MediaFile

Congress should dismantle net neutrality

By Sam Batkins
October 28, 2011

By Sam Batkins
The views expressed are his own.

In 2008, candidate Barack Obama promised, “I will take a backseat to no one in my commitment to network neutrality, because once providers start to privilege some applications or websites over others, then the smaller voices get squeezed out, and we all lose.”  Following his election to the Presidency, he threw the democratic process in the backseat when his appointees implemented net neutrality without congressional approval.

Thanks to this regulatory end-around, net neutrality is currently law, but it doesn’t have to be.  Courts could strike it down before they review the President’s health care mandate, or Congress could take the first bite, rescinding the regulation under the little-known Congressional Review Act.

Net neutrality has received intense scrutiny for more than five years but the arguments against the Federal Communications Commission’s (FCC’s) power grab have hardly changed, and given the current economic climate, the arguments have only gotten stronger. The only thing that has changed is the FCC’s evolving justification for its implementation.

First, the FCC’s new net neutrality rules regulating Internet providers are price controls, plain and simple.  Anyone paying more for their debit card or noticing the paucity of free checking these days ought to know the consequences of government rate-setting.

Net neutrality explicitly bans “pay for priority” arrangements between broadband providers and other parties noting that “a commercial arrangement … would raise significant cause for concern.”  Price controls alone should be “cause for concern,” not arrangements between private companies competing for subscribers.

Let’s imagine for a second if the general ban on “pay for priority” extended to mass transit; highways for example.  Traditional city roads are free and open to all, which has led to mass urban congestion.  Northern Virginia traffic planners rejected this one-size-fits-all approach and adopted “HOT Lanes,” raising the social value of the traffic system by creating priorities and a chance for commuters to choose—or not.

Even the FCC couldn’t avoid the harsh reality of market forces, conceding in their rule, “[W]e recognize that some network congestions may be unavoidable.”  If only price controls were equally unavoidable.

Second, this action is 100 percent speculation, with the Commission listing a few “alleged” violations.  For example, the FCC mentioned the words “may,” “might,” and “prophylactic” (poor word choice, bureaucrats) more than 200 times in a 44-page rule.  If the Internet were truly in danger, they’d list 200 instances of service providers blocking content; they cannot.

What’s more troubling, despite the vibrant, innovative history of the Internet,  is that the FCC dares to declare, “The record does not enable us to make a predictive judgment that the future will be more competitive than the past.”  Really?

Adding to the speculative and unnecessary nature of the rulemaking, the FCC admits “current industry practices” already promote the open Internet and provide a dynamic marketplace for consumers.  If it’s already “industry practice” to allow consumers high-speed unfettered access to content, and these rules are merely “prophylactic,” why implement them at all?

Which bring us to the third reason why government regulation of the Internet is a horrible idea: it is likely illegal.  The D.C. Circuit Court already struck down the FCC’s attempt to regulate Verizon’s broadband management.

Last year the FCC argued that Section 706 of the Communications Act, generally promoting broadband, gave the Commission sufficient authority to implement net neutrality without a vote of Congress.  Now the FCC is taking the kitchen sink approach, citing nine separate sections and three separate titles of the Communications Act for that authority.  The Commission claims that it isn’t concerned about court review, but if its power to enact net neutrality by fiat is so cut and dry, wouldn’t it need only one clear cut provision to cite?

Instead, the FCC argues, “multiple Sections which, viewed as a whole, provide broad authority to promote competition, investment, transparency, and an open Internet….”  You’ve heard of the “Living Constitution.”  This is the living Communications Act, and the consequences are equally dire.

Congress never got a chance to formally decide net neutrality.  Now they will. Choosing between government rate-setting and allowing “current industry practices” to continue should be an easy decision, even for Congress.

PHOTO: Cables are pictured on the Internet server at the Swiss Federal Institute of Technology (EPFL) in Ecublens, near Lausanne May 9, 2011. REUTERS/Denis Balibouse

Comments
8 comments so far | RSS Comments RSS

Sam,

You claim that net neutrality is equivalent to price control, yet nowhere in your article do you make that case. I don’t think a convincing argument can be made for that position.

You decry the lack of democratic process in implementing net neutrality and suggest that if Congress were to make the call that somewhow that decision would be more democratic? So you probably are not aware how many members of congress are in the back pockets of the likes of Verizon, Comcast and their ilk by way of vast campaign contributions.

Furthermore, you completely ignore the fact that the majority of Americans are in favor of net neutrality, as multiple polls have borne out over the past several years.

Honestly, you come off sounding like a telecom lobbyist. Oh, that’s right, the American Action Forum is closely tied with the GOP! Ok, now it’s clear why you are pushing this deregulation angle. After the mess that financial deregulation has made of our economy, you think American voters are going to be receptive to your overtures? Get real!

Posted by GFawkes | Report as abusive
 

Your transportation analogy is badly flawed. You can’t pay to get into HOT (or HOV, or any of the other High Occupancy acronyms), you have to have more than one or two people in the vehicle. Other FCC forays into allowing the market to control a public asset, the airwaves, has left us with fairly monochromatic radio and TV with the voices of the wealthy being almost the only voices we hear. I, for one, am glad that the FCC isn’t going to let the wealthy dominate the internet.

Posted by majkmushrm | Report as abusive
 

So your genius argument is that the corporations should be able to self-govern and charge whatever they want to smaller merchants trying to compete with multi-national corporations on the internet? Isn’t it difficult enough already for small business to compete? Your argument is nonsensical and relies on market religiosity as its main support and thrust. Unbelievably, in the same breath, you cite government intervention in regulating highways as justification for corporate self governance on the internet? Weird.

Wake up and realize that you’ve lived in a mixed society your entire life, it’s afforded you enormous opportunity. Equal opportunity for all should be one of our highest ideals and I’m sorry but “current industry practices” on the internet will only corporatize our democracy further and stifle competition.

To quote Governor Christie, I too am just “sick of the crazies” like you.

Posted by newmichaelman | Report as abusive
 

Despite how you feel about net neutrality, you should know that Sam is right about the VA Hot Lanes, so its a valid metaphor. http://www.virginiahotlanes.com

This came directly from the FAQs:

What will the toll rate be?
Tolls for the HOT lanes will be dynamic meaning they will change based on real-time traffic conditions to keep the lanes free flowing.

When traffic increases, tolls will go up. When traffic decreases, tolls will go down. Because the tolls are based on real-time traffic conditions, it’s impossible for us to predict exactly what the tolls will be at any given time. We expect they will range from as low as 20 cents per mile to approximately a dollar per mile in some highdemand sections of the Beltway at peak times. The average trip cost is estimated to be between $5 and $6.

Posted by rembelle83 | Report as abusive
 

I’m with the other posters’ here, Mr. Sam Batkins. Your bias is so clear that one should wonder who is paying you, Reuters or AT&T.

Posted by LEEDAP | Report as abusive
 

I find it frustrating how these paid lobbyists can continue to get space on popular “news” websites, spreading misinformation about network neutrality.

Let’s start with the definition. To sum it up, network neutrality means “for the data crossing your network don’t spy on it and don’t mess with it”. This is pretty much the same rules we have for the telecom network, the electricity network and the water network. These rules have been self-evident for these networks.

Until a few years ago, this was also self-evident for the internet as well. Then ISPs (starting with Neil Whittacre’s speech, then AT&T CEO, in 1996), seeing how much money companies internet companies like Google and Amazon are making (BTW, both Google, Amazon, Netflix already pay plenty for their internet access), decided they wanted to mess with the data crossing their networks to extract a percentage of revenue for these internet companies (and sell user data to the highest bidder).

There already have been blatant abuses of network neutrality over the past few years like the Nebuad/Phorm scandals (people really should have gone to jail), the Comcast Bittorrent scandal (operators continue to selectively throttle bittorrent traffic), the ongoing scandal in Rogers where Rogers is randomly breaking apps, the recent Paxfire scandal where ISPs were working with Paxfire to redirect search engine search traffic to their preferred sites. Recently even Verizon Wireless changes their privacy policy to by default sell you location, browsing history and app usage to anyone willing to pay.

So there is definitely a need for some regulatory certainty in this area. Websites, internet companies large and small need some certainty that their websites will not become accessible, applications randomly break because ISPs (which they have no direct business relationship with) decide they want to hold these companies to ransom to extract additional revenue.

By the way, the analogy the author dreamed up is just wrong on multiple levels.

Firstly, network neutrality does not bar ISPs from a congestion pricing model. All it bars is spying on content being sent over then network and attempting to treat content coming from different locations differently. If we go back to the author’s analogy, it is not possible for the tollsite operator to treat a GM car differently than a Toyota, even though both cars may have the same mileage, size and engine type. Yet this is what the ISPs want to do the equivalent on the internet. Why again should we allow it?

As well the size of roads are ultimately constrained. You cannot just keep building more roads. This is not the case with the internet. You can definitely build more capacity…and over time as technology improves adding more capacity will become cheaper and cheaper! By allowing ISPs to ignore network neutrality and create “artificial scarcity”, it actually will reduce their incentive to increase network capacity as their money for double, triple and quadruple charging companies for “priority access” over their competitors will go away.

Posted by Flash2011 | Report as abusive
 

Net Neutrality is a critical topic that must be considered with less passion and more pragmatism.

Most of the operators are held by private investors. They invest in network infrastructure and sell services that are supposed to give them decent ROI. I’m afraid the Net Neutrality joint to the boom in Mobile Broadband traffic will lead to the bankruptcy of the liberal telecom market model. Then we go back to the minimum servicing Post and Telegraph Telcos.

The unpredictable and surprising growth of the mobile broadband traffic has surprised most of the mobile operators. In fact, the radio technologies, even HSPA+ and LTE appeared as incapable to satisfy the new capacity requirements. Operators all over the world are seeking for smart ways to offload the broadband traffic from wireless to fixed-line through Femtocell and Wifi in order to release their networks and their pockets.
Furthermore, network suppliers are working on new architectures that will revolutionize the wireless networks by relying most of the load on wireline networks and deliver the switching and service functions on cloud computing datacenters. The goal is also to release the expenditures and propose more flexible and scalable solutions to the suffering operators.

So, calling for Net Neutrality on the Wireless field will squeeze very hard the MNO business. Imagine that the statistically planned radio networks get flooded by P2P file sharing, video and skype traffics. Under a crisis situation, operators will either continue spending more and more on capacity upgrades; which will exhaust their budgets and decrease the profitability of their business without even solving the problem. Or, they will join hands to lobby for raising prices and finding new ways to charge more, not only end users but also content houses (facebook, google, why not?). Because with Net Neutrality and without one of these two solutions, MNOs will just hit the wall.

For fixed-line the picture is not less dark. In fact, for business balance purpose, the fixed-line broadband networks have always been built considering statistical traffic planning and estimation. Yet, if Net Neutrality is imposed, P2P file sharing and video traffic will overtake huge parts of the bandwidths, compromising HTTP, SLA professional services and so on. What should the operator do is even rougher than Wireless in somehow. There will be a whole chain of land gears to upgrade or swap: from access to aggregation switches to the backbone. Even without Net Neutrality, wireline operators cannot afford the traditional flat rate price packaged Internet (type 30$/month) and they’re even lobbying to charge the content providers such as Facebook and Google (yes, lion is being grabbed by its tale for business necessity!). And the irony is that they accepted to negotiate in order to avoid future crisis.

Net Neutrality is an ethical concept that can be considered as a citizen right in some point of view. However, the telecom market has been liberalized since at least a decade allover the world; and network operators act under a license contract and serve under pragmatic business plans. Net Neutrality is a critical variable that can compromise the whole business profitability. It must be present in the license conditions and contract as a clear clause. I’m saying so while being sure that if this happens, no investor will bother to buy telecom operation license, and we will see the PTT Telco model reestablish again in many markets.

If governments insist to apply the Net Neutrality, network operators will most probably lobby together and raise the prices in an extraordinarily way, and here end user will neither enjoy neutrality nor keep the advantageous flat rate prices.

I’d like also to look at the story from another angle. As has been reported recently by the WHO, there is more and more proofs that radio waves, precisely the case of mobile handsets, cause cancer, brain problems and nervous diseases. This is still a shy news until now, but it will develop and may cause serious economic crisis later.

Joining the Net Neutrality squeeze job to the health concerns to the difficulties in keeping steady business models will threat in a very dangerous way the telecom operators and the whole telecom industry. And therefore the risk of a more serious financial crisis has to be considered.

Posted by akkeri | Report as abusive
 

Unfortunately I made a couple of typos in my previous response:

- Whittacre’s speech I believe was in 2006, not 1996 (and it is Edward Whittacre Jr, not Neil :)).
- the last line should have read “By allowing ISPs to ignore network neutrality and create “artificial scarcity”, it actually will reduce their incentive to increase network capacity as the opportunity to double, triple and quadruple charge companies for “priority access” will go away”.

I have to respond to Akkeri’s post.

He makes an important point that wireless carriers are much more capacity constrained that wire line carriers.

This fact, however, is completely irrelevant to the Network Neutrality discussion. The rest of his post repeats traditional telecom talking points. Let me respond to them one by one.

Akkeri makes the case that ISPs not be constrained by Network Neutrality so that they can intelligently manage traffic. This is false. If networks are overloaded the correct solution is Usage Based Billing. Wireless carriers are already moving to this model. You are already being charged for a finite amount of bandwidth per month (typically a couple of GB a month). We have already paid for that bandwidth! ISPs cannot be “flooded” by bittorrent or skype if they limit the maximum amount of data which can be consumed per billing period.

Again, internet companies are not “free riders”. Google, Netflix, Facebook and other content providers already pay plenty for their internet access. Investment in the internet will dry up if they have to pay again and again to every last mile ISP with their hand out (“if you don’t pay we will throttle your traffic or break your app and you will lose X customers”).

And it is a complete and utter fallacy that Network Neutrality will lead to higher prices. What Network Neutrality maintains is transparent pricing. When I pay for internet access I know what I am getting and I can make accurate comparisons between ISPs. This goes away with a non-neutral internet. In a non-neutral internet you will only be able to see Hulu if you subscribe to one ISP, but if you want to subscribe to Netflix you will need to subscribe to a different one. You may need to pay money to Google for that Gmail account as every ISP charges google for access. In theory whilst your “top-line” internet cost may be lower (though given the cable TV experience I seriously doubt it) you will pay more through extra add-on charges and less choice.

Unfortunately ISPs can’t accept that just like water, gas and electric, internet is just another utility and needs to be treated as such. No other utility can hold specific users to ransom to extract more revenue. ISPs should be no different.

Posted by Flash2011 | Report as abusive
 

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