With increasing signs that the telecommunications policy reform effort in Congress is stalled, there is an opportunity for policymakers to go back to the drawing board on net neutrality. From my vantage point, that’s a good thing.
The debate in Congress marked one of the most amusing telecom policy debates in a long time. Just Ask A Ninja or Jon Stewart. The debate was, however, short on careful policy analysis.
Take the Wyden bill, for starters. The bill prevented network owners from making available tiered levels of service for a fee because it feared a “chilling effect on small mom and pop businesses that can’t afford the priority lane, leaving these smaller businesses no hope of competing against the Wal-Marts of the world.” To someone schooled in antitrust principles (like me), this fear smacks of the 1960s “big is bad” mantra that cost consumers big time—i.e., prevented efficiencies of the kind that Walmart and Costco use to save consumers money.
Looking even deeper at the economics behind a system of “pay-to-play” is even more revealing. There are costs of upgrading broadband networks and the question that cable and telephone companies are asking themselves is how they will pay for it. Under the Wyden bill, the answer is—charge consumers. But is it necessarily more efficient only to charge consumers and not producers? In short, there may be a series of reasons behind why different pricing strategies will be more effective at identifying those willing-to-pay more—and thereby making services available cheaper to those willing-to-pay less. (This is a little like popcorn at the movies—those who do buy it are, in effect showing their willingness to pay more for the movie experience, and subsidizing those not willing to pay more.)
The real concern of net neutrality advocates should not be insisting on a single tiered Internet that—at least for those who have heard of Akamai already know—is a fantasy. (For those who are unfamiliar with Akamai, its caching services provide enhanced performance to the big companies who can afford to pay for them.) The real concern is that with only two broadband providers offering service, there remains a risk of anticompetitive conduct that understandably makes policymakers nervous. The question is thus, in an environment where there are real benefits from improving network performance and possible efficiencies from alternative pricing strategies, what should policymakers do. For Rob Atkinson and I, the answer is embrace a third way—i.e., a course different from the “do little” approach of the Stevens bill and the “no tiering” approach of the Wyden bill. In particular, we advocate transparency requirements (to enable consumers to be their own protectors); a competition policy based regime that would provide after-the-fact oversight of non-discriminatory conduct (evaluating whether a legitimate business reason existed for it); and a requirement that the best efforts Internet continue to evolve (in bandwidth) so those unable to pay for prioritization are still able to develop and deploy new services. For the details on our proposal, see here.
Your analysis seems to be
Your analysis seems to be overlooking a few major points in the issue of Telecommunications Reform.
In your “three-part Third Way Solution” you have entrusted the FCC with first of all Policing the internet and being the agency which would have jurisdiction and authority of “overseeing the use of discriminatory access arrangements”. Currently the Senate Commerce Committee is calling for an investigation of the FCC for suppressing FCC studies which were not favorable to big media mergers. In response, Martin seems to be pushing through the approval of the AT&T/BellSouth Merger, and since the lines between Media and Telecommunications are blurring, it should concern all of us that the agency in charge of overseeing the fairness of our media and telecommunications networks is very possibly suffering from corruption.
This is not the first time the FCC has come down on the side of the Telecomms at the expense of the Consumer. Take Local Loop Unbundling. This is a regulation that is good for the consumer and is a regulation that was put in place to encourage competition across the Telecomm network. It’s also the regulation that is in place in pretty much every country ahead of the US in broadband deployment. In more than one instance Verizon has requested that the FCC undo local loop unbundling in a Verizon controlled part of the network and, by FCC inaction on the issue, Verizon has gotten just that, to the detriment of consumers in every one of those markets.
http://www.lightreading.com/document.asp?docid=103202 http://www.lightreading.com/document.asp?docid=91238
This has been a pattern established over many years. Bruce Kushnick of Teletruth has documented pretty much all of it and Teletruth has presented it as a complaint to the FTC.
http://www.newnetworks.com/FTCcomplaintSBCVerizon.htm
Your “Third Way Solution” also says that”Congress should provide financial incentives to companies investing in broadband networks (allowing first-year expensing of broadband investments and exempting broadband services from federal, state, and local taxation), but only if broadband providers provide a best-efforts, open Internet data pipe to their customers with average speeds at least as fast as the evolving FCC definition.”
First of all, the FCC definition of broadband as anything above 200 Kbps is laughable. This is a figure that they changed so that they could claim that their Telecomm pals were deploying broadband and beef up the percentage figures. From the NiemanWatchdog.org, “However, this definition is a politically-driven embarrassment for technologists, the equivalent of two tin-cans with string.” http://www.niemanwatchdog.org/index.cfm?fuseaction=Ask_this.view&askthisid=186
Secondly, those financial incentives you suggest should be given to the telecomms were already given to these same Telecommunications companies to the tune of approximately $200 Billion (approximately $2000 per household across the US) via tax incentives granted by the Telecommunications Act of 1996— and the Telecomms never built the network. They swindled the US taxpayer and the FCC let them— the FCC was the agency of oversight on this past fiasco as well. Which also begs the question of who owns those pipes Ed Whitacre has claimed are his.
Personally, I think the entire telecomm infrastructure should be handed over to local and state municipalities, and, with local loop unbundling regulation restored, then these telecomms and any other ISP or VOIP or whatever who wants to use those pipes can lease use. With any company allowed to lease use, broadband competition will flourish as it does in all the countries ahead of us in broadband deployment, and fiber to the home will finally be built in the US. That’s what’s worked so well elsewhere. Do we have to wait until the US is 25th in broadband deployment before this happens?
There is also a technical issue here that you don’t seem to be addressing. More than one article has been written by the techies about how discriminating against certain types of traffic will degrade the whole network and will even affect that “premium” traffic that the telecomms expect people to pay more for if they have their way. “Comcast is already non-neutral, selling a premium service to allow customers to pass video or encrypted traffic without interference, and … the state of Washington had to move thousands of its employees off of Comcast because of their interference with the state’s VPN.”
http://computerworld.com/blogs/node/3140
Many of the Network Specialists have stated that it’s cheaper to build bigger pipes than alter the ones that are there to “packet sniff” and prioritize. But then Cisco and the other hardware companies wouldn’t be able to sell as much equipment to the Telecomms, which the Telecomms get tax breaks on buying and depreciation on owning.
The last issue your “Third Way Solution” fails to address is the DMCA, which states, in reference to ISPs and Copyright Infringement Liability Limitation: “In order to qualify for this limitation, the service provider’s activities must meet the following conditions: 1. The transmission must be initiated by a person other than the provider. 2. The transmission, routing, provision of connections, or copying must be carried out by an automatic technical process without selection of material by the service provider. 3. The service provider must not determine the recipients of the material. 4. Any intermediate copies must not ordinarily be accessible to anyone other than anticipated recipients, and must not be retained for longer than reasonably necessary. 5. The material must be transmitted with no modification to its content.”
It would seem to me that if the Network isn’t Neutral and the Telecomms do sniff based on anything other than filetype or protocol, then the Telecomms have opened themselves to possible liability by virtue of that very discrimination they say they need in order to build out the network we’ve already paid for.
Thanks for writing the first
Thanks for writing the first sensible piece on net neutrality ever to appear on Public Knowledge, Professor Weiser. You’re correct that we need transparency, not the overbearing regulations proposed by Wyden, Markey, and Snowe-Dorgan that criminalize legitimate service offerings.
Regarding the comment by bj novak, there have been exactly no articles by network engineers knowledgeable in the traffic management field arguing that over-provisioning eliminates the need for QoS, so the statement that “Many of the Network Specialists have stated that it’s cheaper to build bigger pipes than alter the ones that are there to “packet sniff” and prioritize.” is simply false.
The pro-regulation arguments that have been put forward by people with some sort of networking background come either from very high levels of network architecture abstraction, relying on essentially religious principles, or they’re dated and obsolete. The famous Internet2 study, for example, was conducted 5-7 years ago with equipment that lacked the capability to do QoS identification and enforcement in hardware, so it’s worse than useless.
The really knowledgeable network protocols and traffic people recognize that over-provisioning is neither cheap nor effective in a world of constantly increasing appetites for bandwidth, which is why all the manufacturers of network equipment oppose new regulations on Internet routing practices.
The network neutrality argument comes down to this: “In the old days we didn’t have this QoS stuff, so we won’t need it in the future.” It’s like saying Great-grandpa was happy with dirt roads for his horse-drawn cart so we don’t need any fancy freeways today, just a very silly argument.