Over the Virtual Top. Digital Service Value Chain Disintermediation Implications for Hybrid Heterogeneous Network Regulation
Year: 2014

An over the top (OTT) application is an app or service providing a product over the Internet. OTT media and communication services generally are more adaptive to user needs, networks, and devices as well as lower in cost than traditional delivery methods, typically for video content. This paper reviews how Fortune 50 firms and the federal government architecturally organize their information technology and network services using a cloud operating model to create value, over the virtual top, today. Enterprise cloud services offer content, service, and things in an infrastructureless overlay network, Over the Top to create innovative products and services. As business investment in value creating activities is increasingly focused on cloud services and 'big' data analytics, might regulators inadvertently inhibit innovation through mis regulation of some of the constituent parts of those services? Disintermediation of digital service value chains including through OTT video value chains continues to accelerate, with legacy video network and service supply chain partners and competitors naturally vitally interested. For academics and regulators, the view inside real, hybrid, virtualized heterogeneous networks provided in this paper may be helpful to identify policy and regulatory concerns OTT (over the top) regulation of digital services including OTT video, might or might not address. The paper suggests Amazon cloud services from AWS are technically the same suite of computational, service, and software components whether used by Netflix or any other cloud operating model enterprise; and differing regulatory treatment of the same service must be carefully scrutinized for unintended (perhaps intended by some) negative consequences. This paper suggests continued regulatory treatment of Internet services as information services, which is the default (Title 1) regulatory approach to OTT video, will remain most appropriate as cloud services restructure industry value chains. Competition policy monitoring of firms in dominant positions in specific information services markets, such as Netflix and Google YouTube, and in other sectors, Comcast and Verizon Wireless, is also suggested. Legislative or regulatory intervention in hybrid heterogeneous networks of cloud to edge services for Internet of Things and edgeware applications markets would be premature, beyond the routine monitoring of firms in dominant positions. Since none of them or anyone else is dominant in the next generation of technologies and markets now emerging across clouds and things, Over the Virtual Top. The evolving broadband ecosystem naturally raises regulatory concerns and policy issues also far beyond entertainment markets as digital service value chain disintermediation disrupts markets, and creates new ones. Enterprises deliver digital services orchestrated in hybrid clouds on virtual machines, using software defined networks and network function virtualization to enable firms to create, and tear down, heterogeneous, policy compliant services and networks in an instant as users wish, Over the Virtual Top, as this paper is titled. The paper concludes with regard to prospective regulation of over the virtual top services that: *Inhibiting ongoing digital service value chain innovation and discouraging investment in heterogeneous network infrastructure if value chain partner costs are raised in cloud and edge services is the likely unintended consequence of a not well thought out regulatory intervention in Over the Top digital service markets. Markets for Over the Top services and other managed cloud services, such as IPTV, can continue to evolve at their own pace if Title I information service treatment of Internet data is not tampered with. The paper suggestions advancing Open Internet compliant regulatory models towards conditions for further growth of Over the Virtual Top services for secure Internet of Things across heterogeneous networks and hybrid clouds that is well beyond the sterile and misleading 'network neutrality' regulator has no clothes or clue misconception. The paper concludes that even if well meaning, public sentiment and most policy analyses of network neutrality are generally far off the mark in that they are not grounded in true network design and use, such as that presented in this paper. In the real world, no one wants a neutral network full of spam, thieves, malware, and phishing emails. Maintaining the Open Internet is essential, which is much easier if the network neutrality red herring were to finally be seen for what it is, a distraction from the substantial technology, market, and Hybrid Hetnet regulation and policy challenges emerging from digital service value chain disintermediation.