FCC Net Neutrality Flap: Fast Lanes Don't Scare Me - InformationWeek

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5/19/2014
02:23 PM
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.
JohnM818
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JohnM818,
User Rank: Apprentice
5/19/2014 | 3:40:16 PM
Network 'Providers' are Unnecessary
The problem I have with the advocates of fast lanes is that the people advocating them have mainly one interest: To use something that they didn't build to extort money from those who did. The so called 'providers' have wedged their businesses between the end users and organizations to act like turnstiles to something they don't own. And they count on users to not question it. But why? Infrastructure could just as easily allow an open, first come, first serve traffic operation like that enjoyed by billions of users of roads and bridges. They get away with avoiding such an infrastructure because the users play along by (in the words of Neil Young) "singing songs for pimps with tailors who charge ten dollars at the door...for the turnstiles." ISPs are a useless commodity that the users don't need. They just have not yet realized that Net Neutrality isn't just possible, it's good...and it's the natural order of things. 
datadoctor
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datadoctor,
User Rank: Strategist
5/19/2014 | 3:44:40 PM
Re: Network 'Providers' are Unnecessary
The highway metphor would go something like this: You get on the highway and pay a toll - if you drive free you can drive 40mph, if you pay $10, you can drive 55mph, and if you pay $45 you can drive 95mph.
Thomas Claburn
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Thomas Claburn,
User Rank: Author
5/19/2014 | 7:27:02 PM
Re: Postal Service
My worry about antitrust law is that it only considers consumer harm. If telecom giant X owns video company Y and then decides to charge competing video company Z twice as much as it charges its own subsidiary, that may not trigger antitrust intervention.
anon9675841497
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anon9675841497,
User Rank: Apprentice
5/20/2014 | 12:36:38 AM
Re: Postal Service
"That's a good point, but Netflix doesn't have to pay more -- it can stay with the standard baseline service."

That's a very strange way to look at it considering Netflix is (was) not buying service from Comcast, et all. I am paying (Verizon).

Please explain how me paying Verizon for 75 Mbps Internet service should require Netflix paying Verizon to deliver a 2 Mbps stream to me?
Brian.Dean
IW Pick
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Brian.Dean,
User Rank: Ninja
5/20/2014 | 9:14:35 AM
Re: Postal Service
That's a very real factor that plays out in the real world, but it is because of economies of scale -- retailers get a lower price on products because they buy in quantity and if a customer begins to buy products in frequent intervals, then they too get discounts, an example that comes to mind is Amazon's premium accounts that offer discounts on shipping to frequent buyers.
RobPreston
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RobPreston,
User Rank: Author
5/20/2014 | 9:24:27 AM
Re: Postal Service
The content providers aren't the customers of the network operators unless they choose to be. No one is forcing the content providers to pay up. And not all the network operators even want to get into the paid prioritization business. The CEO of Comcast has said he's not interested, because, he says, setting up these arrangements would be too complicated. 
Brian.Dean
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Brian.Dean,
User Rank: Ninja
5/20/2014 | 9:44:39 AM
Re: Postal Service
@Thomas, that is an excellent thought provoking example. My take is that telecom giant X is subsidizing its own subsidiary (company Y) because the market has demonstrated that company Z can sustain a service by paying higher for the telecom's infrastructure. If this continues, then I would imagine that shareholders would want to liquidate the subsidiary or allocate a higher cost to it, so that profits can be written to the parents company's account.
Brian.Dean
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Brian.Dean,
User Rank: Ninja
5/20/2014 | 10:05:35 AM
Re: Postal Service
One scenario that comes to mind is that, the consumer should end up paying slightly lower for their 75MB connection and the differences would be picked by the video provider -- the video provider needs the consumer, not the other way around.
stevew928
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stevew928,
User Rank: Ninja
5/20/2014 | 1:04:46 PM
Re: Postal Service
Netflix shouldn't have to pay *more* as they have already paid for their connection. And my ISP has already been well paid to deliver *whatever* data I pick, be it Netflix, a buddy's home video they are self-serving, or a zillion e-mails.

But, you do make a good point about trusting the FCC at all. However, at least with the ISPs classified as utilities, it becomes more obvious when the law is being broken... it isn't just this vague 'consumer's interest' stuff. But ultimately, no, so long as the FCC is in pay of lobbiests, we can't fully trust them. We'll need regulation on lobbying efforts to fix that, but that's a whole other broader problem.

And, we don't need more investment, we just need ISPs to actually invest in the infrastructure, rather than just pocketing obscene profits. For example, I pay my ISP over $80/mo and the amount of data I typically transfer (and I'm a fairly heavy user) costs them under $0.50, all costs included. They can take a bit of that $79.50 in profits and there should be plenty to re-invest.
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