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No, cable TV is not a net neutrality violation. Yet.
People really enjoy putting "challenges" to net neutrality advocates. They usually consist of question-begging, or of inapt metaphors: "If the Internet is just like FedEx, why can't I pay for express shipping?!" "How would *you* like it if you had to pay your neighbor's electricity bill!" What about CDNs? And so on.
But some people ask more sophisticated questions. Rich Greenfield of BTIG is an interesting industry analyst, and he recently asked whether the existence of cable TV *per se* constitutes a violation of net neutrality. After all, it’s true that cable programming is “prioritized” in a sense over programming that is not carried by cable. Here’s a link to Rich’s piece; free registration is required.
This issue has come up before in the net neutrality debates. For instance, PK even mentioned it in 2011, when we wrote that "a cable TV service, by its very architecture, receives preferential treatment over competing online video services in the form of dedicated bandwidth on the last‐mile connection to a customer's home, which implies a certain quality‐of‐service guarantee."
So I think it’s finally worth explaining the various reasons why cable TV, even when it’s carried on the same wire that also provides broadband, does not violate net neutrality. That being said, it’s also worth pointing out that when the same provider offers both cable TV service and broadband service, there can be competitive issues—different issues than net neutrality, but worth considering nonetheless.
This is a long post that will walk though a number of arguments, some of them fairly technical. Since PK cares so much about net neutrality, we think it’s important to understand exactly what net neutrality does (and does not do), whether it comes to cable TV, CDNs, interconnection, or any of the other issues that may be related to, but distinct from, net neutrality. It should also be clear that just because something is not a net neutrality problem, doesn’t mean that it can’t be a problem. However, net neutrality advocates should have a clear idea of its limits, so they can effectively address consumer harms wherever they may arise.
It's not on the Internet.
There are plenty of forms of communication that don't take place on the Internet. A chat with a friend over coffee. Dedicated satellite feeds. Point-to-point fiber connections. AM radio. None of these things violate net neutrality. So why would the existence of cable TV?
If there is a special “problem” with cable TV, it is not that it delivered in a way that bypasses normal Internet delivery. It’s that it’s delivered on the same wire as broadband Internet access. Broadband would be able to use more bandwidth if the frequencies currently used to deliver TV were given over to it, instead. Internet users would have faster speeds, and might even be able to watch more and higher-quality online video. Offering two disparate services on the same wire means that improvements to one can come at a cost to the other.
We need to analyze this "same wire" issue carefully. But the fact that a service is not offered over broadband, without more, is not a problem.
Cable TV was there first.
Yes, cable TV and broadband share the same wire. But it's not like bandwidth was taken away from the Internet to make room for TV. They are distinct services with a separate history. This applies to new services (like Google Fiber or U-Verse), too. These were launched in a market where people came to expect both the TV and broadband service. Just as it wouldn't have been realistic, once broadband was invented, to require that cable operators shut down their TV services, it wouldn't be realistic to tell a new entrant that it can't offer a TV product to compare with the cable incumbent's.
If an ISP proposed to take bandwidth away from broadband to give it over to some new kind of service, this might be a problem. It might lose the incentive to invest to make broadband better, and new services might even start to make it worse, by starving broadband of the bandwidth it needs to have the performance that users have come to expect. But this kind of danger is lessened when it comes to a service that precedes broadband.
Cable TV is separately regulated.
The above rationale, which suggests that cable TV is simply "grandfathered in," is not completely satisfying. But even if cable TV (and some kinds of landline phone service) are merely exceptional, grandfathered-in cases, the fact that they are separately regulated means they provide less cause for concern. You know how the net neutrality argument keeps coming back to "Title II"? Well, cable TV already has a Title of its own, Title VI. The ways that states, municipalities, and the FCC have regulated cable TV in the past have been less than satisfying. Prices are high, and customer service is poor. But if you're going to treat a service as an "exception" to net neutrality, it helps that it's a service that already has its own oversight structure.
Cable TV meets the only reasonable definition of a "specialized service"
The 2010 Open Internet rules had a broad exception for "specialized" or "managed" services. The exception was too broad, because the FCC declined to define these terms. It would undermine the purpose of any net neutrality rule if an ISP could just redefine any alleged violation as a specialized service.
But there is a way to allow for specialized services when they are appropriate without harming the Internet. We just need to think about what they should be.
First, a specialized service might just be some service that uses IP networking or even connects to the Internet in some way, but which is not "Internet access." A good example is Amazon's Whispersync. Some e-ink Kindles come with built-in cellular networking that is used for downloading and syncing ebooks. This is not a net neutrality violation. When you buy a specialized device that connects to the Internet you're not buying a generalized communications service like you are when you buy Internet access.
It has always been the case that whether something is a common carriage service depends on the "offer" that a provider makes to the public. A pizza shop offers to sell you pizza, and a common carrier “offers” to carry your communications from one place to another. Let me just quote from the FCC in 1966: "[T]he fundamental concept of a communications common carrier is that such a carrier makes a public offering to provide, for hire, facilities by wire or radio whereby all members of the public who choose to employ such facilities may communicate or transmit intelligence of their own design and choosing...." This same reasoning has been used to distinguish common carrier communications services from non-common carrier communications services for decades. The FCC made a mistake when it decided to abandon this test in the early 2000s, and advocates of "reclassification” like Public Knowledge simply want the FCC to go back to its simple and technology-neutral test.
Second, a specialized service might be some non-Internet service that is offered over the same wire that Internet access service is provided by, and which *needs* to be treated separately, because it wouldn't work otherwise.
The Internet keeps successfully doing things that just a few years ago people said was impossible--such as real-time gaming, or high-definition video streaming. But the Internet is not magic. There is still room for other kinds of technology.
One of these is delivering high-quality live video feeds to many, many viewers simultaneously. It is very hard to do this on the Internet. Think of the problems we still face with live-streaming events such as the Presidential inauguration or the Olympics. On the Internet, for each person that wants to watch a video online, you need more bandwidth. This adds up when lots of people want to watch something at once. There has to be a separate “transmission” for each viewer.
This is different than how other networks work. For instance, cable television is a broadcast technology. Each viewer tunes into the same transmission. Unlike the Internet, each new viewer doesn't use up more bandwidth. This is also true of TV delivered over fiber (like FiOS)--which usually uses a variant of cable technology--and even "IPTV," which uses a variant of the Internet protocol known as "multicast." Whether it's IP multicast, LTE broadcast, FM radio, satellite transmissions, or cable TV, one-to-many technologies are very bandwidth-efficient. They have a future.
(There's an important side point to be made here: just because something uses the Internet Protocol ("IP"), doesn't mean it has anything to do with the Internet. The Internet happens to be a fairly well known system of networks that all use IP to communicate with each other. But I can set up an IP network in my home or office and not connect it to the Internet. A specialized service may or may not use IP and it shouldn’t affect the analysis either way. Since "IP" can be used on networks that are not the Internet and because it also means "intellectual property" I wish we had a better term, but we're stuck with it.)
This is not to say there are not competition, or even discrimination problems that could arise when a provider offers both broadband access--which can be used to access streaming video of some kind--and a pay TV product. The danger is particularly acute when the same services are offered over the same wire, such as with cable, IPTV like U-Verse, or FiOS. Bandwidth that is dedicated to one service has to come out of the other service and there may be an incentive for a provider to discriminate against Internet access *per se* in favor of some other service; for example, by dedicating resources to improving the non-Internet service instead of toward improving broadband. A provider can also dynamically take capacity away from the Internet and allocate it to video—giving its proprietary video service an almost-insuperable advantage over competing online service. But while discrimination against all of the Internet at once in favor of some other service would be a problem, it would not be a net neutrality problem. Net neutrality is about ensuring that Internet services can compete on a level playing field with each other, not about protecting the Internet from all of the many threats it faces. (Unfortunately, there are a lot of them.)
The best way to address this particular danger is to make sure that services that are offered over the same wire as broadband access, but are not broadband services, have good technological reasons for being treated differently. In other words, they should be analyzed as “specialized services.” Right now, a service that offers hundreds of live streams of HD video meets this test.
This does not mean that a provider can take a normal on-demand online video app (like XFinity On Demand) and exempting it from bandwidth caps by calling it a "managed service" or part of "cable TV.” We know that on-demand video services work just fine over the Internet, and they do not benefit from the same “one-to-many” efficiencies as cable TV.
While the issue of discrimination against the Internet at large in favor of non-Internet services is perhaps more acute when services are offered over the same wire, it is by no means *only* present there. For example, suppose that AT&T is successful in its bid to buy DirecTV. It may have a similar incentive problem (invest in satellite TV, not in broadband) to what a cable TV provider might have. Satellite TV is not on the same wire (or spectrum) as broadband, but there may always be a temptation for a service provide to emphasize its own proprietary services over the open Internet.
It may be the case that someday soon, technology will improve to the point where one-to-many distribution does not offer a real advantage over one-to-one services. This may change the analysis for "same wire" services like cable TV. But we're not there yet.
Net neutrality advocates have to spend a lot of time explaining what net neutrality is and isn't. And then explaining that just because something would fall outside of net neutrality, that doesn't mean it's automatically ok forever and free of competitive concerns. Cable TV is in this category.
Image credit: Flickr user Rob Pegoraro