The Economist has again editorialized about US telecom policy, in this case specifically about network neutrality.
This debate is loudest in America, uncoincidentally the developed market with the least competitive market in internet access. Democrats, who are in favour of net-neutrality rules, insist regulation is needed to prevent network operators discriminating in favour of their own services. A cable-TV firm that sells both broadband internet access and television services over its cables might, for example, try to block internet-based video that competes with its own television packages. Republicans, meanwhile, worry that net neutrality will be used to justify a takeover of the internet by government bureaucrats, stifling innovation. (That the internet’s origins lie in a government-funded project is quietly passed over.)
They take a fairly middling approach, regarding the network neutrality rules as decent, arguing that some measure of discrimination should be allowed and could be beneficial (one wonders if they truly thought deeply about this: before YouTube, connections would have been optimized against streaming traffic and YouTube may never have succeeded).
In any event, they answer their own question: the real problem in the U.S. is lack of competition among Internet service providers.
These details are important, but the noise about them only makes the omission more startling: the failure in America to tackle the underlying lack of competition in the provision of internet access. In other rich countries it would not matter if some operators blocked some sites: consumers could switch to a rival provider. That is because the big telecoms firms with wires into people’s homes have to offer access to their networks on a wholesale basis, ensuring vigorous competition between dozens of providers, with lower prices and faster connections than are available in America. Getting America’s phone and cable companies to open up their networks to others would be a lot harder for politicians than prattling on about neutrality; but it would do far more to open up the net.
Unfortunately, they do not consider another remedy: local ownership that is accountable to the public. This approach can offer both competition (via open access) as well as ensuring general network management puts community needs...Read more
Bob Frankston has long been critical of both telecommunications companies and the regulators who are supposed to oversee them (but instead are often captured).
Bob has published a lengthy explanation of what is wrong with the US approach to expanding access to the Internet and the beginnings of an alternate approach. This paragraph from his conclusion is where I'll start:
We have a right to communicate. If we fund infrastructure instead of charging for services we can realize that right.
A number of thoughtful people have made the same comments and I believe we will ultimately build access to the Internet as infrastructure (rather than as discrete services arising from the history of telecommunications), but I'm not sure how we will get there.
Perhaps it helps for some to remember just how far we have some. Most of the people pushing for the government to stop regulating the gatekeepers to the Internet seem not to understand why government regulates telecommunications providers. Simply put, when telecommunications was largely unregulated, they screwed their subscribers.
The FCC defines a “completed call” as one that merely rings. It’s a perfect example of naïve indifference to the larger question of why we are using the phone. To a user (a word that makes us forget we are talking about people) a call is complete when you reach a person or, at least, leave message. Yet the phone companies didn’t allow answering machines until the Supreme Court overruled them in the 1968 Carterfone decision.
This story is repeated again and again because it is at the very heart of the concept of telephony. In 1956 they lost the Hush-A-Phone decision. They tried to prohibit people from putting a box around their phone! That was the extent to which the providers went to preserve control and dictate how you were supposed to use their network.
As Frankston rightly points out (here and elsewhere), the best one can say about regulation is that it has been imperfect. This is one reason we encourage public ownership rather than regulation from an authority closer to those regulated than the people...Read more
Frontier has been bitten by the same disadvantage many communities face when building their own networks -- little market power means having to overpay for everything. When Frontier bought millions of Verizon rural lines, it bought a few FiOS connections as well. But not enough to gain any bargaining power with channel owners. So Frontier had to raise the costs of its video services up for 46%. Lest anyone feel too sorry for Frontier, they are doing just fine. It is their customers who suffer. But it is a reminder that the issue of scale and market power are barriers to all competition, not just community networks. If we want to have real competition in this country, the Congress and the FCC need to stop ignoring the problems caused by massive players distorting the market. This unregulated market is an invitation for big players to join together and screw everyone else.
Today, the FCC is poised to pass a half-ass attempt to preserve the open Internet against the interests of massive gatekeepers like AT&T and Comcast. Tim Karr rightly calls it Obama's "Mission Accomplished" moment.
Fortunately, the likely result will be a couple of years in the courts before the rule is thrown out because the FCC has not properly ground its half-ass actions in any authority it has received from Congress. Perhaps when the FCC next has to deal with this, we'll have an FCC Chairperson with a backbone and a stronger interest in what is best for hundreds of millions of Americans than what is best for AT&T and a few other corporations.
The FCC and supporters of this let's-keep-the-Internet-partly-open "compromise" will lump all critics as being extremist looneys. (Okay, the Republicans who oppose this might fit that description as they are literally making things up or totally confused about what is being decided).
But let's look at the crazy looney rhetoric of FCC Chair Genachowski last year:
Genachowski proposed that the FCC formalize its four principles of network openness. To encourage broadband deployment and preserve and promote the open and interconnected nature of the public Internet, consumers are entitled:
- to access the lawful Internet content of their choice.
- to run applications and use services of their choice, subject to the needs of law enforcement.
- to connect their choice of legal devices that do not harm the network.
- to competition among network providers, application and service providers, and content providers.
To these, Genachowski proposed adding two more: The first would prevent Internet access providers from discriminating against particular Internet content or applications, while allowing for reasonable network management. The second would ensure that Internet access providers are transparent about the network management practices they implement.
Not only has Genachowski sold out on what he once stated was absolutely necessary to maintain the Open Internet, he has rolled back the...Read more
Whenever the discussion of Network Neutrality comes up, we like to remind everyone that when the network is locally owned and accountable to the community, anti-subscriber discrimination is not a problem. That said, we are strong supporters of proper safeguards to ensure massive companies like AT&T cannot abuse their market power and discourage innovation.
As the FCC prepares to discuss a half measure to preserve parts of the open Internet, a number of us have been frustrated that while we cannot read the proposal, AT&T appears to be helping write it. Karl Bode's take:
[T]he question shouldn't be whether or not consumers can now view a neutrality proposal after it was hashed out in private meetings (predominately with only the largest, wealthiest carriers), it should be: why weren't consumers absolutely integral in crafting it? AT&T has met with the FCC half a dozen times in the course of three weeks and likely knows precisely what's in this plan -- do you?
We've written to FCC Commissioners to make it clear that they must not compromise on the future of the open Internet. You should too.
Photo used under Creative Commons license from AdamWillis.
So Comcast and Level 3 are in a peering dispute following the Netflix partnership with Level 3 to distribute their streaming movie service. Studies suggest Netflix movie streaming has become a significant chunk of Internet traffic, particularly at peak times.
A quick primer on peering: the Internet is comprised of a bunch of networks that exchange traffic. Sometimes one has to pay another network for transit and sometimes (commonly with big carriers like Comcast and Level 3) networks have an agreement to exchange traffic without charging (one reason: the costs of monitoring the amount of traffic can be greater than the prices that would be charged). (Update: Read the Ars Technica story for a longer explanation of peering and this conflict.)
Comcast claims that Level 3 is sending Comcast 5x as much traffic as Comcast sends to Level 3 and therefore wants to charge Level 3 for access to Comcast customers. Of course, as Comcast only offers radically asymmetrical services to subscribers, one wonders how Level 3 could be 1:1 with Comcast…
At Public Knowledge, Harold Feld ties the dispute to network neutrality:
On its face, this is the sort of toll booth between residential subscribers and the content of their choice that a Net Neutrality rule is supposed to prohibit. In addition, this is exactly the sort of anticompetitive harm that opponents of Comcast’s merger with NBC-Universal have warned would happen — that Comcast would leverage its network to harm distribution of competitive video services, while raising prices on its own customers.
Susan Crawford wrote a lengthier piece about Comcast, Netflix, network neutrality, set-top boxes and NBC that is well worth reading (as is just about anything she writes).
However, for the purposes of this post, we will assume the 5x traffic imbalance is true (and unique and...Read more
The abstract immediately captured my attention:
Policymakers often tell us that the Internet succeeded because of a lack of government regulation. For instance, FCC Commissioner Robert McDowell recently noted that the “evolution away from government intervention has been the most important ingredient in the Internet’s success.” These views, while widely shared, happen to be inaccurate. In reality, a diverse range of federal regulations, subsidies, and nondiscrimination protections sustained the Internet’s historic growth.
But what if, as many inaccurately assume, these regulations had never existed? What would today’s Internet look like in such a world? In this essay, I provide a fictional alternate history - in form of a satirical book review - to illustrate how differently the Internet might have developed in a truly privatized world. Although the essay below (beginning after this abstract) is fictional, it draws heavily upon both the regulatory history of the Internet and the policy arguments at issue in today’s leading regulatory proceedings.
This article covers decisions like Carterfone, the FCC's Computer Inquires, giving control over TCP/IP to the National Science Foundation rather than AT&T, and the intentions of the 1996 Telecommunications Act. It also includes a reminder of the difference between open systems and closed systems:
One important way that open policies achieve this goal is by reducing various types of transaction costs. In open networks, new market entrants can completely avoid negotiating with companies who have “gateway control” over the network. The aspiring entrants do not have to pay—nor seek permission from—the network owners for access. Accordingly, these policies encourage vastly more experimentation and amateur “tinkering.” Closed networks, by contrast, produce relatively less innovation because they rely on centralized network owners to introduce—or at least approve—innovation before it becomes available.
This is a fantastic read (really riveting telecom reading -- how often do you get that?) and a good history lesson for people who were not there to see it firsthand over the years.