Net neutrality debate may be focused in the wrong part of the ecosystem

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Earlier this week, media outlets lit up with news that Apple (Nasdaq: AAPL) might be negotiating a deal with Comcast (Nasdaq: CMCSA) to stream the cable giant's linear TV and on-demand video across its Apple TV device. A number of articles arose almost as quickly analyzing whether or not this would actually happen, and why.

Bookending that news, of course, was the reaction to Netflix (Nasdaq: NFLX) CEO Reed Hastings' comments in a Friday blog post regarding peer-to-peer networking. Level 3's (NYSE: LVLT) regulatory counsel Michael Mooney supported the idea that ISPs have too much control over Internet traffic, while AT&T's (NYSE: T) Jim Ciccone shot back that Hastings was making a "self-righteous" demand for ISPs to bear the cost of carrying Netflix's traffic.

The rumors around Apple TV can't be completely dismissed. For one, Netflix has been trying to engineer a more favorable ecosystem through deals with network owners like Comcast. For another, demand for high-quality online video is only going to rise--and every worthwhile player in the market knows they need to carve out network space for that content delivery, particularly in the last mile.

But the biggest traffic issues, and the deals put together to prevent them, may be taking place well before the last mile.

Last weekend, Tim Fernholz and David Yanofsky put together a very clear explanation at Quartz on net neutrality and how the Internet itself works today.

"(A) growing series of business relationships that come before the last mile might make the net neutrality debate obsolete: The internet problem slowing down your Netflix, video chat, downloading, or web-browsing might not be in the last mile," the authors wrote. "It might be the result of a dispute further up the line."

What's happening in the network? Beyond the viewer numbers--NCAA's March Madness tournament is blowing through viewing records for its online app, for example--technology is marching forward, with 4K, HEVC, MPEG-DASH and similar high-resolution standards becoming more prominent in the market this year.

According to Akamai's Kurt Michel, 4K can require as much as 15 Mbps of throughput to be delivered reliably. So the need for reliable high-speed networks and solid interconnects, already a premium for content delivery providers, is just going to get more urgent.

Providers have three main options to get this reliability, Fernholz and Yanofsky explain. They can build their own proprietary network, like Google (Nasdaq: GOOG) is doing in areas like Kansas City and Austin; they can pay for transit over another company's backbone, like Cogent Communications; or they can use a content delivery network (CDN), which stores the content at a node near ISPs to allow for faster last-mile delivery.

Getting reliable high-speed transport for high-bandwidth video takes a lot of investment no matter which path a provider chooses. So regardless of how this latest kerfluffle shakes out, don't expect the net neutrality debate to go away anytime soon.--Sam