Light Reading

FCC's 'Middle Ground' Already Under Attack

Carol Wilson
4/24/2014
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The reactions to the Federal Communications Commission (FCC) 's new net neutrality proposals have been swift and predictable even though those proposals haven't even been formally announced yet.

In advance of the expected announcement today, multiple news outlets are reporting that Chairman Tom Wheeler is circulating a proposal that seeks a middle ground. It would allow broadband ISPs to offer premium access to companies that want to carve out guaranteed high-speed bandwidth for their services, as long as such access was commercially available to all on reasonable terms.

Just the fact that anyone would be able to pay for premium services is drawing howls of protest and claims that both President Obama and Wheeler are reneging on their support for a free and open Internet. (See Wheeler Writes Regulatory Rubric and Wheeler Walks Line on Net Neutrality.)

In a Common Cause press release, former FCC Commissioner Michael Copps, now a special adviser to Common Cause's Media and Democracy Reform Initiative, said: "If true, this proposal is a huge step backwards and must be stopped. If the Commission subverts the Open Internet by creating a fast lane for the 1 percent and slow lanes for the 99 percent, it would be an insult to both citizens and to the promise of the Net."

The Wall Street Journal, which broke the story Wednesday , claims the winners in the net neutrality wars would be the broadband ISPs, who would be able to make money selling services to both consumers and content providers, and larger content companies such as Google (Nasdaq: GOOG), Apple Inc. (Nasdaq: AAPL), and Netflix Inc. (Nasdaq: NFLX), who can pay more to make sure their content reaches consumers with higher quality. (See Netflix CEO Wants 'Strong' Net Neutrality .)

But broadband providers, many of whom are announcing financial results this week, are being more measured in their responses.

"We have to see what's ultimately embedded in the proposal," said Time Warner Cable Inc. (NYSE: TWC) Chairman & CEO Rob Marcus. "At this stage, it's difficult to speculate until we know what's contemplated.”

Asked about possible new business models for offering Internet video content, Marcus said it was "premature" to discuss. "We'll have to see what new business models emerge," he said.

The new rules were made necessary by a January court ruling that struck down the FCC's previous rules in a challenge brought by Verizon Communications Inc. (NYSE: VZ). According to the Journal, the FCC would require broadband ISPs to disclose more information about their networks and would retain the right to decide on a case-by-case basis on the fairness and reasonableness of the commercial terms broadband ISPs have set. (See Net Neutrality Fight Not Over.)

UPDATE 11.30 AM EST: FCC Chairman Tom Wheeler is "setting the record straight" in a blog you can read here , in which he says the FCC's proposal to be circulated today would set "a high bar" for what is commercially reasonable. In addition, he says the agency will solicit other approaches to preventing "behavior harmful to consumers or competition by limiting the openness of the Internet."

— Carol Wilson, Editor-at-Large, Light Reading

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Ray@LR
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Ray@LR,
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4/24/2014 | 12:26:07 PM
Lobbyists
I wonder how much in lobby funds has gone into this?
sam masud
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sam masud,
User Rank: Light Sabre
4/24/2014 | 1:09:49 PM
Stick a fork in it
I'm betting the days of the open Internet are numbered. The FCC will triangulate and allow a fast lane, and then tell us the change is to ensure the Net stays open (sort of a variation of the Supreme's logic that money is free speech).
Carol Wilson
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Carol Wilson,
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4/24/2014 | 3:00:01 PM
Re: Stick a fork in it
I'm as tired of the polarizing talk about Net Neutrality as I am the polarizing talk around Obamacare, immigration reform and deficit spending. 

This can't be an all-or-nothing thing - either the Internet is free and open OR broadband ISPs can develop premium services for OTT content. 

Beating up on the FCC is pointless - these aren't evil beings seeking to undermine the Internet, they are human beings looking for a logical solution to a difficult problem. 

Are they heavily lobbied by those with deep pockets? No doubt. I'm not entirely convinced that means they are incapable of consumer protection. But maybe I'm just being naive. 

 
futurephil
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futurephil,
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4/24/2014 | 4:24:58 PM
Re: Stick a fork in it
I think you might find my most recent podcast refreshing. Martin Geddes and I discuss why both sides of the net neutrality debate need to agree that networks are trading spaces and time and quality are the most important measurements of those trades. 

We also discuss the second act of the musical "Oklahoma!," because there's an analogy that Geddes uses that really works. 

 
RitchBlasi
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RitchBlasi,
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4/24/2014 | 5:00:34 PM
Re: Stick a fork in it
Agree with you fully Carol.
RitchBlasi
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RitchBlasi,
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4/24/2014 | 2:54:02 PM
FCC
I guess likening this to paying for a first class ticket for the same flight is out of the question?

 
sam masud
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sam masud,
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4/24/2014 | 4:23:04 PM
Re: FCC
I think that's comparing apples to oranges. Air travel was not created so all could travel by air. By contrast, content on the Net was/is there for anyone who has access to it, either via dial-up or broadband.
Mitch Wagner
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Mitch Wagner,
User Rank: Lightning
4/24/2014 | 3:41:54 PM
Fundamental arguments
The fundamental arguments against preferential treatment are:

- It makes it harder for the next YouTube, Facebook, or Netflix to go into business, as they basically have to ask permission from service providers before reaching a noticeable size. 

- Consumers don't have choice because if you want a new service provider, you have to move. The overwhelming majority of Americans can get broadband from zero, one, or two providers. If they have two providers to choose from, one -- likely the cable company -- is far faster than the other. 

Are these arguments wrong?
Carol Wilson
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Carol Wilson,
User Rank: Blogger
4/24/2014 | 4:09:29 PM
Re: Fundamental arguments
Mitch,

I'm well aware of the fundamental arguments in favor of Net Neutrality.  There are arguments against it as well. For example:

The way networks work today, companies such as Netflix already pay more to have their content distributed close to the consumer on the fat pipes of CDNs - the new rules would only apply to the last mile networks. The argument can be made, and is, that allowing premium content services to traverse that last mile would give consumers access to higher quality content at more reliable speeds than today's best-effort Internet. 

Broadband service providers also make the argument that upgrading their networks to meet demand isn't free, and if the demand is being generated by OTT services that pay nothing for access, where is the financial incentive for them to upgrade? Unless the only answer is asking the consumer to pay more?

I'm sure that will make everyone happy. 

I'm not trying to take sides here, just state the arguments as I've heard them posed, for more than a decade now. The NN crowd didn't even see the FCC proposals before shooting them down. 
Carol Wilson
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Carol Wilson,
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4/24/2014 | 4:22:12 PM
Re: Fundamental arguments
Here is what Wheeler notes in his blog:

 

To be clear, this is what the Notice will propose:
  1. That all ISPs must transparently disclose to their subscribers and users all relevant information as to the policies that govern their network;
  2. That no legal content may be blocked; and
  3. That ISPs may not act in a commercially unreasonable manner to harm the Internet, including favoring the traffic from an affiliated entity.

I think it's at least worth a discussion and not all the moaning, groaning and wailing that has gone on in response to the WSJ account.
sam masud
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sam masud,
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4/24/2014 | 4:36:15 PM
Re: Fundamental arguments
Carol,

Perhaps, Wheeler is well intentioned (perhaps), but my fear is that once we start tampering with net neutrality through legalisms, we'll be on a fast and slippery slope towards a neutered Net. The fast lane concept is not the solution. Allowing " premium access to companies that want to carve out guaranteed high-speed bandwidth for their services" is saying some are more equal than others. That's not the way I, and probably a lot of other folks, would want the net to be operated.

 
Carol Wilson
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Carol Wilson,
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4/24/2014 | 4:43:13 PM
Re: Fundamental arguments
Sam -- if you are consuming video content over the 'Net, why wouldn't you want to be able to get guaranteed bandwidth? I would like to have that option. 

Carol
sam masud
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sam masud,
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4/24/2014 | 4:59:39 PM
Re: Fundamental arguments
Carol,

At a personal level, I'm more than fine with the way things are--I have about 30 megs of broadband access, I'm totally addicted to Youtube and Netflix and hardly ever have a hiccup. I think Mitch makes a good point in noting that once ISPs are allowed to fast lane, it'll no longer be a level playing field for the next Netflix to come along.

BTW, are ISPs (I'm talking about the big guys) actually losing money. I honestly don't know...

 
gconnery
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gconnery,
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4/24/2014 | 6:52:19 PM
Re: Fundamental arguments
@Sam,

 

No, ISPs are making money hand over fist already.  That's whats especially odd here.  Somehow they've been able to charge their customers (us) for higher speeds and upgrade their networks as they have to date, but that won't work going forward (yeah right) and they need to also charge somebody else too so they can make a fair wage.  Something like that.
Mitch Wagner
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Mitch Wagner,
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4/24/2014 | 4:26:33 PM
Re: Fundamental arguments
I'm not taking sides either, just trying to get a better understanding of the problem. 

My philosophy here -- as with some of the other hot-button political issues you listed -- is that there is no shortage of people eager to jump in and take sides on these issues, and there is a shortage of people trying to figure things out. 

How do you preserve innovation -- leave openings for the next YouTube or Netflix -- if the incumbents (the current YouTube or Netflix) have been able to raise the price as a barrier to newcomers?
Carol Wilson
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Carol Wilson,
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4/24/2014 | 4:41:17 PM
Re: Fundamental arguments
Mitch,

First, I think Phil Harvey, below, has it right but don't tell him I said so or it will go to his head. The guy has an incredibly huge ego already - don't tell him I said that either. 

I understand that the level playing field of a best-effort Internet works in favor of folks with no money but lots of good ideas. I think they will still have their opportunities even if Netflix is allowed to deliver its video content with guaranteed quality of service. 

And we, as consumers, can decide for ourselves if we want to pay more for the enhanced Netflix service -- because they will certainly pass along those costs -- or not. The market gets to decide if this succeeds or fails.

 
futurephil
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futurephil,
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4/24/2014 | 4:56:47 PM
Re: Fundamental arguments
Well, that's true. :) 

In this case, I'm merely amplifying what Geddes and others have been saying for a while.

Oh, if only the network was thought of as a dynamic trading space and someone, somewhere were building software to enable reallocation of network resources in real-time. We could call it something catchy, like SDN... 
futurephil
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futurephil,
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4/24/2014 | 4:42:55 PM
Re: Fundamental arguments
Yes, in the sense that those arguments both make false assumptions about the nature of networks. In other words, they're not measuring the right things on the network, so what they're asking for doesn't make sense. Happy to chat about it if you want.
Mitch Wagner
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Mitch Wagner,
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4/24/2014 | 4:53:17 PM
Re: Fundamental arguments
Interesting. Unpack, please? How are the arguments making false assumptions about the nature of networks, and measuring the wrong things?
futurephil
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futurephil,
User Rank: Light Sabre
4/24/2014 | 5:29:39 PM
Re: Fundamental arguments
You should listen to my podcast or phone me. But, in general, most net neutrality arguments assume that with more speed comes more quality. Or even the same quality. That's not necessarily true if the network is a shared resource and if the resources aren't being dynamically allocated.

And now, I need a beer.
NetZoo
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NetZoo,
User Rank: Light Beer
4/24/2014 | 6:57:42 PM
Re: Fundamental arguments
Having been at an SP that has tried before to create tiered service, I can tell you that the only way to get customers, on either end of the service, to buy a premium service is to make the basic service terrible.  If there were effective competition, then someone could switch if this were the case.  However, as was pointed out earlier on this thread, there is no real access competition in America.  This policy change will lead to:


1) A slow (or not so slow) slide toward a very poor "basic" internet, and a faster "premium" service.

2) Balkanization of the internet into different "QoS/CoS" pools with non-standard and incompatable mappings between networks for the "premium" services. This will encorage large players to have to buy service from all the providers to get good access to their customer.

3) Dramatically increased pricing power from the service providers with access footprints.

4) Decreased value of SPs without access networks.  They will move more into enterpise services.

 

 
brookseven
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brookseven,
User Rank: Light Sabre
4/24/2014 | 8:24:49 PM
Re: Fundamental arguments
Of course, I would already argue there is a content fast lane.  Cable calls that the non-DOCSIS channels.  U-verse calls it broadband TV.  So, I am stunned that anyone thinks there can be no premium content lanes since they exist already.  We were working with Verizon to do long tail content over Switched Digital Video over IP and give it higer QoS than Internet service.

Interesting thing about this....the cable and telcos PAY the content owners for the priviledge of being able to show this content.  Now the reality is that Netflix is not a content owner...its a content aggregator.  I wonder if the cable cos and telcos would be able to pull this with Hulu Plus.  I think not.

And the rest of the services (outside of video) do not care very much about these hyper lane QoS deals.

seven

 
Mitch Wagner
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Mitch Wagner,
User Rank: Lightning
4/28/2014 | 12:17:11 AM
Re: Fundamental arguments
I remember a discussion back when DSL was emerging to compete with cable. DSL advocates said the problem with cable is that you're sharing the Internet with all your neighbors. Cable advocates responded that in either case, you're sharing the Internet with ... the entire Internet. 

In your opinion (and the opinion of others reading this thread) would the US be better off if the FCC used the nuclear option and declared Internet service providers to be common carriers?
brookseven
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brookseven,
User Rank: Light Sabre
4/28/2014 | 10:02:13 AM
Re: Fundamental arguments
Mitch,

Universal Service was required to make phone service ubiquitous.  Can't see why it wouldn't be required for high speed BB.

I have said mandatory High Speed BB as a required service should be put in place and ISPs should be common carriers.

seven

 
SachinEE
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SachinEE,
User Rank: Light Sabre
4/28/2014 | 10:56:24 AM
Re: Fundamental arguments
The recent circulating proposal that seeks to allow broadband ISPs to offer premium access to companies that would like to curve out guaranteed high speed bandwidth internet connectivity for the services that they provide should be scrutinized a lot. This is simply because, it will bring about bias, favoring broad band ISPs, who will take advantage to make a lot of money by selling their services both to their clients and to content providers. This will limit the citizen's democratic and fundamental right to access and use open internet. 
Mitch Wagner
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Mitch Wagner,
User Rank: Lightning
4/28/2014 | 12:10:34 PM
Re: Fundamental arguments
We can have universal service without subjecting ISPs to common carrier status though. 
brookseven
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brookseven,
User Rank: Light Sabre
4/28/2014 | 1:35:03 PM
Re: Fundamental arguments
Mitch,

 

Universal Service has never applied to anything other than common carriers.

 

seven

 
Mitch Wagner
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Mitch Wagner,
User Rank: Lightning
4/29/2014 | 6:49:47 PM
Re: Fundamental arguments
brookseven - "Universal Service has never applied to anything other than common carriers."

That could, of course, change if Congress chooses to do so. 
brookseven
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brookseven,
User Rank: Light Sabre
4/29/2014 | 7:26:38 PM
Re: Fundamental arguments
Mitch,

Plan on the next Congressional Action to be around 2050.  If we take the two Telecom Acts, you will see over 60 years separated them.

So, don't expect anything in your lifetime from Congress.

seven
Liz Greenberg
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Liz Greenberg,
User Rank: Light Sabre
4/28/2014 | 1:54:46 PM
Re: Fundamental arguments
I with you @seven.  Back in the day voice was "the" service for everybody.  Now it it is the internet carrying everything including voice.  Given that and the carriers push to VoIP only, it only makes sense to declare all carriers as "common carriers" and subject them all to the same rules.
RolfSperber
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RolfSperber,
User Rank: Light Beer
4/29/2014 | 2:53:00 AM
Net Neutrality
Net Neutrality melts down to a political slogan, at least in Germany. Acces lines from 384 KBit/sec up to 100 MBit/sec depending on where you live make an "equal rights" internet virtually impossible. In backbone and core we have best effort, a vaque idea of net neutrality. What could be done would be to build a virtual infrastructure with elements from different carriers split into a high quality virtual section with the possibility to guarantee bandwidth and QoS for individual clients and a neutral section, guaranteeing bandwidth to all clients of this section.
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