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5/19/2014
02:23 PM
Rob Preston
Rob Preston
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FCC Net Neutrality Flap: Fast Lanes Don't Scare Me

Only the status quo will keep the Internet 'open,' net neutrality advocates insist. But a refined approach may ignite more network investment.

I got an earful from readers last Friday on an Editor's Note I wrote for our "InformationWeek In Review" newsletter. In that 400-word overview of InformationWeek's coverage of net neutrality happenings over the previous week or two, I chimed in on both sides of the issue: Should the FCC relax net neutrality rules or not?

Apparently this issue isn't to be debated: Net neutrality must stand, un-amended... was the consensus from the handful of readers who emailed me on the subject. But I don't see things so cut and dried.

As you've probably already read or heard, more than 100 Internet bigwigs -- Google, Facebook, Amazon, and Twitter among them -- laid into FCC chairman Tom Wheeler's plan to give network providers more freedom to charge customers extra for faster data delivery over their slices of the Internet. The fear, as my colleague Tom Claburn wrote, is that this so-called paid prioritization "will turn the Internet into a protection racket." That is, dominant providers such as Verizon, Comcast, and AT&T would require heavy Internet users such as Google and Netflix to pay extra for "fast lanes" for their traffic -- or suffer the consequences. In the meantime, the reasoning goes, shallow-pocketed commercial Internet users would be put at a competitive disadvantage.

[Overregulation is a pervasive problem for businesses. See Death By A Million Regulations.]

But isn't paid prioritization already an established commercial practice across industries? For example, the US Postal Service charges customers more to deliver packages overnight than it does for two- or three-day service. The airlines charge customers more for classes of service that usher them through check-in, security, and boarding faster. Internet and cellular providers already charge consumers more for faster data speeds. Are such premium-priced services "unfair" to customers who can't afford them or choose not to take advantage of them?

That's only a problem if the supplier degrades baseline service as it improves its premium services -- and there's no reason to assume that will happen on the Internet, now that the FCC has stipulated that it won't allow such network degradation. The FCC still has the authority to police the carriers so that they don't make the slow lane slower. If you don't trust the FCC to keep that promise, then why would you expect it to be any more committed to upholding net neutrality?

The telecom operators already provide priority delivery of certain business customers' Internet traffic through VPN and QoS services. Enhancing that model -- letting them offer gold-standard security for financial transactions, for instance, or guaranteed connectivity for healthcare monitoring -- isn't the end of the Internet as we know it. It's a business opportunity for the carriers. Yes, it stands to make them more money. But it also gives them more incentive to invest in their networks.

Electronic Superhighway by Nam June Paik. (Source: Libjbr)
Electronic Superhighway by Nam June Paik.
(Source: Libjbr)

Tom Claburn refers to an article published in Vox last Monday that claims that broadband industry figures misrepresent network investment as rising when it actually has been falling, a sure sign, critics say, that the dominant network operators are getting fatter and happier and more dominant. But one could look at a falloff in public network investment from another perspective: Perhaps one reason carriers are spending less on upgrades and more capacity is because net neutrality rules have limited their upside. Why plow more money into Internet capacity when you're not allowed to fully profit from it via premium services?

Supporters of the FCC's relaxation of net neutrality rules, including George Foote, a partner with law firm Dorsey & Whitney who has worked with the agency, think there's less here than meets the eye. "The final rules will require a strong baseline level of service," Foote said in a statement. He added: "As for the so-called fast lane, all that does is open the door to better or different service for a fee. The FCC commissioners made it clear that existing law and the threat of heavier regulation should give pause to monopolists."

I'm not arguing that the big carriers are saints. Far from it. They're in business to expand their profits and please their shareholders, just like any publicly held company, and they have abused their market positions in the past. But we have antitrust laws and myriad other regulations to keep anticompetitive behavior in check. If you don't think the antitrust authorities are up to that task, why do you think the FCC regulators are up to it under the framework of net neutrality?

The FCC has decided that it's prudent to move ahead slowly, voting three to two on Thursday to open its controversial proposal to public comment. Good. Let's hear all sides. Meantime, what do you think about the FCC's move to relax net neutrality rules? Hopefully, we can have a civil conversation on this issue in the comments section below.

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Rob Preston currently serves as VP and editor in chief of InformationWeek, where he oversees the editorial content and direction of its various website, digital magazine, Webcast, live and virtual event, and other products. Rob has 25 years of experience in high-tech ... View Full Bio

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datadoctor
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datadoctor,
User Rank: Strategist
5/19/2014 | 3:33:09 PM
Monopoly doesn't pay to break speed limits
I don't believe that multi-tiered service levels for content providers will necessarily mean innovation and faster internet speeds. Telecom providers that manage our backbone internet services are virtual monopolies. I don't know of a single market where there are more than two choices of provider, playing a back-and-forth game of raising prices and giving low rates to those who switch. In our market the two providers are also the biggest provider of content, because they deliver television as well as internet service. As television and internet services merge into "on-demand" content, there is surely an incentive to speed up the telecom's internal network. If telecom provider content streams better, than why would you subscribe to anyone else's service. The owners of the pipes get the upgraded service for free, and the idea of free market competition goes out the window. It's bad enough already - this is just one way to shut independent competitors out of the market. The only possible challenger is Google, who is buying up fiber to offer true high-speed internet which magically comes without speed checks for content providers.

If telecoms provide a true, alternate network for high-speed delivery than they can probably avoid regulation, because it will operate as a separate service. As a technician, I know that to tier service, you must set specific speed caps for your pipes, and tiers are typically described by the telecoms as "up to" such-and-such a speed. The FCC will have a great deal of difficulty regulating the speed of the slow lane, but would have much less difficulty maintaining a level playing field for content providers, where any slow-downs would be a violation.

Let's say the Federal government steps in to break up the telecom / cable monopolies, separating content from delivery - then we might see true competition and fair markets - but who expects any anti-monopoly action these days? There's too much money to be made raking the consumer over the coals for the slowest internet on the block.
tbuds
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tbuds,
User Rank: Apprentice
5/19/2014 | 3:26:48 PM
Re: Postal Service
The problem is who will set the baseline service standard? Internet speeds are already listed as "up to XMbps" so they can justify their slower speeds. Do you think it will be hard for them to "justify" even slower speeds?
Lorna Garey
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Lorna Garey,
User Rank: Author
5/19/2014 | 3:25:46 PM
Encourage munis
I'd be more comfortable with allowing pay for priority if the FCC also made it easier for municipalities to stand up services -- and lo and behold, that seems to be happening: http://arstechnica.com/business/2014/04/state-laws-that-ban-municipal-internet-will-be-invalidated-fcc-chair-says/

"In a footnote, Silberman wrote that "[a]n example of a paradigmatic barrier to infrastructure investment would be state laws that prohibit municipalities from creating their own broadband infrastructure to compete against private companies."

 The Internet is infrastructure. Let's treat it as such. 
ThouhtW
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ThouhtW,
User Rank: Apprentice
5/19/2014 | 3:20:20 PM
Re: Postal Service
Exactly! The argumet he is making is that the content providers are somehow the customers of the ISPs and that's not correct! We are already paying through the nose to get high speed access to the internet. What they want to do is make us pay for high speed access to their, practically worthless (by itself) network and then for the people on the other end to have to pay for high speed access so we can connect to them. That, quite frankly, is BS.

IF my ISP wants to cut my service charges to a quater of what I'm paying now or wants to offer my end for free, I'm all ears about what they're doing but I as the paying customer locked into a near monopoly ISP in my area should be able to get the full speed access that I'm paying for for EVERY site passing through the ISPs systems. If they aren't offering the full bandwith I'm paying for to all of the content i'm requesting, they're screwing me as their direct paying customer over which is the whole issue with fast lanes...

The ONLY way I see this as being a legitimate offer is that if I'm paying for 5mbs and someone like Netflix or Google wants to pay more so that their streams can come through at a rate higher than I'm paying for - maybe guaranteed 10mbs, for instance.

Since it's mostly cable providers, I'll provide another anology that make more sense. Right now, cable companies like Comcast pay network TV provders as well as cable channel providers to send their singals to me. What you are proposing would be the equvelant of them charging ESPN as well as me to get that ESPN content. Maybe that business model would work out for ESPN if they had 100% control over selling and profiting from all advertising on their channel but I doubt it... Now when you consider that I pay almost as much for internet access as standard cable and for all practical intents and purposes, the internet service they are providing me function mustly as dumb pipes, I see no reason they should be getting a bigger slice of anything.

 

 
RobPreston
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RobPreston,
User Rank: Author
5/19/2014 | 3:13:23 PM
Re: Postal Service
That's a good point, but Netflix doesn't have to pay more -- it can stay with the standard baseline service. Under the most recent FCC regs, the carriers must provide the same level of baseline service as they have been--the FCC has said it won't abide a degradation of service. If we don't trust the FCC to enforce that stipulation, why would we trust the FCC to enforce net neutrality?
aredditor
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aredditor,
User Rank: Apprentice
5/19/2014 | 3:11:45 PM
Airline companies... poor analogy

The airlines charge customers more for classes of service that usher them through check-in, security, and boarding faster.

Airlines today degrade "economy" class seats by reducing legroom and seat width, skipping meals, and adding baggage fees. Then they crowd out "economy" seats with "economy plus" seats that, for a price, restore a few of economy's old conveniences.

And they do this while (occasionally) facing competition for major destinations! Improvements in their service quality is somewhat driven by competition. ISPs have no such problem - in most towns it's one broadband provider or nothing, and so companies like Comcast can use their captive subscribers as bargaining chips.

Einstein Jr.
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Einstein Jr.,
User Rank: Apprentice
5/19/2014 | 3:11:34 PM
the corruption of the net and first amend for profit
 Youve got to be kidding...your argument is precisely what the argument against the FCC's proposals isall about. With all the billions that have been reaped from the net you think it NEEDS to be exploited further?I would argue that the infrastructure needs updating in that bandwidth should be well increased for all.That would of course need to happen in time and now. And that should satisfy all. But to prioritize trafficfor what would ultimately be for sheer profit sets not only a dangerous precident but in and of itself is selfishwill not help the broad spectrum of net users and further corrupts freedom of speech as it applies to the net whether or not you understand that. Are you suggesting specifically that this corruption is the only way to upgrade the net? You sound as if we sudddenly need fast lanes. The net has done just fine so far and will continue to as a free unencunbered entity as it is.
tbuds
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tbuds,
User Rank: Apprentice
5/19/2014 | 3:06:06 PM
Slow already!
Your argument that "That's only a problem if the supplier degrades baseline service" doesn't hold any water when the US basically already has the slowest internet speeds of any industrialized nation on earth! Isn't it funny when Google Fiber comes in to a new town with faster internet and then companies like ATT and Comcast can "magically" compete with faster speeds all of a sudden? We're already paying for the slow lane and now the ISPs want to double dip.
miteycasey
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miteycasey,
User Rank: Apprentice
5/19/2014 | 3:03:00 PM
Re: Postal Service
To use your USPS example I already pay the delivery company extra. I pay for 20Mbs instead of 5Mbs for the exta speedy service.

For my ISP to charge Netflix as well that's like me paying the USPS to send the mail AND the USPS charging the reciver to recive the mail. They want to charge the send and reciever.
geofspkr
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geofspkr,
User Rank: Apprentice
5/19/2014 | 2:57:26 PM
Really?
While I can understand it, your view that "Overregulation is a pervasive problem for businesses"  only goes so far. All you have to do is look at the airline industry and see what underregulation has done for us all. I'm for a free market economy as much as the next businessman but with what is basically a utility that so many rely on  already I am unable to be so trusting.
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