The internet, network neutrality and permission to innovate

53 Comments

The internet champions “permissionless innovation,” the ability to develop new services without tedious negotiation and approval. As the Federal Communications Commission makes its third attempt to develop a fair, coherent, and lawful regulatory policy for the internet’s broadband on-ramps, it can either apply this principle or it can adopt Title II — a contrary rule that once limited the pace of innovation in the historic telephone network.

Much of the internet establishment, many ordinary citizens, and even some cable network comedians urge implementing Title II without acknowledging the harm it’s likely to cause. The father of net neutrality, Columbia law professor Tim Wu, is an exception: he admits that “excessive regulation can stagnate an industry” even while preferring monopoly-style regulation for increasingly competitive broadband networks.

A historical precedent

There is no clearer example of stagnation than traditional telephone service. Since the passage of the Communications Act in 1934, telephone service has remained remarkably constant. While telephone operators gave way to automatic switches and rotary phones were replaced by touch-tone, the nature of the telephone call itself hardly evolved: there was no migration to high-definition calls, video calling, or calling on the go until broadband and mobile networks took over.
internet connections

Restrictive, monopoly-oriented telephone network regulation effectively preserved the status quo in the face of massive upheavals in technology, many of them created by the phone company itself.

Unlike the telephone network, the internet was not designed for the purposes it serves today. Its original “killer app” was computer time-sharing, an application driven by the economics of computing in the 1970s. Before the PC, mainframe computers cost millions of dollars. They had to be intensely shared by many to justify their price tags; the internet made this possible, but it didn’t stop there.

Broadband technology allowed the internet to become a Swiss Army knife, nurturing an expanding range of applications beyond time-sharing from email to web surfing, mobile calling and messaging and many audio and video uses. Despite the internet’s essential indifference to the phone call, it massively outperformed the telephone network as a medium for personal communication.

Technology trumps regulation

Capitol Hill taken by  Songquan Deng via Shutterstock.

Capitol Hill taken by Songquan Deng via Shutterstock.

Technology is clearly a more powerful force for progress than regulation. For example, tone dialing was invented in the 1940s, but it didn’t make its way to the consumer until the 60s and didn’t serve more people than rotary dialing until the 80s, an astonishing four decades to reach mainstream status. This slow diffusion was all because of regulatory overhead.

In the overall scheme of things, tone dialing is a minor feature that’s dwarfed in significance by innovations offered through the internet on an almost daily basis without regulatory approval. If eBay had been subject to telephone-style regulation we’d still be waiting for the first online auction.

The internet has succeeded because it’s flexible and open to new applications, new users, and new networking technologies, not because it’s rigidly confined to a regulatory box with an established history of stifling innovation.

Technology has an affinity for competitive markets: it provides entrepreneurs with an edge that can help them stand out from the pack, and it enables them to constantly improve products and services to stave off competition. Highly regulated industries and public utilities never quite seem to know what to do with technology other than apply it in small ways to increase efficiency.

A blank slate for innovation

Innovation in a thought bubble written on a chalkboard

Photo courtesy of Flickr user Think public.

But the most dramatic consumer benefits actually stem from re-imagining the big picture. The interstate highway system forced the railroads to realize they were transportation companies with an intrinsic interest in integrating their operations with those of truckers and manufacturers.

A similar dynamic is afoot in entertainment, where internet-based middlemen such as Netflix, Amazon, and YouTube are beginning to realize that their continued success depends on constructive partnerships with both creative industries and broadband services.

Understandably, all three industries beseech Washington DC and the states for a thumb on the scale. All play important roles, as do their counterparts in consumer electronics, technology R & D, and venture capital. But recent history underscores the fact that technology-driven innovation is too rapid and unpredictable for micro-management. No matter how strongly we may be drawn to neat and tidy utopian visions, the future always zigs where we think it should zag before exceeding the scope of the overseer’s imagination.

Technology regulators must be humble, only intervening in commercial squabbles as a last resort. For all its warts, the permissive broadband approach to internet regulation is the better way forward. The FCC should free broadband networks from the specter of telephone-era regulations and nudge them in the direction of even higher performance, including expedited delivery services for applications that need them, such as immersive video conferencing, HD voice, and other real-time applications.

Networks need the freedom to improve

net-neutrality-toll-booth
The argument for applying telephone regulations to broadband is typically cast in terms of fears about “fast lanes” that are blind to the way the Internet operates. I have offered a rebuttal to this thinking in my comments to the FCC.

Expedited delivery is also important for voice and other real-time applications that can’t be helped by CDNs which are better suited for web sites and video streaming. Plus, expedited delivery of real-time applications is unlikely to affect the performance of web sites at all.

The single most important question for internet policy makers today is not how to keep the internet “the way it’s always been” — it’s how to make it a better platform for more applications. The answer is to allow more experimentation – with appropriate oversight – not to fossilize it in its current, essentially accidental form.

Richard Bennett is a network engineer, co-inventor of Wi-Fi, and a Visiting Fellow at the American Enterprise Institute.

53 Comments

Chris

Love seeing the proletariat mob come out with the pitchforks making ad hominem attacks when someone contradicts their collectivist ideology.

So what if Mr. Bennett is or is not paid by Comcast. Does that make him wrong? He obviously has some qualifications in this area. Would you prefer to get your “facts” from, for example, a blogger who hasn’t a shred of educational or professional experience in building or operating packet networks and has never been involved in establishing public policy, just because you agree with their opinion?

Net Neutrality was once a simple idea that lawful services should not be intentionally blocked from being accessed (something that Google does as a regular course of business in its search business but is somehow left out of the debate). It’s an idea that has near universal support.

Net Neutrality, along the way, turned into a religion that is proselytized by hardcore ideologues who are intolerant of debate and generally lack the necessary technical or professional qualifications to have an intelligent debate. Net Neutralityism serves the collectivist ideologue as not much more than a basket of grievances and straw man arguments, almost all of which can be quickly defeated with fact and logic by anyone with a reasonable level of knowledge in the area of broadband networks, law, economics, and basic common sense. That’s why you rarely see a Net Neutralityism proselytizer actually debate their ideas… easier to push them with a keyboard and populist hyperbole from the basement while streaming Golden Girls reruns on Netflix than is to try and explain why paying for what you use and being able to buy a better performing product if you want one should be illegal. And then try to explain, with no background in law, why the threat of that eventuality should be cause for the government to place broadband under Title II conservatorship, even though there is nothing in Title II common carrier law that bans usage based pricing and/or multiple products of varying levels of performance.

Richard Bennett

Somebody must have shared this post on reddit. Some of these drive-by comments are hilarious.

Not for sale to the highest bidder

A shill shilling for cable oligopolies. Stay classy Richard!

Stacey Higginbotham

Given the accusations made in this comment section and in other publications about Comcast and Richard Bennett, I wanted to make a few things clear. First, this is not a news article. It’s an opinion piece penned by a guest author who is clearly labeled as such. We edited the post for clarity and to remove statements that we found misleading. Second, Comcast is a donor to AEI as it is to other many other institutions, but Bennett has clearly stated to me that he was not paid to write this article by Comcast or on behalf of Comcast, as is the inference in some of the accusations. Bennett has held a clear and fairly consistent position with regard to how the government should view network neutrality and regulate the telecommunications industry over several different jobs and several years.

Neither I nor Gigaom (see our story here: http://gigaom.com/2014/07/14/tech-giants-and-start-ups-split-on-tactics-in-battle-for-net-neutrality/) agree with Bennett’s position, but we feel important to understand what the other side is saying. Those who are undecided can view Bennett’s arguments up against those made by others, including our own staff writers, and then make a decision. Those who disagree know what they are up against and can get busy refuting the arguments. That’s why we ran this piece: So that our audience can read it and make their own decisions.

joe

Fuck you shill. No normal human being could possibly side with cable providers side of this issue unless you were getting paid to do so! Fuck you and fuck him.

Steven

Stacey, giving editorial space to opponet of net neutrality on a consumer blog is like giving equal airtime to a climate change denier.

Richard Bennett

There’s no much danger of opponents of net neutrality getting equal time on GigaOm. In fact, Silicon Valley is actually quite evenly divided between the reclassifiers and the light touchers. The Information Technology Industry Council (the IT industry’s main lobbying group, supported by Google, Microsoft, Akamai, Intel, et al and by no telecom carriers) is against Title II reclassification too; See: http://apps.fcc.gov/ecfs/document/view?id=7521678855

Steven

Richard, you really are a shill. I don’t even know how you can come on here and thump the bible of free market when the current ISP structure goes against every notion of a free, fair and open competitive market. I live in New York system, which is our supposed gleaming capital of urbanization, and I have a choose between Verizon DSL – which is crap – and Time Warner – which is overpriced crap. It’s the definition of a monopoly. Open up your Economics 101 textbook and look who gets screwed in that system – the consumer!

Go collect your pass through payments from AEI. Don’t expect sympathy here.

Michael Bean

What a tool. So how much has comcast paid you, or your institution directly?

Also, sick wordpress website!

prowlingparis

You get paid to write lies Richard Bennet. You obviously don’t study jack; you just write what you are ordered to. This is your life, you should cry.

Richard Bennett

So how is it that broadband networks double in speed every three years, Vectored DSL is replacing VDSL, DOCSIS 3.1 with speeds up to 10 Gbps will roll out soon, more than 100 US cities are targeted for FTTH, and mobile carriers are trialing LTE Advanced? The first cable Internet service I bought, from @Home with an installation program I wrote, provided 1.5 Mbps download speed, and today I have a 50 Mbps service for the same price.

There’s actually a very close relationship between broadband performance and quality and application quality, diversity, and power. I’m saying they’re both important.

And yes, some of us would like to see faster upgrades but we’re in the minority. Most people just care about price and reliability.

Richard Bennett

Oops, this comment is supposed to be a reply to Ben Louis M.

prowlingparis

I’ll reply accordingly nonetheless:

You can torture stats until the end of days and 1-) make ’em say anything you want 2-) confuse ppl into thinking you know something.

If you want faster access, you break monopolistic behavior and allow for local broadbands to be built. The same sold out senators and policy-makers are blocking a free-market like that, in addition to greasing the pockets of your employers who want to protect the greedy monopolistic visionless selfish suits who run literally the most hated companies in America.

You don’t have integrity, and you think it’s ok just bc a lot of other people don’t either. Good thing internet’s written in ink and your grandchildren will know the kind of spineless yes-man you are. You are on the wrong side of history homeboy.

Richard Bennett

I have enough spine to put my real name on the comments I leave on the Internet, and enough integrity back up my claims with data. Does that offend you?

Ben Louis M

Lets go through the logic you present in this article:

If Regulation was bad for touch tone dialing, then all Regulation is bad.

If Regulation is bad, then the FFC enforcing Net Neutrality is bad.

This entire article is a verbose example of the Accident Fallacy

Richard Bennett

That’s not exactly what I’m trying to say, Ben. I tried to argue that Section 706 regulation is better than Title II regulation because Title II has a history of slowing technical progress and 706 is all about accelerating it.

I’m sorry if I wasn’t clear.

Ben Louis M

That is the same argument, replace “Regulation” with “Title II Regulation” in my previous comment and you have the same fallacy.

Here’s the problem with your innovation argument: innovation for ISPs does not equal innovation for the internet. You use the ideas interchangeably which is misleading. The only innovation that ISPs are striving for are ones that squeeze more dollars out of everyone’s pockets to provide the same or worse service. This would be at the expense of innovation on the internet. It isn’t good for the consumer or technology in general.

Richard Bennett

I think innovation in apps is related to the services the actual networks provide. This shouldn’t be hard to understand.

Why so shady?

Why do none of your links support the thing they are supposed to. For instance your link “This slow diffusion was all because of regulatory overhead.” has nothing about diffusion of touch tone dialing being slow because of regulation. And ” blind to the way the Internet operates. ” doesn’t show anyone being blind, it’s simply Mr. Wu saying that president has not followed his promise of making sure what we are talking about didn’t happen. Are you calling Tim Wu blind to the way the internet operates?

Seems like you just made these links to a random article so people think your statement is supported rather than actually find links that support your statement.

Shady

Richard Bennett

One link demonstrates slow diffusion, and the other demonstrates that some people claim that prioritization is a zero-sum game. The detailed argument behind my post is my FCC Comments, linked toward the end. There’s only so much you can say in a blog post.

Dan

What we want is for all network traffic to be treated equally. This means that ISPs would have to deliver all content to their customers without bias. This principal has allowed the tremendous growth and flexibility that you spoke about in the article. It means that the next great innovation (whatever that might be) will be free to gain momentum without interference.

It seems to me that the debate right now is skirting around the heart of the problem with the system: that internet service is dominantly provided by companies that have a powerful financial incentive to harm internet companies that deliver content. Every hour a Comcast and Netflix customer is watching Netflix is an hour that same customer is not watching pay TV through Comcast. It is in Comcast’s best interest to make Netflix watching an unpleasant experience so that people will watch cable TV, on demand movies, and subscribe to premium channels. The better the internet service, the more likely a customer is to only have internet service.

So I believe wholeheartedly that ISPs should be forced to treat all traffic equally if for no other reason than it prevents them from having an unfair advantage over their competition. Call me crazy, but I think the advantages (and money) the public has already given to cable companies is more than advantage enough.

Richard Bennett

This is where we differ. All traffic is treated more or less equally by ISPs today, leaving interconnection and CDNs aside, and that has been good for some applications but not good for others.

I’d like to see what happens if ISPs are required to sell access to low latency delivery services to support real-time, HD Voice, and immersive conferencing. This is not something ISPs are asking for, BTW, it’s my own personal little dream. ISPs are perfectly happy with best efforts because that’s a restriction that protects their voice products from competition.

Richard Bennett

Sorry Jeff, but AEI doesn’t do work for hire. I suggest you contact a PR firm.

Richard Bennett

Any second now, Brett Glass will come along and call GigaOm a Google shill.

Look, kids, there are different points of view on how to regulate broadband, and even on whether it needs to be regulated at all. I’m a regular reader and commenter at GigaOm, and every five years or so they let me write a post. Say what you want about me and AEI, but don’t drag GigaOm into it.

And no, Comcast doesn’t pay me, nor did I write this post at their behest. Comcast is already covered by the 2010 Open Internet rules because of the merger conditions they accepted in the NBCU deal, so it’s actually in their interest for the FCC to regulate other carriers in the same way they’re regulated. That’s one reason by the Esquire guy’s fixation on Comcast is so bizarre.

Jon

I think Robert forgot to mention his company’s ties to Comcast didn’t you Robert.

Greg

What are your ties with Comcast and why haven’t they been included? Full disclosure use to be part of news.

Josh

I find this article ironic. In spite of the fact that net neutrality has been the modus operandi of the Internet since its inception, enabling every crucial Internet innovation by public and private sectors alike until very recently, the author argues that continuing with net neutrality will stifle innovation much like regulation (supposedly) stifled the telephone industry. In fact, much of the stagnation in the telephone industry was the result of market forces plus insufficient regulation, allowing the emergence and continued domination of the AT&T monopoly. It was only regulatory action—the DOJ’s case against AT&T leading to the breakup of the monopoly—that allowed something of a competitive market to develop.

For the time being the nature of network technology makes ISPs into natural monopolies. Unless this changes, they should be aggressively regulated as such. Contrary to this article, the economics of monopoly suggest that it would be the _lack_ of regulation of ISPs that would lead to telephone-like stagnation.

Richard Bennett

The Bell System (AT&T, Western Electric, and affiliates) monopoly was created by an agreement between the Bell System and DoJ called the “Kingsbury Commitment” in 1913. The basic premise was that AT&T was promised a monopoly in exchange for universal service. This was enshrined in law by the 1934 Communications Act, which was operational until the breakup of the Bell System by the courts in 1982. So all of the history I discuss is related to a period when the Bell System was heavily regulated.

Title II changed in the 1996 Telecom Act, to the extent that local phone companies were required to open their lines to competitive telephone companies and consumers were allowed to choose long distance carriers. So I would say this was “more regulation”, it was just different regulation that forecast a future that never arrived, competitive telephone service by wire. The shift from wired to mobile phones made most of this stuff moot.

It’s either true or false that the Internet has always been neutral depending on whether you’re talking about the NSF backbone period before privatization or the period after, and what you mean by neutrality. The practices that were normal between 1983 – 2002 when Tim Wu wrote his first memo on net neutrality were mainly dictated by technology limitations; the Internet in those days wasn’t able to support a wide range of applications because IP is so ill-suited to access the Quality of Service features in Ethernet, SONET, DOCSIS, Wi-Fi, et al.

The Internet has always been dominated by one killer app: first it was time sharing, then email, then ftp, then Gopher, then the Web, and now video streaming. The Internet has a one-track mind (or one-lane traffic management ethos, it’s the same thing) for most of its history.

I think this bias tends to hold back progress and innovation. I also don’t agree that ISPs are natural monopolies either today or in the future; for the most part, I expect the future of networking to be mainly wireless at the edge, and with wireless you can have lots of competitors in lots of places. It’s already the cast that many, many people regard their mobile screen as the first and main one, so we’re not far form escaping the tyranny of the wire.

Ryan Aslett

Everything you just stated about the internet it patently false, bordering on absurdity.

There has never been a “internet killer app”, just ones that take more or less bandwidth and bandwidth consumption has *zero* applicability when talking about progress and innovation. Email, ftp, web services, mobile apps, bittorrent, cloud file sharing are *all* alive and well. It’s like you’re trying to state that the internet has somehow been held back by progress and innovation, despite the fact that its the single most innovative tool in the last 30 years.

It’s too bad that most people dont have the technical chops to see this thinly veiled word salad for the sock puppetry that it is.

On the other hand, it warms my heart that *this* is the best that that last mile oligarchs can come up with.

Richard Bennett

Best-efforts traffic delivery means the network can only be tuned to applications by provisioning, which is very slow to change and is only responsive to one pattern of use. The killer app notion describes the app for which the infrastructure is provisioned.

Tim

Yes, we have seen abundant innovation on the content side, e.g., Google, Facebook, Twitter, SnapChat, What’s App, etc. making fortunes for their investors. Meanwhile, the basic network performance which all of this depends upon lags behind much of the rest of the world. That is exactly what you would expect if the returns on investment in infrastructure are limited by regulation.

Richard Bennett

I’ve studied international data on broadband deployment, speed, adoption, and price, and don’t find any support for the idea that the US lags any significant part of the world in any category other than broadband use by elders. In terms of speed, the US ranks anywhere from 8th to 12th in the Akamai rankings, depending on which metrics you look at. The countries with higher speeds are very small and urban – like Hong Kong and Korea, where most people live in high-rises – or former Soviet republics that never had cable TV and have recently installed FTTH in the cities.

The most interesting comparisons are between the US, Japan, and the UK. Japan has spent an enormous amount of money to provide most people with VDSL, FTTH, and cable, and has the highest speeds and very attractive prices, but Americans transfer more data over their broadband connections than Japanese do. UK is mostly a DSL nation, but about half can get cable at very high speeds – it starts at 50 Mbps and goes up to 150 – but usage is about two-thirds what it is in the US. Their main telecom, BT, has been hemorrhaging red ink since it was privatized, so something needs to change there.

Tim

Thanks for great article. As you say, every business is looking for a thumb on the scale in their favor. If the ISP’s currently have too much power, they should be running away with the game. But, look at some representative market caps
ATT 188B
Verizon 209B
Comcast 141B
Netflix 26B
Facebook 172B
Google 393B

Facebook + Google are worth more than ATT + Verizon + Comcast. ATT is worth only about 7 times Netflix. Yet, think about the relative scale of those business, how long they took to build, how many people they employ, how easy they would be to replace. And Netflix thinks it deserves more help from the government? When all they do is serve content created by others over networks operated by others.

Richard Bennett

Yes, Netflix has a slim value proposition, but they can be very important for recommending content to watch in the million channel world. Their biggest challenge is actually access to content, not to delivery. Except for a couple of high-profile disputes, their access to eyeballs is more than adequate.

Ryan Aslett

Netflix isn’t asking for help from the government. They are asking the government to prevent the last mile providers from leveraging their absolute local monopolies to the detriment of not only netflix, but *every single service on the internet*.

Tim

Most people have a choice between DSL or cable, so the monopoly is really only on high quality video streaming. Most of the truly revolutionary interactive applications the Internet enabled work just fine at DSL speeds. More TV is cool if that’s your thing, but I don’t think it’s a major public policy issue. And, maybe I don’t want my Internet bill subsidizing your Netflix bill.

Also, if abuse of monopoly power is the problem, why aren’t we seeing better performance where FIOS offerings go head to head with cable? Maybe it is simply the case that residential broadband service is expensive to deliver and nobody can do it for less. Have you noticed that the major broadband providers, ATT, Verizon, Comcast, Google all have some other large source of revenue to help support their business? Yet, people continue to be duped by Netflix PR.

Pete

Bandwidth requirements are ever growing. High quality video streaming will be tomorrow’s slow lane. Think 4K video, real time cloud storage.

DSL is a dead end.

Comments are closed.