Now let’s look at Apple.  They’re a cult computing company that became a success through a shift into consumer electronics.  They played effectively on a combination of style and elitism, a powerful combination for as long as you can exploit it.  Apple had a better OS than Microsoft before the first iPod came along, and they could have funded a cadre of technology excellence in the software and cloud space just as easily as pushing a new i-something model.  They didn’t because the profits were easier to achieve, faster to realize, with another i-gambit.

If you’ve read my stuff before, you know that I’ve been warning that you can’t take personal electronics to unlimited ends.  Even Cisco’s “Internet of Everything” is a cheap ploy for the broad market, and for Apple wearable or personal electronics is simply an invitation to find reasons why your belly-button needs to communicate with your elbow.

Apple needs to be focusing on point-of-activity empowerment, meaning the adding of value to network relationships by adding insight and context into information requests.  That’s very much a cloud mission, and Apple is the most behind of all the major technology companies in exploiting a compelling cloud vision.  Something that would make sense in this critical mobile space wouldn’t be much harder than doing another i-thing, and what Apple needs to do now is understand they’re at a crossroads.  The easy way out turns into a slippery slope very quickly.

That’s also true for “neutrality”.  We are going to have some issues here, some changes, some risks.  Regulators could go too far, not far enough, or move too late.  Of the risks we face, the ones I fear are the latter two.  Public policy in telecommunications has to accommodate, as a UN report once noted, both the quality of consumer experience and the cost, but also the “health of the industry”.  I favored full settlement and QoS charging almost 20 years ago, and I favor it now.

Let’s get on with it, Apple and the FCC.  Remember the end of that song:  “…a one-way ticket, yeah.  It took me soooooooo long to find out, but I found out.”