Light Reading

Net Neutrality Fight Peaks at FCC Deadline

Mari Silbey
7/18/2014
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After technical issues at the FCC's website forced an extension, the final deadline for comments on the Commission’s Open Internet Notice of Proposed Rulemaking will arrive tonight at midnight. So far, no one has been shy about expressing an opinion.

The National Cable & Telecommunications Association (NCTA) has filed a lengthy document urging the Federal Communications Commission (FCC) to avoid reclassifying broadband providers as common carriers, limit new regulatory mandates, and refrain from addressing interconnection agreements within the Open Internet framework. Among other issues, the filing contends that Internet Service Providers should not be required to reveal more detailed information about network congestion. Declaring that "the current transparency regime is sufficient to protect Internet openness," the NCTA asked the FCC to reject calls for greater disclosure.

From the document:

    The Commission likewise should reject the proposal to require ISPs to "disclose meaningful information regarding the source, location, timing, speed, packet loss, and duration of network congestion." As an initial matter, congestion at a particular point in the network is not necessarily evidence that the quality of service to consumers has been degraded, because ISP networks are built with redundant paths that enable Internet traffic to be routed around points of congestion. Furthermore, as the NPRM acknowledges, network congestion can occur at any point in the Internet, not just the last-mile portion controlled by ISPs. For example, some large content providers like Netflix may choose to route traffic over congested links from transit providers rather than spending more money to route traffic over open links from CDNs.

The NCTA's comments allude to the ongoing public battle between Netflix Inc. (Nasdaq: NFLX) and such major broadband service providers as Comcast Corp. (Nasdaq: CMCSA, CMCSK), Verizon Communications Inc. (NYSE: VZ), and AT&T Inc. (NYSE: T) over who is to blame for declines in video streaming performance. (See Verizon Threatens to Sue Netflix.)

Not too surprisingly, Netflix has filed its own concerns with the FCC, and stated a position that is directly counter to the NCTA's. In its official comments regarding the Open Internet NPRM, Netflix said that:

    The Commission should adopt clear and strong open Internet protections that prevent blocking, interconnection access tolls, unreasonable discrimination, and paid prioritization on any point in the network controlled by the terminating ISP. Transparency rules should be augmented to require ISPs to provide meaningful, real-time disclosures of network performance and congestion to keep the public properly informed.

Further, Netflix argued that "failing to address interconnection abuse by terminating ISPs will undermine the efficacy of any open Internet or consumer protection rules that the Commission adopts in these proceedings."

Caught in the middle between Netflix and ISPs are transit providers like Level 3 Communications Inc. (Nasdaq: LVLT) and Cogent Communications Group Inc. (Nasdaq: CCOI). In addition to official comments by both companies asking the FCC to intervene on interconnection agreements, Level 3 has extended the debate to its corporate blog.

In a post on July 17 (hat tip, DSLReports), the company claims that Verizon has inadvertently admitted to "deliberately constraining capacity from network providers like Level 3 that were chosen by Netflix to deliver video content requested by Verizon's own paying broadband customers." The post concludes that "all of the networks have ample capacity and congestion only occurs in a small number of locations, locations where networks interconnect with some last mile ISPs like Verizon."

The Level 3 rhetoric is the latest in a series of accusations suggesting that ISPs are allowing specific peering points to degrade. However, veteran engineer Peter Sevcik pointed out recently that Netflix’s performance across all ISPs improved when the company signed a direct interconnection deal with Comcast. The agreement removed traffic from the middle-mile networks, relieving congestion everywhere. Sevcik does not blame middle-mile network providers like Level 3 and Cogent, but instead noted that Netflix could be buying more capacity. (See Netflix's Problem Is Its Transit Network – Report.)

The FCC will have a lot to consider as it combs through the latest Open Internet commentary. One thing that's clear, however, is that arguments over network interconnection agreements have steadily crept further into the net neutrality debate. Level 3 VP Bill Wohnoutka said recently that he believes the industry will make significant progress on peering capacity issues over the next year. (See Net Neutrality: Level 3 Sees Peering Progress Soon.)

The question, however, is what role will the FCC play? (See Net Neutrality Redux? FCC Probes Peering Problems.)

— Mari Silbey, special to Light Reading

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brookseven
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brookseven,
User Rank: Light Sabre
7/22/2014 | 12:07:56 PM
Re: Backwards
sam,

The reason it makes a difference is really simple.  Premium Content Owners run things.  Disney owns ESPN.  ESPN gets paid a LOT by Cable Companies for formating and distributing their content.  But (for example) the PAC-12 has a big TV deal with ESPN and gets paid a lot of money by ESPN.  Note thet the PAC-12 is doing off ESPN items on the PAC-12 Network and getting paid directly by the Cable Companies.  At some point in the future, you can imagine a day when the PAC-12 steps neatly around ESPN and takes all the money directly from the Cable Companies for its content.

ESPN (and Disney) are simply Content Aggregators in this model and the money flows uphill to the source of content.  In a similar vein, Jerry Seinfeld is still making a lot of money from the Syndication of Seinfeld.  NBC not so much (or at least not a lot when its shown on non-NBC owned channels).

See the point?  Content Aggregators are like the record labels of the music world.  Do we really need Capital Records if a band like Metallica can post its own tunes to iTunes?  What this means is that the Internet over the long term will work to eliminate middle men and in the long term that they will have no business model (caveat in the next paragraph).

Now what the Aggregators CAN do is do what the record labels used to do.  Locate and market new talent.  That is essentially what CBS did with the Big Bang Theory.  It funded some talent that it knew (Chuck Lorrie) through some lean times and marketed the show until it took off.  Now poof, its the #1 show and everybody is raking in the bucks.  Just like startups, most new shows fail.  The better Aggregators do a great job at sponsoring content more likely to succeed.

As a counter example, lets use Youtube.  I read a statistic that most (like 90%) of Youtube videoes have less than 5 views.  Nobody markets them and their content has low value.  Compare it to say "The Guild" where dollars were spent to market the videos.  Or Funny or Die.  Or Twitch TV.  Or TED. If you are not going to source content, then you need to be able to select content like you were a TV Studio in the old days to make money.

Netflix is starting to do its own content.  It doesn't have "channels with recommendations" of indie projects or small names, but it could.  But just hosting, reformatting, and streaming content is a dead business in the long run.  People will just do it themselves.

seven

 
sam masud
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sam masud,
User Rank: Light Sabre
7/22/2014 | 11:41:24 AM
Re: Backwards
Why should that distinct make a difference? So are a number of news sites as well as others that simply aggregate content from various other sources. To me the operative word here is "content."
KBode
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KBode,
User Rank: Light Sabre
7/21/2014 | 6:27:50 PM
Re: Wheeler
We're already heading toward a realm where users have to pay a steep premium for uncapped service, so I wonder if a premium tier that offers faster speeds to some sites -- or exempts some select services (like AT&T's sponsored data) is only a matter of time? FCC seems relatively warm to these kinds of proposals.
brookseven
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brookseven,
User Rank: Light Sabre
7/21/2014 | 4:31:25 PM
Re: Backwards
sam,

Netflix is barely a content provider.  They are primarily a content aggregator.  Real content providers DO get paid by Comcast.  See Disney.

seven

 
sam masud
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sam masud,
User Rank: Light Sabre
7/21/2014 | 4:12:34 PM
Backwards
I'm with Prof. Tim Wu, who I understand came up with the term "net neutrality and thinks Comcast should be paying Netflix. Folks pay for broadband because, among other things, they love to stream video from content companie like Netflix...and those broadband charges go straight into the pockets of the ISPs.

Are we headed to a point where ISPs will have tiered charges for different content providers?

 
Carol Wilson
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Carol Wilson,
User Rank: Blogger
7/21/2014 | 12:25:23 PM
Re: Wheeler
I agree that Title II reclassification seems beyond the reach of the FCC - there is just too much lobbying firepower from the big guys to make that one likely. 

The only real battle may be around the notion of "premium" Internet services. I think we are going to see more creative approaches to getting content closer to customers to try to alleviate the various bottlenecks, but whether there will ever be a true "premium service" in the local loop is still a question mark in my mind. 

 
danielcawrey
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danielcawrey,
User Rank: Light Sabre
7/20/2014 | 3:32:33 PM
Re: Wheeler
I personally have intermittent issues with my home Comcast service when using Netflix. It's not a major annoyance, but I do sometimes notice that Netflix stops completely for a period of time. 

As someone who uses Comast's internet service but does not subscribe to its cable service, I wonder what the company thinks about its television business being consumed by streaming media. Of course, that's why the company has moved into buying media companies such as NBC Universal.

Actions speak louder than words. 
thebulk
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thebulk,
User Rank: Light Sabre
7/20/2014 | 4:18:05 AM
Nice run down
Great rundown of where the fight is at right now, it is really scary to think what actually is at stake in this fight. 
KBode
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KBode,
User Rank: Light Sabre
7/18/2014 | 5:04:53 PM
Wheeler
Good read! Wheeler has already made it clear they won't be including peering in their neutrality rules. In fact, I'm not sure they'll be including much of anything in the rules outside of banning things ISPs never intented to do anyway (block sites and services outright, throttle some services for no reason)....I think it's also highly, highly unlikely Wheeler heeds consumer advocate calls for Title II reclassification.
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