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Net Neutrality: Latest Proposal Will Make Everybody Unhappy

Mitch Wagner
10/31/2014

In the latest net neutrality proposal, the Federal Communications Commission has reportedly cooked up an idea guaranteed to unite both net neutrality advocates and carriers: They're both going to hate it.

Federal Communications Commission (FCC) head Tom Wheeler is considering a plan to split the Internet, separating the "back-end" connection between carriers and content providers from the "retail" connections between carriers and consumers, according to a report on the Wall Street Journal late Thursday. The FCC would require net neutrality on the back end, classifying it as common carrier, but leave carriers free to cut special deals with consumers.

The proposal would give the FCC authority to police deals between content companies like Netflix Inc. (Nasdaq: NFLX) and broadband providers. Says the Journal:

    The proposal would leave the door open for broadband providers to offer specialized services for, say, videogamers or online video providers, which require a particularly large amount of bandwidth. The proposal would also allow the commission to explore usage-based pricing at some point, in which consumers are charged based on how much data they use and companies are able to subsidize traffic to their websites or applications.

    While the FCC still believes there should be room for such deals, its latest plan would shift the burden to the broadband providers to prove that the arrangements would be beneficial to consumers and equally available to any company that would like to participate. FCC officials believe reclassification would put them on much stronger legal footing to block such deals when they are anticompetitive.

Carriers, which have resisted any kind of net neutrality regulation, are going to hate this proposal. So will net neutrality advocates, who want to regulate the Internet end to end.


Find out more about key developments related to broadband on Light Reading's dedicated broadband channel.


The proposal as described by the Journal has at least three big unanswered questions:

  • Would this proposal apply to the wired Internet only, or would it also apply to wireless connectivity? The consumer Internet is increasingly becoming a wireless network.

  • The Journal article talks about the connection to the customer as a "retail" connection. What kind of effect would this proposal have on business Internet customers?

  • Would carriers and content providers be allowed to cut deals to provide subsidized connections to consumers where, for example, Facebook pays to allow consumers to connect to Facebook (and only Facebook) for free?

It's difficult to see where this proposal makes sense. Why discriminate between the two ends of Internet connections? It doesn't even make sense politically; carriers aren't going to like this any more than they've liked any other proposal for net neutrality and net neutrality advocates have already started opposition. Either regulate the whole Internet, or none at all.

— Mitch Wagner, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profileFollow me on Facebook, West Coast Bureau Chief, Light Reading. Got a tip about SDN or NFV? Send it to [email protected]

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brooks7
brooks7
11/3/2014 | 10:14:58 AM
Re: Whatever.
Joe,

 

Hush your mouth!

The FCC writes my Friday Blog for me on a regular basis.  I might actually have to ponder something deep without them!

But the problem at some level is not the FCC but Congress.  At some level I feel bad for them.  The legislation is 20 years behind us and things have changed more in the last 20 then it did in the previous 100.  The stark choice between unregulated and Title II is just a bad position to be in.

seven

 
mendyk
mendyk
11/3/2014 | 10:00:44 AM
Re: Whatever.
Joe -- Re your point, the FCC is hoping to extend its existence if not its useful life (which many would argue is long gone) by maintaining some form of Internet regulation under the guise of net neutrality. As a workable policy, net neutrality is a 20th century construct that makes less sense as time moves on.
Jack42
Jack42
11/3/2014 | 9:51:13 AM
Re: Whatever.
Joe, I would add: big goverments solution is to regulate when businesses behave badly.  I believe the govt has tried hard to stay out regulating the internet.  The issue at hand stems from last mile providers intentionally - throttling consumer bandwidth and applying other deceptively coy, network traffic grooming tactics to dictate purchase terms by content providers.  The behavior prompts industry and customer complaints.

Let's not get the violins out just yet on the "burdens of regulation" as regulation is usually a self inflicted result.  The best way to keep regulation out of any industry and easily avoid the financial burden of compliance is to play nice with others, act responsibly, and not bully other businesses or consumers, would you agree?  

I disagree with your point "that nobody is a good guy in this".....the consumer is.  They pay their bill every month and would like to recieve the service they pay for without distortion or censorship.

I do aggree with you "that the last mile access industry wants to have the consumer in the shorts", but if the regulators "do the right thing"  they wont have to.  Would you agree with that?

 

 

 
Joe Stanganelli
Joe Stanganelli
11/3/2014 | 12:40:43 AM
Whatever.
Big surprise that a big government agency's solution is to give more power to itself.  ◔_◔

On the other hand, I think a compromise of some form is needed.  This is my big problem with the net0neutrality debate in general.  On the one hand, net neutrality sounds fantastic when you consider it in a vacuum, and I certainly don't want to pay more for Netflix than I have to.  On the other hand, it means more regulation and moving power from the private sector to government (as if the latter is necessarily less evil than the former).  And, as regulations require companies to hire more compliance staff and create other burdens, costs get passed on to and go up for consumers anyway.  Lose-lose-lose all the way.

Make no mistake: nobody's a good guy in this conflict, and consumers are going to get it in the shorts one way or the other.
kq4ym
kq4ym
11/2/2014 | 3:47:54 PM
Re: It's the same bad proposal as previously, except.....
This whole idea may very well be a trial balloon just to see where the sides stands, or maybe to see how much consumers might protest in light of the extra fees and cost they would likely see. It probably a aure thing that consumers are going to get hit badly in the end. The FCC is already tipping way towards no net neutrality and just has to figure out how to keep net neutrality advocates as bay.
Jack42
Jack42
11/1/2014 | 6:07:35 PM
Re: Under what paradigm would this work
Well then, I think we should all encourage the disclosure of more of that type of information so we can see more clearly where the network congestion problems are.  That's if certain players were actually interested in fixing the problem.  But we know fixing this problem isn't what this is really about.

What this is all really about is being able to continue to gouge the consumer through monopolistic behavior.  And the FCC's decision on this will determine if that is allowed to occur or if they will stand up for the consumer so that we all get the service we already pay for.

The reality is that the costs to provide consumers with internet service are significantly decreasing.  This is upsetting to monoplistic thinkers who don't want to pass those cost savings on to the consumer.  That is why google is starting Google fiber (1G for $70!). That's why municpalities are building their own networks for their communities.  That's why last mile providers need to be regulated.  That's why we need competition.
Jack42
Jack42
11/1/2014 | 5:44:53 PM
Re: Under what paradigm would this work
You first point sounds like it's more about who gets to peer and who has to pay.  I think those demarcations have already been well established.  If you have been a peer where traffic is exchanged then you would both be expected to continue maintain your peer point at a well functioning level.  If you've always paid for connectivity, then you are likely to continue to pay for connectivity.  Pretty straight forward.

"The large ISPs created this mess by giving everyone unlimited high speed bandwidth ..."

I find this comment disturbing.  Consumers are supposed to recieve the service they are paying for.  If you paid for 50mb service at your home, you should be able to access that 50mb service without distortion.  So what's your problem with that?

"....not offering a subscription based service like Netflix themselves"

If network providers (transit or last mile) want to be in the content subscription business instead of the network subscription business, the are more than welcome to start a competing service. But I think this is off topic to the post for which we are commenting on.

The reality is that the costs to provide consumers with internet service are significantly decreasing.  This is upsetting to monoplistic thinkers who don't want to pass those cost savings on to the consumer.  That is why google is starting Google fiber (1G for $70!). That's why municpalities are building their own networks for their communities.  That's why last mile providers need to be regulated.  That's why we need competition.
brooks7
brooks7
11/1/2014 | 5:12:26 PM
Re: Under what paradigm would this work
Actually, you can't document where the congestion is...you can only accept what Level 3 says.  Since they can't peer into the Access ISPs network they have no idea.

 

seven

 
Jack42
Jack42
11/1/2014 | 5:00:39 PM
Re: Under what paradigm would this work
As to my middle point, it's a fairly well documented fact that "the" most significant network congestion point for consumers to recieven the content they are paying to reccieve is where a last mile provider interconnects with a large transit traffic carrier - see Mark Taylors post from Level3 as I suggested previously.  If after reading it post you can not see my point, then once again we can agree to disagree.

If a last mile provider wants to run a highly congested network that doesn't deliver what the consumer is paying for, well then you have the exact reason why they need to be regulated.

When I say regulated, I also mean that to include establishing verifiable minimum levels of service. Something the last mile carriers are apparently not willing to do by choice, so it should be done through regulation.

History has proven time and again, that monopolies tend to behave badly - over time, when unregulated.  As market concentration grows ever greater through M&A, the behaviour is becoming more prevailent.  

 

 
dwx
dwx
11/1/2014 | 3:52:10 PM
Re: Under what paradigm would this work
There are some large ISPs, smaller regional ISPs, municipalities with their own fiber networks, wireless ISPs, etc. who have always been double charged by transit carriers like Level3.  They may want to provide great service to their end users for various content providers but in order to do so they end up paying someone like Level3 who is also charging content providers like Netflix for service.  Netflix will give them appliances to put in their network but they still incur the cost of space, power, and network for them and they don't fill themselves.  Then the next big thing may come along who doesn't push edge caching and they are out of luck.  

So does the FCC force large content providers like Netflix to interconnect with everyone who wants service from them?  

That's a devil's advocate argument.  The large ISPs created this mess by giving everyone unlimited high speed bandwidth and not offering a subscription based service like Netflix themselves.  I believe Netflix will exist in the future based on its original content, not on wholesale consumption like we see today.  Think HBO, not Blockbuster.  Netflix hardly makes any money doing what they do today.  I think we will see ISPs introduce consumption based billing, and those who want to a wholly OTT TV offering will have to pay for it.  

Artificial congestion or depeering for bargaining has been going on for many years. I do think the FCC will do something about those games, but it won't be in a way anyone likes.  

 
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