FCC Will Probe Managed Services As Part of Net Neutrality Push

600px-US-FCC-Seal.svgUpdated: Both the telecommunications industry and proponents of a free and open Internet have put the rhetoric machine into overdrive in the run-up to the release of a series of proposed rules on network neutrality by the Federal Communications Commission tomorrow.  Telecommunications firms are even getting their employees involved (a fairly common tactic with AT&T).

Sources in Washington tell me that the hyperactive response is driven not by the FCC’s plan to codify the four broadband principles regarding non-discrimination of certain types of traffic and add two more, but by the fact that the org plans to ask a bunch of questions about managed services that travel over carriers’ pipes.

In general, managed services are ill-defined, but most carriers will tell you they include features that customers pay extra for and as such, require guaranteed levels of service — things like IPTV or virtual private networks back to a corporate office. For example, AT&T (s T) allocates a chunk of its pipe for delivering IPTV and won’t let other web traffic interfere with that. In practice, this means a set percentage of AT&T’s pipes are walled off from regular web traffic so customers paying for the telco TV product get a great service. But it also means that when the percentage allocated for the regular web is congested, regular service degrades. If a subscriber is trying to watch web video such as Hulu, for example, they may get a subpar experience. Update: AT&T tells me the “walls” can be porous if there is enough capacity on the IPTV network and the best-effort traffic needs more, it will allow the best-effort traffic to bleed over into the IPTV traffic.

However, this practice isn’t inherently bad, as no one paying for telco TV wants to let VoIP calls or Hulu interfere with the Big Game when they’re watching it on U-verse. But the FCC apparently wants to know how far carriers can take that. If taken too far, then carriers could protect their revenue streams and get around any net neutrality provisions by allocating more of their network for managed services rather than for the public Internet. The FCC is worried that a neutral public Internet that gets forced through a smaller pipe so that carriers can invest more on upgrades and capacity for managed services won’t be able to support the innovations of tomorrow.

In his speech last month before the Brookings Institution, FCC Chairman Julius Genachowski made mention of the managed service issue, saying:

“I also recognize that there may be benefits to innovation and investment of broadband providers offering managed services in limited circumstances. These services are different than traditional broadband Internet access, and some have argued they should be analyzed under a different framework. I believe such services can supplement — but must not supplant — free and open Internet access, and that we must ensure that ample bandwidth exists for all Internet users and innovators. In the rulemaking process I will discuss in a moment, we will carefully consider how to approach the question of managed services in a way that maximizes the innovation and investment necessary for a robust and thriving Internet.”

So we expect the FCC to ask some probing questions aimed at exposing how the carriers view this managed services, as well as how, from a technical perspective, they currently wall such services off. In his speech at the Supercomm trade show today in Chicago, Verizon (s vz) CEO Ivan Seidenberg not only spoke out against net neutrality, but cited a handful of offerings that could be optimal managed services, saying:

“If we can’t differentiate between packets, we can’t prioritize emergency communications for first-responders…telesurgery or heart-monitor readings for digital medicine…videoconferencing over spam for telecommuters. The truth is, we have never provided ‘dumb pipes’ — and as more and more commerce takes place on the Internet, customers will rely even more on the quality of service, reliability and product differentiation that network operators provide.

More broadly, if we can’t earn a return on the investments we make in broadband capacity, our progress toward a connected world will be delayed, if not halted altogether. This is ironic, in that the same digital elites and Silicon Valley investors who advocate net neutrality regulations are also pushing for faster mobile connections, more broadband deployment, and faster progress toward a 100-megabit society.”

The FCC’s attention on managed services is an effort to make sure that the fat pipes the carriers are building will be available for innovations that aren’t delivered through a carrier-created and controlled managed service. The threat of ensuring a quality-of-service guarantee for some offerings means, at its heart, that certain traffic is shunted aside when traffic deemed to be a priority comes through.