Net Neutral?

By Noah Marks 

Last week, the Wall Street Journal broke the news that the FCC’s third attempt to regulate “in defense” of net neutrality would allow “commercially reasonable” agreements between content providers and Internet service providers. The “commercially reasonable” test aligns with the January DC Appeals Court decision striking down the FCC’s previous attempt but affirming their right to regulate broadband. Net neutrality is based on the premise that all Internet traffic is treated equally, regardless of who requests and what is requested. Under the new rules, larger companies could purchase from ISPs the right to have their content arrive faster to consumers. Since broadband is essentially a straw, with fixed (albeit expandable) capacity, it is impossible to have some content arrive faster without the rest of the content arriving slower.

The FCC chairman has been quick to assert that the new regulations would not, as many have warned, destroy net neutrality, for three reasons: (1) they would require ISPs to disclose their capabilities and any agreements they make with companies, (2) no legal content could be blocked, and (3) the “commercially reasonable” requirement for all agreements. It is dubious at best whether transparency protects net neutrality – knowing that Netflix pays to deliver Breaking Bad faster does not help companies who are unable to pay the premium, it only makes sure the fee to play is standard across ISPs. As for the second restriction, even if content is not per se blocked, slowing down delivery by as little as 250 milliseconds has a significant impact on visitors. Finally, the third restriction is essentially a policy punt – leaving for another day, and the FCC’s case-by-case judgment, what is reasonable. An obvious problem the FCC will face is defining in which commercial world to judge reasonableness – what is reasonable for Amazon or Facebook in their commercial context is very different than in the NGO/non-profit context of Jstor and the Red Cross, but they all rely on the same ISP infrastructure.

Proponents of “net discrimination” have argued that the additional capital ISPs raise will enable wholesale improvements to broadband (currently, US consumers pay more than our European counterparts but receive speed that is closer Ukranian internet speed). However, in this case, a rising tide does not lift all ships: the latency that we are patient enough to tolerate has steadily decreased as Internet speeds have increased (in 2004, latency of 2 seconds was tolerable). Therefore, Internet could quickly mirror aviation: a privileged few in luxury, the rest cramped and ignored.  Another argument made in the Wall Street Journal by an unnamed executive is that net discrimination allows ISPs to tax those companies who use the bulk of the infrastructure (video traffic is more than half of US bandwidth), instead of charging customers to upgrade infrastructure and ‘subsidize’ content providers. However, that argument completely ignores the most likely outcome – Comcast charges Netflix more, so Netflix either (1) creates tiers of service for fast-lane access or (2) passes the cost back to the consumers, just with one more step of markup. Indeed, this could lead to a arms race where all content providers have new, high expenses, raising the price for existing services and most likely inducing currently free services to charge for access. Additionally, that argument assumes that the biggest content providers are the richest, but it is not obvious that high use equals high capital and capacity to pay tolls.

Ultimately, net discrimination may be inevitable (it would continue to separate the US from the rest of the world, which consistently affirms net neutrality). If that is the case, the least the FCC could do is set a floor on the minimum speed – perhaps as some percentage of average speed) that would backstop open access to information and maintain the innovative capacity of the internet.

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