Nondiscrimination

The Debate so far, and a better solution than FCC regulation.

Since 2006 there has been a cycling debate over how the Internet should work. Should all data traveling over the network be treated about the same? Or, is Google getting a free lunch, and have its service degraded along with other ungrateful content providers abusing little old AT&T’s network (Buzz Out Loud 02/08/2006). The debate has changed since then from a hypothetical problem over “Google’s free lunch” (Buzz Out Loud 02/08/2006) and Verizon. It then moved to an actual violation when Comcast throttled BitTorrent packets (Packets are what are sent through the Internet instead of gigantic files all at once to prevent the network from being clogged. BitTorrent is a peer to peer file sharing protocol where all users downloading a file are also uploading it to others) and only BitTorrent packets. To todays debates over whether or not the FCC should or can regulate service providers to insure they treat all packets going through their network equally. While the FCC can regulate the service providers (unless congress says otherwise) regulation for neutrality may not be the best move. The best way for the FCC to ensure neutrality would be to encourage more competition.

The FCC has recently decided to start making regulations on service providers to ensure neutrality. They are basing these new regulations off of their prior “four principals” that would prevent service providers from “accessing lawful Internet content, applications, and services of their choice, nor can they prohibit users from attaching non-harmful devices to the network” meaning that the telephone company offering DSL and fiber-optic can’t block internet phone companies like Vonage or your cable company from blocking internet TV services like Revision3 or Hulu even though it competes with their core business model of delivering phone or pay TV service (Reardon [FCC Chief] par. 3). The Commission would also like to add two new bits to the regulation that would “prevent Internet access providers from discriminating against particular Internet content or applications” so that a repeat of the Comcast/BitTorrent controversy cannot make a comeback (Reardon [FCC Chief] par. 4). They are also seeking regulation to make providers be transparent about their network management practices so that consumers know what they are getting into ahead of time in regards to when their provider will start throttling them (Reardon [FCC Chief] par. 4).

All of this is fine, except for the fact that any government regulation will worry some. Regulation worries some because of what could happen in the future if the FCC gets into regulating how content gets delivered on the Internet. Some have stated that regulating service providers could lead to there being a “Fairness doctrine” applied by the FCC onto the Internet (BOL 1091). As Tom Merritt said in that episode of Buzz Out Loud that for there to be a free network you would need this style regulation to prevent service providers to block content or services (BOL 1091). There is more of a risk that left unregulated (and with the FCC not having the power to regulate the result could be worse than if there were a fairness doctrine in place.

Once these plans for regulation were announced some in congress started towards blocking any regulation (ignoring the fact that the procedure has a one-hundred twenty day long period for review and comment). One of the first to do so was Arizona Senator and 2008 Republican Presidential nominee John McCain (R-AZ); he introduced his “Internet Freedom Act”. McCain’s bill states that the FCC “shall not propose, promulgate, or issue any regulations regarding the Internet or IP-enabled services” somewhat defeating the purpose of a Federal Communications Commission (If in fact the Internet is a communication medium, not just a clever porn delivery system) (Bradley par. 4). The basis for this is the thought that the free market can police its self. Historically this is untrue, beyond the Comcast situation AT&T tried to block Internet phone services from it’s mobile network (used mostly for cheaper long distance calls [data is cheaper than voice minutes, despite being capped at about five gigabytes per month]) and stopped out of pressure of possible regulation (Bradley par. 6).

Beyond the need for the threat of regulation to keep service providers in line, there is a dearth of choice in the broadband market. Back in 2005 a company called Brand X LLC. challenged a ruling by the FCC that allowed cable companies not to share their lines with smaller service providers (Schatz, Drucker, Searcey par. 6). This effectively made so that the market for broadband Internet service was between two parties, your phone company (AT&T or Verizon) and your cable company (Comcast or Time Warner in most cases) (Schatz, Drucker, Searcey par. 10). Your phone company offers fiber-optic connections (which also carry TV) and DSL service (Slow, but still somewhat open due to the Bell trust-busting a few decades back). Your cable company offers cable Internet and TV. This issue only started to come up when Verizon started saying that Google was getting a free lunch, and wanting them to pay to not be lowered to a lower quality of service (Unheard of in a neutral network, which the Internet currently is) (Buzz Out Loud 02/08/2006). The problem is that “THEY PAY” either by paying a host a flat rate per bunch of data to link them to the Internet, or by dealing directly with backbone providers (AT&T and Verizon…) along with building out their network and allowing them to transfer some of their data through them and dealing with billing only one way (a balance of payments to one side, unless it matches up then its free for both sides)(Buzz Out Loud 02/08/2006). Add to that Verizon’s statements that they would have liked to use up to eighty percent of their own network to deliver their own services, which Google and its quality fee would be helping Verizon strengthen “their gas infrastructure”(Buzz Out Loud 02/08/2006).

But the problem is not that service providers cannot be neutral providers. The problem is the lack of competition. With only two real providers how can we expect the invisible hand of capitalism to do it’s job. Especially if both of the companies do the exact same thing (Not in a colluding way, but more like what EA and 2K Sports did after EA bought an exclusive NFL licence, 2K took the MLB and EA took College Baseball, and Football). The ideal solution would be to break open the cable lines and then regulate for neutrality. Although neutrality should not come from the FCC due to the possible future creep into content that some fear, instead regulate through the Federal Trade Commission. Recent studies have shown that regulated neutral networks with lots of competitors lower prices for consumers and increase speeds for users as reported in the Ars Technica article (Anderson). This must be because with many players that all have to do the same thing the real differences are in speed and price. There would be more of an incentive to increase speed because then more people would be willing to pay more for your service. Or, charge less, as most people are not too interested in massive speed, but lower prices. Also, any company violating neutrality would either be smacked back into line by the invisible hand of the market or if extreme enough by the FTC. Unfortunately this is still a bit of a dream, as the Telco lobby is massive and this issue not that big.

In the end while service providers may not make as much money as they have in this duopoly they will still make profits. The line owners of the world would make money from many sources by selling access. Users would have the same excellent service at a more affordable rate, and more people would be welcomed into the modern Internet fold (as dial-up is no longer viable as a connection).

The importance of this however is that this would be one of those issues that it is easier to just keep it the same than to have go to a worse system and deal with a big happy-with-the-new-way Telco lobby trying to revert back to this way. The market is the best way to deal with this issue, but the way the FCC will likely go is not that bad if the regulation is well crafted. It’s better to have something that kind of works than have something worse than what exists now.

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Idea No. 242