Should regulators forfeit spectrum auctions if they cant resolve Net Neutrality / Fair Share?

I have been writing about Net Neutrality and Fair Share broadband usage for nearly 10 years. Both sides of the argument have merit and it is difficult to find a balanced view represented in the media these days. Absolutists would lead you to believe that internet usage should be unregulated with everyone able to stream, download, post anything anywhere, without respect for intellectual property or fair usage; while on the other side of the fence, service provider dogmatists would like to control, apportion, prioritize and charge based on their interests.

Of course, the reality is a little more nuanced. A better understanding of the nature and evolution of traffic, as well as the cost structure of networks help to appreciate the respective parties' stance and offer a better view on what could be done to reduce the chasm.

1. From a costs structure's perspective first, our networks grow and accommodate demand differently whether we are looking at fixed line / cable / fibre broadband or mobile. 
1. In the first case, capacity growth is function of technology and civil works. 
1. On the technology front, the evolution to dial up / PSTN  to copper and fiber increases dramatically to network's capacity and has followed ~20 years cycles. The investments are enormous and require the deployment, management of central offices and their evolution to edge compute date centers. These investments happen in waves within a relatively short time frame (~5 years). Once operated, the return on investment is function of the number of users and the utilisation rate of the asset, which in this case means filling the network with traffic.
2. On the civil works front, throughout the technology evolution, a continuous work is ongoing to lay transport fiber along new housing developments, while replacing antiquated and aging copper or cable connectivity. This is a continuous burn and its run rate is function of the operator's financial capacity.
2. In mobile networks, you can find similar categories but with a much different balance and impact on ROI.
1. From a technology standpoint, the evolution from 1G to 5G has taken roughly 10 years per cycle. A large part of the investment for each generation is a spectrum license leased from the regulating / government. In addition to this, most network elements, from the access to the core and OSS /BSS need to be changed. The transport part relies in large part on the fixed network above. Until 5G, most of these elements were constituted of proprietary servers and software, which meant a generational change induced a complete forklift upgrade of the infrastructure. With 5G, the separation of software and hardware, the extensive use of COTS hardware and the implementation of cloud based separation of traffic and control plane, should mean that the next generational upgrade will be les expensive with only software and part of the hardware necessitating complete refresh.
2. The civil work for mobile network is comparable to the fixed network for new coverage, but follows the same cycles as the technology timeframe with respect to upgrades and changes necessary to the radio access. Unlike the fixed network, though, there is an obligation of backwards compatibility, with many networks still running 2G, 3G, 4G while deploying 5G. The real estate being essentially antennas and cell sites, this becomes a very competitive environment with limited capacity for growth in space, pushing service providers to share assets (antennas, spectrum, radios...) and to deploy, whenever possible, multi technology radios.

The conclusion here is that you have fixed networks with long investment cycles and ROI, low margin, relying on number of connections and traffic growth. The mobile networks has shorter investment cycles, bursty margin growth and reduction with new generations.

What does this have to do with Net Neutrality / Fair Share? I am coming to it, but first we need to examine the evolution of traffic and prices to understand where the issue resides.

Now, in the past, we had to pay for every single minute, text, kb received or sent. Network operators were making money of traffic growth and were pushing users and content providers to fill their networks. Video somewhat changed that. A user watching a 30 seconds video doesn't really care / perceive if the video is at 720, 1080 or 4K, 30 or 60 fps. It is essentially the same experience. That same video, though can have a size variation of 20x depending on its resolution. To compound that issue, operators have foolishly transitioned to all you can eat data plans with 4G to acquire new consumers, a self inflicted wound that has essentially killed their 5G business case.

I have written at length about the erroneous assumptions that are underlying some of the discourses of net neutrality advocates. 

In order to understand net neutrality and traffic management, one has to understand the different perspectives involved.

• Network operators compete against each other on price, coverage and more importantly network quality. In many cases, they have identified that improving or maintaining quality of Experience is the single most important success factor for acquiring and retaining customers. We have seen it time and again with voice services (call drops, voice quality…), messaging (texting capacity, reliability…) and data services (video start, stalls, page loading time…). These KPI are the heart of the operator’s business. As a result, operators tend to either try to improve or control user experience by deploying an array of traffic management functions, etc...
• Content providers assume that highest quality of content (8K UHD for video for instance) equals maximum experience for subscriber and therefore try and capture as much network resource as possible to deliver it. Browser / apps / phone manufacturers also assume that more speed equals better user experience, therefore try to commandeer as much capacity as possible. 

The flaw here is the assumption that the optimum is the product of many maxima self-regulated by an equal and fair apportioning of resources. This shows a complete ignorance of how networks are designed, how they operate and how traffic flows through these networks.

This behavior leads to a network where resources can be in contention and all end-points vie for priority and maximum resource allocation. From this perspective one can understand that there is no such thing as "net neutrality" at least not in wireless networks. 

When network resources are over-subscribed, decisions are taken as to who gets more capacity, priority, speed... The question becomes who should be in position to make these decisions. Right now, the laissez-faire approach to net neutrality means that the network is not managed, it is subjected to traffic. When in contention, resources are managing traffic based on obscure rules in load balancers, routers, base stations, traffic management engines... This approach is the result of lazy, surface thinking. Net neutrality should be the opposite of non-intervention. Its rules should be applied equally to networks, devices / apps/browsers and content providers if what we want to enable is fair and equal access to resources.

As we are contemplating 6G, and hints of metaverse, augmented / mixed reality and hyper connectivity, the cost structure of network infrastructure hasn't yet been sufficiently decoupled from traffic growth and as we have seen, video is elastic and XR will be a heavy burden on the networks. Network operators have essentially failed so far to offer attractive digital services that would monetize their network investments. Video and digital services providers are already paying for their on premise and cloud infrastructure as well as transport, there is little chance they would finance telco operators for capacity growth.

Where does this leave us? It might be time for regulators / governments to either take an active and balanced role in Net Neutrality and Fair share to ensure that both side can find a sustainable business model or to forfeit spectrum auctions for next generations.