Post

A Network Neutrality Meme That Will Not Go Away

September 26, 2012 , , , ,

Recently, arguments against network neutrality as a
“solution in search of a problem” have resurfaced (recently subscribed to by Mitt
Romney’s campaign
, recently argued by Verizon
in its challenge to the Open Internet Order, and also argued here
and here).
People who make this argument essentially claim either (1) discrimination predicted
by Public Knowledge (and the FCC) will never actually come to pass, or (2)
discrimination can be benign or even beneficial. For the reasons set out below,
these arguments are not persuasive, especially in light of recent examples of
discrimination by service providers.

Network
Discrimination Is Happening Now

Companies have already engaged in the exact behavior that
created the need for an open Internet rule. For example, AT&T recently decided to
discriminate regarding which customers can use FaceTime over its cellular
network—only those on AT&T’s premium “mobile share” plan. This looks like
blocking a competing application, a violation of the rules in the Open Internet
Order.

Another open Internet violation occurred when Comcast exempted
its own Xbox-based Xfinity video service from data caps. This incented Xbox
users to use Xfinity (Comcast’s service) rather than competing services such as
Netflix, Hulu, Youtube, and other video sites. This looks like discrimination
against a competing application, another rule violation.

There has been a history of other discriminatory actions,
including Comcast
blocking BitTorrent
and Madison
River Communications blocking VoIP
. There is no shortage of examples of
discrimination by providers. We’ve found the problem, and it is right here.
Thus, the idea that network neutrality is a solution in search of a problem
lacks merit.

Discrimination
Outlawed by the Open Internet Order Is Harmful to Consumers

Discrimination by Internet Service Providers could be seen
in two lights: it could benefit consumers by providing Quality of Service when
it is most needed and by more accurately meeting the demands of users;
alternatively, it could be used as a way to stifle innovation, shut out
competition, and harm users that rely on, or would benefit from, such
innovation (the latter could be achieved intentionally or unintentionally and
it does not matter—the harm is there regardless). By requiring a neutral
Internet, the FCC decided that the benefits provided by enhanced Quality of
Service et al. were outweighed by the benefits provided at the edges of the
network by a truly open platform.

This was the correct determination. We are not talking about
price discrimination here (though that is also suspect), we are talking about
discrimination based on the use of
the network. While price discrimination could arguably reduce deadweight losses
by requiring those who can pay more to do that, use-based discrimination is
much more problematic. There is no value proposition for the user with
use-based discrimination—the ISP either intentionally chooses the winners and
losers based on whether that application competes with the ISP’s other services,
or does so unintentionally, but it still stifles innovation.

For instance, competitive e-mail services might speed
through because ISPs receive minimal revenue from email. But video applications,
TV-online applications, or VoIP might be blocked or degraded to the point of
nonuse in order to pad the provider’s bottom line. Alternatively, the ISP
blocks something for “reasonable network management” purposes, but the
management is not reasonable, and end-users lose the benefit of that
innovation. Society benefits much more from substantial and significant innovation
at the edges of the network rather than a more finely-tuned service plan.

The FCC devoted pages and pages of its Open
Internet Order
to the fact that carriers have a monetary incentive to block
or degrade competing applications. Barbara van Schewick made a similar argument
in her book Internet Architecture and Innovation. In addition, technologies
like deep-packet inspection have made it incredibly easy for Internet Service
Providers (ISPs) to monitor traffic activity and discriminate based upon it.
Users, meanwhile, would not know why a particular website or app would be
blocked or slowed. High switching costs (or lack of competition) mean these
bottleneck ISPs have little to lose by blocking or degrading traffic since
users will not, or cannot, switch providers. And let us not forget, Comcast, an
ISP, owns NBC, a content company.
Regardless of whether you believe NBC is run “independently,” Comcast has a
clear and rational incentive to discriminate in favor of NBC content.

Verizon’s Assertions

Verizon also argues that the Open Internet Order is not
solving any real problems (pages 46-47 of its brief)
when it says “[h]ere . . . the FCC is acting alone, without evidence of an
actual problem. . . . [T]he FCC . . . acknowledges that the problems it fears
are hypothetical.” As of the time the FCC passed the Open Internet Order, there
were already at least two instances of service providers blocking applications.
These justified, on their own, the FCC’s actions because of the harmful
potential of the bottleneck-power over content that ISPs exhibited. Subsequent
developments have only further exemplified the need for openness standards and
neutrality requirements, as more ISPs continue down the path of stifling
competition and editing-out portions of the Internet rather than allowing a
level playing field for all applications and users at the edges.

There is an inherent dissonance in Verizon’s claims. First,
it claims that it is like a newspaper and has the right to edit the Internet.
Then, it claims that FCC is hallucinating the problem in the first place. But,
the very fact that Verizon is claiming that it should be allowed to edit the
Internet (as a first amendment “speaker”) means that this problem that the FCC
spares no words in analyzing actually does exist. In other words, the FCC
predicted correctly.

Conclusion

It is not secret that the public Internet has been
unbelievably successful since its inception. It has flourished because it was,
and is, neutral, allowing for maximum innovation at the edges. The Open
Internet Order aims to keep it that way rather than gamble on promises made by
the ISPs of pricing and network innovation. The FCC made the correct choice.