Wednesday, December 22, 2010


The FCC on network neutrality

Yesterday, the U.S. Federal Communications Commission (FCC) approved new rules related to network neutrality. The rules are no surprise, nor was the approval — we’ve known the basic contents for some time, and they’re right along the lines of the Google/Verizon proposal from August.

Key points of contention are these:

  1. The rules allow for paid access to higher data speeds in a way that leaves things open for non-neutral deal between carriers and providers of services or content.
  2. By stressing that carriers must not block legal web sites, the FCC leaves a gaping hole, the size of which depends upon one’s definition of legal.
  3. Wireless broadband is treated differently from wired, and the rules allow much more non-neutral behaviour on the wireless side.

On point one, let’s look at three situations, and see how they’re different. Suppose my cable provider gives me Internet service at 5 megabits per second, but offers to make that 15 megabits per second if I pay another $10/month. Is that consistent with network neutrality? Most of us would say that it is.

Now suppose my cable provider gives me Internet service at 5 megabits per second, but if I stream data from Netflix that’s capped at 1 megabit per second. Is that consistent with network neutrality? Most of us would say that it is not. If I’m paying for 5 megabits per second with no limit on the number of megabits, they should not be artificially slowing down a service they want to discourage.

OK, but let’s go in the other direction, and suppose Netflix makes a deal with my cable provider. Suppose Netflix pays them some fee, and the result is that I get my 5 megabits per second normally, but when I stream from Netflix I get 15 megabits per second. Is that consistent with network neutrality?

The new rules seem to say that it is. Is it the same as the first scenario, or different? Does it matter whether I, the subscriber pay for better service, or Netflix, the content provider, pays for better service? That’s a matter for debate. Some say it’s bad on its surface, and is inconsistent with network neutrality. Others say that as long as any provider is allowed to pay for the improved service, it’s OK (there can’t be an exclusive deal). Still others think exclusive deals are OK, as long as it’s improving service, and not penalizing someone outside the deal. Maybe, but isn’t that a relative thing?

My own opinion is that there’s a fundamental difference that hinges on who pays, who benefits, and who gets left aside. If I pay, I benefit, and all services I use benefit equally. That seems neutral. If a service provider pays, only their services benefit. That’s not neutral. On the other hand, this is rather like a manufacturer paying for preferential display of their items in a store, and we do that all the time. This is not a black-and-white issue.

On the second point, the legal web site point, we have the Justice Department’s recent action of shutting down web sites that are purported to violate copyright rules. If the FCC’s highlighting of the legal point makes it easier for Internet carriers to police the Internet, I think it’s a very bad thing. Enforcement should stay in the hands of the enforcement agencies.

To look at the third point, we need to remind ourselves that wireless, in this context, refers not to WiFi, but to broadband over cellular service. I find it hard to accept that there’s a need for or a benefit to treating the two differently. With smart phones and iPad devices, and others like them, 3G service (and, soon, 4G) is becoming as important to accessing the Internet as wired broadband is. It seems detrimental, in general, to allow — even to encourage — different levels of service through the two paths. While it may be valid to limit data rates or volumes (in general, neutrally), I can’t see the need to restrict services and applications outright, and consider the inclusion of that in the regulations to be a real problem.

That’s not to say the new regulations are all bad — the transparency requirements are good, and there are other reasonable aspects to them. But I think there are fundamental flaws in the regulations, and they should not have been issued as they are. We’re very bad at regulating technology, and bad regulations can really bite us in the ass.


Nathaniel Borenstein said...

Since you've been studying this... one thing I haven't heard is whether or not the carriers are allowed to discriminate in who they offer services to at a given price. If Blockbuster pays Verizon for faster access, is Netflix guaranteed the right to a similar deal? I'm a lot more worried about the competitive implications if it that kind of equal treatment isn't required.

brittanym said...

Thanks for posting such a thorough explanation of what exactly Network Neutrality is, I was still slightly confused myself....the examples you provided & points of contention really clarified it for me!

I wanted to share a video that I thought you might find interesting about the FCC’s decision, from gathers & analyzes information from various news outlets, & puts it together to provide multiple views of news stories. I hope that you’ll consider embedding or linking to the video in your post, I thought it might be a nice additional resource for your readers.

Barry Leiba said...

Nathaniel, that's what I was getting at with the paragraph that asked “Is it the same as the first scenario, or different?” The FCC regs aren't specific about this, and by allowing flexibility (or, some would say, vagueness) here, they open things up for very non-neutral deals.

I think it's wrong to allow any content providers to pay to get preferential delivery of their content. But I'm willing to consider a compromise position where all content providers have the option to pay — I still think it's bad, because it can amount to extortion, it severely hurts the small providers who can't afford the charges, and it leans toward limiting us to popular content that will give those who pay a return on their investment.

But I think exclusive deals are ust evil, go directly against what the Internet is all about, and threaten to stifle innovation.

Nathaniel Borenstein said...

Sorry if I missed part of your point. I think we are (as usual) in violent agreement -- both interpretations are evil, but one is more evil than the other.

By painfully close analogy, if our elected officials were allowed to take a bribe from one company, every other company should be allowed to bribe them on the same terms. :-(