Blog Post

The FCC Needs to Do the Right (& the Hard) Thing

Back in November 2007, I remember sitting in my office one evening and reading then-Senator Obama’s Technology and Innovation Platform for the first time. I was genuinely excited about this PDF. I was particularly taken by a paragraph that appeared right up front:

. . . Because most Americans only have a choice of only one or two broadband carriers, carriers are tempted to impose a toll charge on content and services, discriminating against websites that are unwilling to pay for equal treatment. This could create a two-tier Internet in which websites with the best relationships with network providers can get the fastest access to consumers, while all competing websites remain in a slower lane. Such a result would threaten innovation, the open tradition and architecture of the Internet, and competition among content and backbone providers. It would also threaten the equality of speech through which the Internet has begun to transform American political and cultural discourse. Barack Obama supports the basic principle that network providers should not be allowed to charge fees to privilege the content or applications of some web sites and Internet applications over others. . . .

I remember being amazed that a candidate had actually come out and said that he understood what net neutrality was about and that he knew it was important to the nation’s economy and culture. President Obama said it again in February 2010.

“I’m a big believer in Net Neutrality. I campaigned on this. I continue to be a strong supporter of it. My FCC Chairman Julius Genachowski has indicated that he shares the view that we’ve got to keep the Internet open, that we don’t want to create a bunch of gateways that prevent somebody who doesn’t have a lot of money but has a good idea from being able to start their next YouTube or their next Google on the Internet.”

“This is something we’re committed to. We’re getting pushback, obviously, from some of the bigger carriers who would like to be able to charge more fees and extract more money from wealthier customers. But we think that runs counter to the whole spirit of openness that has made the Internet such a powerful engine for not only economic growth, but also for the generation of ideas and creativity.”

Net neutrality is actually a very old idea. The idea is that when you’re making point-to-point basic transportation (of information or people) available to the public, you’re not supposed to discriminate against uses of your network. (Barbara van Schewick has a marvelous new book out about this here.) We’ve had this idea for lots of networks, including the telephone, the telegraph, the electrical grid, and the railroads. These networks provide basic inputs that are so important for economic growth and creativity that it would harm society to allow private network owners to pick winners and losers, charging one user more than another for the same basic transport service.

This old idea has a old response: distribution networks that should, by rights, be constrained from discriminating often seize the chance to act in cahoots with particularly valuable shippers to make better profits. They can do this when they don’t face much competition. This is good for the two in cahoots but bad for the rest of us.

Example: If you’re a railroad operator, you have high fixed costs and you’d love to have some deep-pocket shipper guarantee you a constant stream of revenue. The railroad barons of the early 1900s did exactly that, using secret rebates to effectively charge a favored customer (say, Standard Oil), much less than they charged other shippers using their lines. It was worth it to the railroads because they made more from Standard Oil, even with rebates, than they would have by offering commodity shipping to all comers. Result? Standard Oil could use the railroads to raise its rivals’ shipping costs and drive them out of business. Lots of rock-ribbed Republicans hated the railroads because they didn’t allow a free market to operate.

Well, the analogy to the railroad today is high-speed Internet access. It’s a key basic infrastructural input into economic life: transporting everything, and transforming every town in America and around the world. It wouldn’t be a good idea, the President keeps saying, to allow the private network operators who provide us with Internet access to discriminate against particular shippers (now, the content and application providers). These operators don’t have much competition to constrain them, and they have every interest in favoring their own business plans. Even more importantly, they’re providing an essential input to America’s economic future.

Deregulation of high-speed Internet access happened via some Bush-era FCC semantic shenanigans back in 2002. I’ve explained this here, and here. It’s time, the President has said, to go back to the status quo. We won the election, after all.

The Verizon-Google (s vz) (s goog) legislative proposal released this week would, if enshrined in legislation, allow network operators to provide exclusive-deal services over their Internet Protocol pipe that would compete directly with other online applications and raise their costs of doing business, just like our railroad-and-shipper example. A carrier could, say, partner with a cable channel to provide Video on Demand services to its subscribers. That would allow the cable channel to raise the “shipping” prices of rival online video distributors, because in order to reach audiences in a similarly technologically advanced way, the rival online distributor would have to also make a deal with the carrier: a deal that might not be available, or might be too expensive for a start-up.

(That’s why, by the way, the cable industry in particular wants these special services to be indistinguishable from Internet access. Cable wants to destroy its online competition, and this net neutrality issue is deeply related to the Comcast/NBCU merger. )

The companies are saying “don’t worry, that’s not the Internet.” But it will certainly appear to be the Internet to the rest of us, and we’ll give up on the slow-lane services that aren’t satisfying. The companies are also leaving wireless out of any nondiscrimination promises, which most of us also thought of as an access route to the Internet, and the nondiscrimination regime they’ve proposed for wired access is pretty weak.

In an op-ed in the San Jose Mercury News I’ve joined with three other law professors to say that the vacuum we now have in regulating high-speed Internet access has led these companies to divide things up among themselves. The FCC is being disintermediated, in effect. The Commission needs to act quickly to protect entrepreneurs, innovation, and consumers.

Here’s President Obama again:

“So let me remind everybody: Those of us in public office were not sent to Washington to do what’s easy. We weren’t sent there because of the big fancy title. We weren’t sent there to — because of a big fancy office. We weren’t sent there just so everybody can say how wonderful we are. We were sent there to do what was hard. (Applause.) We were sent there to take on the tough issues. We were sent there to solve the big challenges. And that’s why we’re there. (Applause.)”

Dear FCC: It’s time to do what is hard.

Susan Crawford is a member of the faculty of Cardozo Law School and also a Visiting Research Collaborator at Princeton’s Center for Information Technology Policy.

13 Responses to “The FCC Needs to Do the Right (& the Hard) Thing”

  1. I would hope that your enchantment with the then Senator has waned now that we have actually seen the effect of his ill-fated policies. Politicians love to wax philosophically about “non issues” that engage people while not actually addressing real issues. Saying that you are for net neutrality is like saying you are for the Earth. Who isn’t? My point is that these so-called walled gardens or ghettos, if you prefer, can be created under current rules, not just under the principles that Verizon/Google created.

    Carriers have not formed these alliances because they know of the backlash that would ensue, such as removing barriers to true competition. This is why the railroad analogy does not work in this situation. When Comcast blocked BitTorrent, there was a huge public outrage and the FCC investigated. Some people switched carriers. Subsequently, Comcast changed the rules for its content management equipment. If carriers started creating walled gardens, the FCC would be sure to investigate utilizing its current authority. Local and state governments would likely get involved and start removing barriers to competition that presently protect their monopolies or duopolies. Competition would ensue which is one of the reasons that Verizon started working with Google. Although the principles would create competition for content against Verizon, it would maintain status quo on network access for the most part. Large companies are adverse to change.

    Politicians, bureaucrats, and the lawyers involved with net neutrality fail to mention that the easiest way negate any potential content bias is through competition. Allow local government entities to build their own open-access infrastructure to resell to service providers so that there are more than two carriers in a market. This group fails to consider this option for two reason. First they are not business people. They think in terms of creating more laws and regulations. Secondly, their industry makes money on it whether through legal fees or lobbying.

    Let industry, engineers, and the free-market address net neutrality. They are the experts. The FCC should facilitate competition by removing barriers for unique business models that will increase broadband penetration. Although the Internet is important to many people and our economy, it is a private enterprise not a Constitutional right. Many people tend to forget that fact.

    Differentiated services create a “smart Internet” that allow third-party service providers to compete effectively with the incumbents. For an extra couple of bucks a month to your Netflix subscription, you could receive streaming high definition video without the buffering and block error that are typically encountered. With Netflix, Boxee, Amazon, and Hulu, I could replace my cable provider, still see the programs I enjoy, and save $30 per month. If the network remains “dumb,” then I am stuck with my traditional cable. What cannot be allowed is the discrimination of the same content dependent on the content provider. So Google should not get higher quality services because it can pay more than Netflix or Boxee. Service quality should be managed based on content type not provider. The groundwork for managing QoS across networks is already being addressed by the Metro Ethernet Forum.

    In summary, listen to the people pushing net equality (my preferred term). They are politicians looking for sound bites, bureaucrats seeking cushy lobbying jobs, lawyers looking for or representing clients, political organizations with an ulterior motive, and the press pushing the aforementioned groups’ agendas. I have not seen content providers like Hulu, Netflix, Boxee, Amazon, and others writing OpEd pieces and blog posts condemning the Verizon/Google principles. In fact, they are considering joining the group in continued refinement of them. So before you start believing the doom-and-gloom scenarios of a second-class Internet, take some time to think through the issue an ask yourself whether we are trying to fix a problem that has yet to exist; whether you trust politicians and bureaucrats that can be purchased by the highest bidder; whether the government can run the Internet as well as it does other social programs like social security; whether the people that created and operate the Internet may know best how to evolve it?

    I am personally at a loss as to understand why there are so many people in this country that are against free-enterprise and think government control is the answer to every question. This country was a success because it was built on individual liberties, limited government, and free enterprise. We are now experiencing the affect of changing that formula.

  2. Robert Shorin

    The mission of the FCC is to serve the public interest and to permit corporations to use public airways if they serve the public interest. The internet must be free of corporate control so that the public can be kept informed, and so that there is no discrimination in favor of rich corporations at the expense of the private citizen.

  3. Robert M. Cerello

    Get this one right–or you will have no support left, in view of the Ken Salazar fiasco and the lies being told about your stimulus, health care reform bill and other successes by unregulated neocon newstwisters, swiftboaters and paid liars. If we are not to lose this nation to pseudo-puritanic extremists frauds, anarchists and worst, hen you have to deliver on this promise above all others–the one that touches the rights, liberty, future and hopes of every citizen most deeply. Do the right thing., HInstruct the FCC’s leaders to “regulate” participants and shortcircuit potential wrongdoers and would-be monopolists. NOW. This is the key to the nation’s future–and to that of your Administration.

  4. Don Samuelson

    Very clear and thoughtful statement. Would be worth a well publicized panel discussion broadcast everywhere, perhaps distributed by the PEG channels nationally.

    It would be useful for the various BTOP Comprehensive Community Infrastructure grantees to adopt these principles as illustrations of how these ideas should work in practice.

  5. Richard, of course trains are different than the Internet.

    The question is, what does openness mean on the Internet?

    Almost all net neutrality advocates agree that customers should be able to pay for better service, as long as other customers aren’t degraded without their consent. People should be able to pay for higher bandwidth connections, lower latency, and so on.

    The fallacy people like you make is thinking that the same principle should apply to having your packets delivered to customers. There’s nothing wrong with edge companies collocating servers or taking other steps that only the well-heeled can afford to improve their service.

    But there’s a big difference between that, and creating artificial last-mile scarcity, or leveraging that real scarcity, in a way that end users have no control of. And that’s third-party paid prioritization in a nutshell: the ISPs try to make money over the fact that they have a terminating access monopoly over their customers, and do all this without saying a word to those same customers.

    You guys also tend to think that “technologists” should be able to do whatever they want on their networks, even lying to customers and interfering with the service they have paid for. You don’t get to say you’re providing access to the “Internet” when you’re monkeying around and playing favorites.

    • To characterize for-fee low-latency delivery service as nothing more than a means of extracting monopoly rents is simply an attempt to score an emotional point at the expense of the Internet’s utility. All four of the law professors involved in the Mercury News op-ed have lobbed this rheortical bomb on many, many occasions.

      Three of them are committed to imposing regulations on the Internet that would make it unlawful for network operators to raise the priority of low-latency applications over bulk data applications whether a fee is charged or not, so the question of fees is actually academic. Van Schewick’s definition of “non-discrimination” says that all users and all applications must be treated the same, for example; it’s the “nothing but box cars” rule.

      At the same time, they’re all in favor of edge-caching services provided by CDNs, even though it’s a provable fact that CDNs degrade the service of users who aren’t accessing content from the CDN. The wholesale ban on prioritization by edge networks is therefore arbitrary, inconsistent and harmful to network performance.

      Real-time applications don’t benefit from edge caches, because they don’t deal in canned content. In many scenarios they would benefit from a priority boost at the far edge, and it’s not at all clear that the fee for obtaining this would be anywhere near as great as the fee to use a CDN.

      As I said, we all want an Open Internet and we all want innovation; in order to get to these goals, we need to abandon the naive vision of a passive, unmanaged, neutral network. Today’s Internet user sustains more traffic degradation from other applications than from network operators, and this problem is only mitigated by active management of traffic flows. Regulatory oversight is generally a good thing, but it has to be informed on a technical basis.

  6. Take a look at a train sometime. You’ll see that all the cars are not the same. Some are standard box cars, some are tankers, some are open topped rock carriers, some are refrigerated, and some are designed to carry passengers in different classes of comfort.

    Everyone has open access to the type of train service they want, but they’re not all forced into one type of service – like the standard box car. So the railroad is open, but it’s not neutral.

    This the fallacy that the law professors have fallen into with Internet regulation: You want an open system. Congratulations, technologists want an open system, too. But you mistakenly believe that forcing all packets into a single Type of Service mold advances the goal of openness, which is essentially a technical judgment that policy makers are not qualified to make. In fact, neutrality does not facilitate openness and innovation, it stifles it.

    You’re right on the goal, and wrong on the means.

  7. I don’t see what the FCC can possibly do. Didn’t they recently get neutered by a court decision which declared a lot of this net neutrality stuff out of its jurisdiction? Not only would it be difficult for the FCC to do anything but due to that case it would be illegal for them to do anything.