Prospects for Widespread Access to Electric Vehicle Charging Stations: Insights From Telecommunications Technology Diffusion

            An energy reporter, for a major daily business publication, contacted me to understand how electric vehicle charging stations might become more readily available, particularly in rural locales. She wondered whether the fast take up of new telecommunications technologies, such as cellphones, cable television, and broadband, might offer insights on what works to jump start market penetration.

             Bear with me as this apparently geeky subject offers insights on when electric vehicles might reach critical mass, in time to achieve a significant reduction in greenhouse gasses.

             The reporter intrigued me with a curious question whether the fast proliferation of gas stations might provide a model for similar geographical market penetration by electric vehicle charging stations.  My small collection of vintage gas station published road maps confirms she may be onto something.           

 

             This late 1950s map of Iowa identifies locations where motorists can fill up with Skelly gasoline:

             Marketing 101 suggests that a companies can bolster brand loyalty by offering a product far and wide.  The map identified locations where motorists could find a Skelly station on the recently constructed Interstate 80.

             Access to EV charging follows a similar chicken/egg challenge: car buyers will become more inclined to buy an EV if they have confidence that access to charging stations will not create FUD: fear, uncertainty, and doubt.

             Several parallels in telecom provide insights on what business models work. 

 Cellular Radio

             Some of you might remember the bad old days when a lack of vigilance when “roaming” might result in a hefty and unexpected charge.  Before nationwide roaming, with “anytime, anywhere minutes,” the U.S. had many standalone, “independent” operators, primarily serving ex urban and rural locations.  These carriers made a killing by providing access to their networks by motorists speeding along a major Interstate highway.  Few noticed the icon on their handsets (or bag phones) showing that a call was being handled by another carrier.

             The major operators, such as Bell Atlantic, Pacific Telesis, Bell South, and Southwestern Bell eventually executed roaming agreements with the small, independent operators, thereby reducing or eliminating “non-network” roaming charges.  The end to unexpected, extortionate roaming charges helped expand subscribership and the eventual mergers and acquisitions that now leave us with only three national carriers.

 Cable Television

             Unlike cellular radio, cable television debuted in lots of rural areas at the same time, or even before urban service.  First generation cable was labeled Community Antenna Television, typically offered by local, “Mom and Pop” television sales and service ventures.  These entrepreneurs offered cable television, primarily to stimulate interest and demand for television sets.

             CATV market penetration occurred on small, town-by-town basis without coordination, or accrual of scale economies.  Rural residence, starved for any broadcast television reception, gladly paid for access to a few broadcast channels.  Their urban counterparts had free, off-air reception options.  Only after cable operators embraced satellite technology to deliver distant signals and new cable only content did national penetration and subscribership speed up.

 Broadband

             High speed Internet access provides a case study in a most desirable, but costly technology largely unavailable in rural locales unless and until, private and public actors subsidize access.  This technology has high startup costs that operators must bear before the first dollar arrives.  On the other hand, adding an additional subscriber typically has much lower, so-called incremental costs, especially for high density locales.

             A private venture might vertically integrate into the electric charging market to remove FUD, generate brand loyalty, and stimulate vehicles sales.  It might also install facilities using proprietary standards resulting in incompatibility with EVs manufactured by competitors. 

             A government agency might want to stimulate demand, but typically the legislature must enact laws creating tax incentives and financial subsidies.  Unless and until incentives are anticipated and/or funded a “Digital Divide” has resulted.  The Covid-19 pandemic underscores the consequences when broadband access is unavailable or deemed too costly.

             For broadband and EV charging, state and federal governments may have to create generous financial incentives to achieve anything close to ubiquitous access.  Early adopters might not need as much external funding, because they can anticipate market opportunities, such as when a national hotel chain prioritizes the installation of charging stations.

             In any event, the past technology adoption models may offer insights on this new challenge.

Latest Publications: Conflict in the Network of Networks: How Internet Service Providers Have Shifted From Partners to Adversaries

The Hastings Communications and Entertainment Law Journal (Volume 38, No. 1 pp. 63-90) has just published an article of mine that examines the peering process.  I show that peering "partners" no longer have a common and shared mission.  Instead the parties become opponents on compensation and interconnection arrangements as occurred between Netflix and Comcast.

The article reports on the FCC's concerns about peering and the prospect for government oversight established in the 2015 Open Internet Order.  I suggest that the FCC refrain from intervening unless and until a stakeholder files a formal complaint based on the assertion that the parties cannot achieve a a commercially negotiated arrangement.

Cable Retransmission/Channel Placement Negotiations and Commercially Reasonable Internet Connections

            Back at the drawing board, Chairman Wheeler and staff have attempted to find the sweet spot where ISPs can negotiate paid traffic prioritization so long as it’s “commercially reasonable.”  Libertarians and a lot of other observers would conclude that all commercial negotiations reach a reasonable outcome between two willing parties.  So absent coercion or evidence of an unfair—okay call it unreasonable—trade practice, the negotiation should produce a mutually beneficial outcome.

            Such outcomes do not prevent one side from exercising superior bargaining leverage.

            In broadcaster-cable television retransmission consent negotiations, the former enjoys a superior bargaining position for two reasons: 1) broadcasters have exclusive access to “must see” television such as the regular season of professional football and 2) cable operators face severe restrictions on their ability to negotiate with a distant broadcaster if the local station imposes unreasonable demands. So arguably the deck is stacked in favor of broadcasters.

            What does the Commission do in this situation?  Nothing for two reasons: 1) the Commission lacks specific statutory authority to impose terms and conditions; and 2) the Commission wisely refrains from interfering with “marketplace driven” negotiations knowing that eventually the parties will reach closure, particularly after the regular NFL season begins.  The Commission limits its intervention to defining what constitutes good faith negotiations.

            I acknowledge that the consequences of regulatory reticence to act can more significantly harm consumers when ISPs cannot come to terms.  The pain threshold arrives almost immediately when access to the Internet cloud becomes congested, or when specific sites become inaccessible.  Many would assert that reliable and neutral Internet access has more significance than whether cable television subscribers can watch a football game. 

            Similarly the D.C. Circuit Court of Appeals has instructed the FCC that it lacks jurisdiction to supersede cable operators’ channel placement and content tiering decisions. Absent a “voluntary” commitment, as occurred when Comcast agreed to limits on its channel placement freedom, the FCC cannot mandate neutrality and fairness.  Comcast can place its owned and operated Golf Channel on the basic tier and relegate the Tennis Channel to a more expensive tier viewed by fewer subscribers.   Was this a commercially prudent decision, or one designed to disadvantage the Tennis Channel?  The court in effect said it does not matter.

            The FCC has a model in retransmission consent and case precedent that it may not consider applicable.

           

FCC Chairman Wheeler’s Open Internet Strategy Post Verizon v. FCC

            FCC Chairman Wheeler has released a statement outlining his thoughts on how the FCC lawfully can press on for open and neutral Internet access; see http://fcc.us/1c2RBzv.

             I appreciate what Chairman Wheeler has attempted to do: avoid any unlawful mission creep in light of the strong language in the Verizon decision, but also run as far as possible with Sec. 706 authority.  I do think the Commission can move forward with muscular transparency/disclosure requirements.  Just now Netflix subscribers don't know the cause of any service degradation so perhaps ISP disclosure requirements might provide some light on how frozen images came about even for subscribers to FIOS service operating at multi-megabit per second speeds.

    I do think the Chairman and the Commission will find a less than receptive D.C. Circuit should any order ignore the clear prohibition on the imposition of Title II common carrier requirements on ISPs.  I don't see much wiggle room in the no blocking, no discrimination area, nor am I as sanguine as the Chairman in terms of what deference the data roaming decision affords the FCC.  That decision emphasized the use of commercial negotiations and the limited role of the FCC and its ability to intervene. 

    One could draw a parallel between the duty to negotiate, commercially driven data roaming terms and conditions and the similar duty to negotiate retransmission consent between cable operators and local television broadcasters.  In both instances the FCC cannot act proactively and has limited powers even to resolve a protracted dispute. Unfortunately for broadband subscribers there won't be a specific "must see" television program that forces one side to capitulate, so degraded service and not so subtle abuses of last mile access may occur.

 

Post Network Neutrality Feud Number 1: The Netflix (Traffic) Jam

            As you know, the D.C. Circuit Court of Appeals has invalidated network neutrality requirements that impose common carrier requirements.  In this blog and elsewhere I predicted an uptick in disputes between content providers and distributors in the absence of unquestionable authority for the FCC to intervene if necessary. 

To be clear I favor commercial negotiations that typically resolve interconnection compensation disputes.  However, I also suggest that the FCC have authority to resolve intractable disputes as a referee and mediator.

So along comes another dispute between Netflix and retail ISPs such as Verizon and Comcast.  See Drew FitzGerald & tzGerald   BiograShalini Ramachandran, Netflix-Traffic Feud Leads to Video Slowdown, The Wall Street Journal (Feb. 19, 2014); available at: http://online.wsj.com/news/articles/SB10001424052702304899704579391223249896550?mod=WSJ_hp_LEFTTopStories.

This really should not come as a surprise, even as retail ISPs already receive compensation on both sides of their two-sided market: 1) 3 digit margin monthly broadband retail subscriptions; and 2) transit payments from ISPs, particularly Content Distribution Networks for Netflix such as Level 3.

Retail ISPs want a third revenue stream on some notion that content sources, such as Netflix, are “bandwidth hogs” who should be throttled, or alternatively hit up for direct payments.  In particular it must tick off senior management at ISPs, owned by cable television companies, to see Netflix offer a $7.99 value proposition when cable content bundles are 10-15 times as expensive.

I agree that a direct payment should flow from Netflix if and only if it directly interconnects with a retail ISP.  If Netflix were to stop using CDNs and seek to interconnect directly with ISPs providing the last mile delivery Netflix surely should pay including the significant electricity used to power onsite proxy servers. 

But are retail ISPs right to demand payment from both the directly interconnecting upstream ISP/CDN and even farther upstream from the content source?

I don’t think so, but there’s nothing stopping retail ISPs from trying.  Apparently Verizon and others can degrade Netflix traffic delivery—intentionally or not—without much consumer pushback.  When consumers don’t get high resolution Netflix content, they do not even know whom to blame.  Has Netflix done something wrong, or has the last mile carrier?  Who operates the weakest and inferior link when multiple ISPs participate in the complete end-to-end routing of traffic?

Until retail ISPs lose customers or the debate in the court of public opinion expect more interconnection compensation disputes to arise and possibly mess with your Internet access experience.

The Network Neutrality Debate in “Extra Innings”

     Since release of the D.C. Circuit Court decision on the FCC’s Open Internet Order, I have read and reread the decision along with many interpretations.  I have seen some opponents to network neutrality try to convince themselves and others that the two courts decisions have little impact or finality, so the campaign (and the need for financial support) must continue. 

     On the other hand, some advocates for network neutrality appear intent on finding a glimmer of hope that the decisions do not prevent the FCC from yet again trying to carve out a regulatory regime for Internet access.  Even as the court devoted much space in explaining what the FCC cannot do, many advocates on both sides invoke the validation of FCC statutory authority (under Section 706 of the Telecommunications Act, 47 U.S.C. §1302) as evidence that the FCC can still do harm, or remedy likely problems.

     Both sides appear to overstate what the court considers lawful going forward.  Bear in mind that Section 706 only authorizes the FCC to promote access to, and investment in the Internet.  The legislative history appears to emphasize deregulatory initiatives, rather than new regulatory ones to achieve the specified twin goals.  Both court decisions devote many pages on what the FCC has done unlawfully with fairly clear admonitions on what the Commission cannot do going forward.  Put simply, the FCC has a limited wingspan for invoking Sec. 706 to create regulations directly impacting how Internet Service Providers (“ISP”) deal with upstream sources of content and downstream subscribers.

     The Commission can impose transparency requirements such as the duty to disclose when network management factors warrant throttling (slowing down) certain traffic streams, or when an ISP offers premium, “better than best efforts” quality of service and traffic routing options.  Likewise the Commission should retain authority to respond to complaints from subscribers, upstream ISPs and content sources.

     However, the language in Sec. 706 and the clear prohibition on imposing common carriage responsibilities significantly constrain the FCC.  Perhaps more importantly and ignored from the analyses I’ve read is the insight provided by cable television case precedent and the court’s reading of these cases.  These cases did not endorse the FCC’s imposition of anything coming close to common carriage responsibilities on cable operators. 

     The high water market of a duty to deal occurred when the FCC created a dichotomy of carriage options pertaining only to significantly viewed broadcast television stations.  When unable to extract payment from cable operators for their “retransmission consent” broadcasters can demand carriage, a process known as “must carry.”  Note that the FCC limited this carriage obligation to a select beneficiary, broadcast television stations, not to any and all sources of content.

     The D.C. Circuit court in Verizon v. FCC, http://www.cadc.uscourts.gov/internet/opinions.nsf/3AF8B4D938CDEEA685257C6000532062/$file/11-1355-1474943.pdf, emphasized that the FCC could apply its expertise to determine that the public would benefit from a limited cable television carriage regime.  The FCC rules provided for a marketplace-driven, commercial negotiation process by the stakeholders, with the prospect of mandatory carriage coupled with denial of monetary compensation flowing to the source of content electing compulsory carriage. Note that currently most broadcaster-cable operator negotiations opt for retransmission consent and not must carry.  Additionally the FCC limited the carriage requirement to a percentage of overall channel capacity.  Also the Commission never put itself in the position of ordering cable operators to carry a specific station, or content.

     The court in Verizon v. FCC devoted several pages to explaining that when the FCC decided to mandate the reservation of channels by cable operators for access by a larger group of qualifying candidates, (public, educational, local governmental, and leased-access users), the Commission exceeded its statutory authority by imposing the functional equivalent of common carriage.  See FCC v. Midwest Video Corp. - 440 U.S. 689 (1979)(Midwest Video II).

     It appears to me that the D.C. Circuit has provided the FCC and others rather clear guidance on the way forward.  The Commission cannot impose common carriage requirements and not even quasi-common carrier duties to deal that extend to a large subset of the public.  The court used a little snarkiness to admonish the FCC not to push the envelope as it had done with previous interpretations of its ancillary jurisdiction.  Noting that even regulatory agencies take pride in authorship, the court recited the history of network neutrality litigation where the Commission’s work product failed to pass muster, but it soldiered on only to receive the same rejection.

     Perhaps history will not repeat itself.  However the FCC has a long history of false pride, or at least the inability to take no for an answer. Some of the judges in the D.C. Circuit court appear to know this and to infer from this the need to provide clear instructions. 

    Is anyone listening?

The D.C. Circuit Court Decision on the FCC’s Open Access Order

            The D.C. Circuit Court of Appeals has affirmed the FCC’s reading of Section 706 in the Communications Act, but also determined that the FCC could not extrapolate from that Section statutory authority to prohibit Internet Service Providers from engaging in discriminatory practices, including blocking access to specific content. See http://www.cadc.uscourts.gov/internet/opinions.nsf/3AF8B4D938CDEEA685257C6000532062/$file/11-1355-1474943.pdf.

            This is “damning with faint praise” at its finest, so much so that the author of the decision condescendingly notes that “even a federal agency is entitled to a little pride” (p. 20) when after losing the first case on network neutrality (Comcast v. FCC, 600 F.3d 642 (D.C. Cir. 2010) the Commission struggled onward to find lawful authority.  This decision offers the FCC a generally worthless victory that the Commission can lawfully find some statutory basis for jurisdiction over Internet Service Providers so long as the responsibilities imposed do not constitute common carriage. 

            The court again reminded the FCC that having classified Internet access as an information service, the Commission has no foundation whatsoever to impose common carrier duties:

even though the Commission has general authority to regulate in this arena, it may not impose requirements that contravene express statutory mandates. Given that the Commission has chosen to classify broadband providers in a manner that exempts them from treatment as common carriers, the Communications Act expressly prohibits the Commission from nonetheless regulating them as such. Because the Commission has failed to establish that the anti-discrimination and anti-blocking rules do not impose per se common carrier obligations, we vacate those portions of the Open Internet Order. (p.4)

            Some network neutrality advocates had expressed hope that the court would have considered nondiscrimination and anti-blocking rules as permissible in light of a recent case that approved as non-common carriage specific interconnection requirements on wireless carriers. In Cellco Partnership v. FCC, 700 F.3d 534, 541 (D.C. Cir. 2012) the court approved the FCC requirement that wireless carriers negotiate commercial terms and conditions for data roaming, Internet access via smartphones located outside the customer’s home service territory.  The FCC treats all forms of Internet access as non-common carriage by classifying the offering as an information service.  The court affirmed the FCC, because the imposition of some duties to deal, e.g., providing data roaming, does not rise to the level of compulsory carriage, particularly because the FCC only required commercial negotiations and recognized that the duty is not mandatory if technologically infeasible, or that the terms and conditions be uniform across all instances of interconnection.

            Even with a quasi-common carrier option, the FCC cannot expressly impose non-discrimination and anti-blocking duties.  Section 706(a) of the Communications Act requires  the FCC to “encourage the deployment on a reasonable and timely basis of advanced

telecommunications capability to all Americans . . ..” Section 706(b) requires the Commission to conduct a regular inquiry “concerning the availability of advanced telecommunications capability” and if it determines that access is not available on “a reasonable and timely fashion” “to take immediate action to accelerate deployment of such capability by removing barriers to infrastructure investment and by promoting competition in the telecommunications market.”

            The court determined that the FCC could reasonably interpret Sec. 706 as providing statutory authority for some degree of private carrier oversight, despite the FCC having previously determined that this Section provided no such foundation when the Commission previously sought to classify ISPs as information service providers entitled to a largely deregulated status.  The court defers to the FCC and its later in time decision to consider Sec. 706(a) as providing a statutory basis for regulatory oversight: “Does the Commission’s current understanding of section 706(a) as a grant of regulatory authority represent a reasonable interpretation of an ambiguous statute? We believe it does.” (p.22)

            The court accepts the ability of the FCC to change course and even change factual determinations, as when the Commission determined that the Internet access market lacked sufficient competition having previously determined that it did. The court also does not dispute the FCC’s finding that ISPs have the ability to engage in discriminatory practices: “there appears little dispute that broadband providers have the technological ability to distinguish between and discriminate against certain types of Internet traffic,” p. 38 nor does the court dispute that the Internet access subscribers cannot or will not quickly change providers if potentially harmful discrimination actually occurs:  
For example, a broadband provider like Comcast would be unable to threaten Netflix that it would slow Netflix traffic if all Comcast subscribers would then immediately switch to a competing broadband provider. But we see no basis for questioning the Commission’s conclusion that end user are unlikely to react in this fashion. (p.39)

            However, the ability to discriminate does not automatically translate into illegal discrimination particularly when the FCC has determined that discrimination is something only common carriers cannot pursue.

            The FCC may seize upon the approval of its reliance on Sec. 706 to assert statutory authority to regulate ISPs.  However, the Commission will have little latitude and even less deference to craft quasi-common carrier duties on ISPs.  One permissible duty would require transparency and full disclosure of non-neutral service arrangements.  The Commission lawfully can require "truth in billing" by private carriers.  Perhaps the potential for consumer pushback in response to disclosed sweetheart deals with corporate affiliates and favored ventures might create a disincentive for ISPs not to go overboard. 

Tracking New Models and Conflicts in Web Interconnection and Delivery

            You might have an interest in my work to understand the diversification of web interconnection and content delivery models, largely driven by the substantial increase in streaming video and the proliferation of Content Delivery Networks.  ISPs have devised many new deviations from the traditional peering/transiting dichotomy including: use of Internet Exchange Points by Tier-2 ISPs, paid peering, CDN surcharges, equipment co-location, e.g., Netflix Open Connect Network; “specialized networks” and Intranets/ Multiprotocol Label Switching and non-carriers like Google securing Autonomous System identifiers.

            Some retail ISPs also want to increase to three the number of payers for last mile content delivery.  Currently end users pay monthly Internet access subscriptions and directly interconnecting, upstream carriers pay when traffic for delivery well exceeds what the retail ISP can or will hand off for upstream carriage.  The targeted third revenue source does not directly interconnect, but constitutes a major source of content, e.g., Netflix.

            I’m working on a paper that examine existing and likely future interconnection disputes with an eye toward identifying where conflicts will arise and whether commercial negotiations can reach closure on a timely basis.  Here’s a link to slide pack summarizing the paper:
http://www.personal.psu.edu/rmf5/New%20Models%20and%20Conflicts%20in%20the%20Interconnection%20and%20Delivery%20of%20Internet-mediated%20Content.ppt.

Netflix and the Future of NGN Interconnection

            Recent press accounts report that Netflix and cable television companies have collaborated on carriage agreements.  What results from these negotiations may provide a model on next generation network (“NGN”) interconnection and compensation arrangements.

            Currently telecommunications, cable television and Internet arrangements have problems for video-heavy traffic flows.  Traditional telephone carrier settlements have too much granularity when the meter counts minutes of use.  Cable television retransmission consent agreements primarily cover copyright licensing, because the content typically arrives at the cable head end via satellite (paid by the content provider) leaving the cable operator with the last mile distribution it already performs for all other channels.  Current Internet arrangements focus on directly interconnecting carriers and customers making it difficult to extend a compensation demand farther upstream to sources or distributors of content.

            Retail ISPs in particular have objected to providing last mile carriage of Netflix traffic “without compensation,” a false allegation, but one gaining some traction.  ISPs want Netflix to pay them directly, in addition to the significant retail subscriptions paid by their end users and the transit, paid peering and other compensation arrangements paid to them by Content Delivery Networks and even other ISPs with comparatively more traffic needing downstream delivery.

            Netflix and cable operators appear to work on a mutually beneficial interconnection and compensation regime where compensation flows directly to the cable operator, but the length of carriage—and presumably the cost—drops with the installation of a proxy server directly at the headend.  Netflix benefits by securing higher quality of service and some future assurance that the cable broadband plant can and will handle even more traffic as Netflix’s subscribership grows and when content formats increase in bandwidth requirements, e.g., 3D and ultra high definition. 

            Cable operators benefit, by securing financial compensation for their retransmission consent.  While the interconnection arrangement may differ from other satellite-delivered cable networks, or the retransmission of broadcast channels, cable operators will receive direct compensation for providing a subscriber-friendly platform using the existing set top box.

            Consumers may end up having to pay more for their Netflix subscription to cover higher delivery costs as well as higher copyright licenses, but the convenience in access enhances the value proposition.  Rather than trying to engineer and “sling” Netflix content from the computer to the television set wirelessly, the content arrives directly to the television set, a winning proposition.

New Publication--The Mixed Blessing of a Deregulatory Endpoint for the Public Switched Telephone Network

        Telecommunications Policy soon will publish my paper entitled The Mixed Blessing of a Deregulatory Endpoint for the Public Switched Telephone Network

        Here's the abstract:

            Receiving authority from a National Regulatory Authority to dismantle the wireline public switched telephone network (“PSTN”) will deliver a mixture of financial benefits and costs to incumbent carriers.  Even if these carriers continue to provide basic telephone services via wireless facilities or the Internet, they will benefit from the likely substantial relaxation of common carriage duties, no longer having to serve as the carrier of last resort and having the opportunity to decide where and what services they will provide going forward.  On the other hand, incumbent carriers may have underestimated the substantial financial and marketplace advantages they also will lose in the deregulatory process.

            Incumbent carriers often obscure or dismiss as insignificant the substantial privileges and benefits accruing from their status as telecommunications service providers.  Common carrier responsibilities include duties to interconnect with other carriers, provide service on transparent and nondiscriminatory terms and offer some low margin services.  But this legal status also guarantees wireline local exchange carriers in many nations access to annual universal service funding, zero or low cost access to rights of way and radio spectrum, accelerated depreciation and other tax benefits, the ability to vertically integrate throughout the “food chain” of telecommunications services and dominant status in the administration of telephone numbers, standard setting and other policy issues.  Incumbents will strive to capture deregulatory benefits while retaining the many benefits previously reserved for common carriers.

        This paper will identify the potential problems resulting from the decision by the United States Federal Communications Commission (“FCC”) to grant authority for telecommunications service providers to discontinue PSTN services.  The paper also will consider whether in the absence of common carrier duties, carriers providing telephone services, including Voice over the Internet Protocol (“VoIP”), voluntarily will agree to interconnect their networks.  The paper will examine Internet peering and other types of network interconnection with an eye toward assessing whether a largely unregulated marketplace can ensure ubiquitous access to PSTN replacement services. 

        The paper concludes that private carrier interconnection models and information service regulatory oversight may not solve all disputes, or foreclose price discrimination for functionally the same type of service.   Recent Internet interconnection and television program carriage disputes involving major players such as Comcast, Level 3, Fox and Cablevision, point to the possibility of increasingly contentious negotiations that could result in balkanized telecommunications networks with reversed or reduced progress in achieving universal service goals.  The paper also concludes that rural access to VoIP and other voice communications services could end up costing significantly more than what urban residents pay, an efficient, but politically risky outcome.

Yale JOLT Article on Internet Access Regulation

     The Yale Journal on Law and Technology has recently published my article entitled Rationales for and Against Regulatory Involvement in Resolving Internet Interconnection Disputes (14 Yale J.L. & Tech 266 (2012); available at: http://yjolt.org/rationales-and-against-regulatory-involvement-resolving-internet-interconnection-disputes.
     Here's the abstract:

      This Article will examine the terms and conditions under which Internet Service Providers (“ISPs”) switch and route traffic for each of several links between a source of content and consumers. The Article concludes that the Federal Communications Commission (“FCC”) may lack direct statutory authority even to resolve disputes based on its determination that Internet access constitutes an unregulated information service.  Additionally the FCC may appropriately forebear from regulating, because sufficient competition favors industry self-regulation.

       Despite substantial reasons not to intervene, the FCC nevertheless might have to clarify its understanding of what subscribers of retail ISP services can expect to receive. Under truth in billing and other consumer safeguards the Commission might require ISPs to explain what an Internet subscription guarantees not only in terms of transmission speed and downloading capacity, but also what subscribers can expect their ISPs to do when receiving content requiring downstream   termination.

      The Article concludes that both customers of content services, such as Netflix, and retail ISP subscribers expect their service providers to guarantee delivery of movies and all sorts of Internet traffic respectively. For physical delivery of DVDs Netflix must pay the U.S. Postal Service and for delivery of streaming bits Netflix must pay one or more ISPs. But for Internet traffic involving two or more ISPs, the Article examines whether other retail ISPs providing last mile delivery of content violate their service commitments to subscribers by demanding additional payment from upstream carriers.

Holiday Reading Part Two

Here's a work in progress that considers the middle ground in the network neutrality debate: Do Conduit Neutrality Mandates Promote or Hinder Trust in Internet-Mediated Transactions?.

The abstract for the paper:

As the Internet evolves and matures, Internet Service Providers (“ISPs”) have begun to create increasingly diversified business models for serving downstream end users and upstream content providers. Increasing subscriber demand for broadband connections necessitates efforts to identify and serve new profit centers and to differentiate retail and wholesale users on the basis of subscriber bandwidth requirements and other customer-specific demand characteristics. ISPs have identified new strategies to differentiate their offerings on the basis of price, quality of service, transmission speeds, permissible amount of capacity uploaded and downloaded, legitimate network management objectives and the demand for customer-specified network features.

Advocates for limiting price and service discrimination contend that absent a “network neutrality” mandate, ISPs will discriminate in ways that harm competitors by favoring corporate affiliates and selected third parties. Network neutrality supporters claim that ISPs have both the incentive and ability to engage in harmful discrimination, typically characterized by ISPs as necessary network management, or a legitimate response to the specific requirements of a customer.

This paper will consider ISP conduit neutrality in the context of whether and how legislatures and national regulatory authorities can enhance trust and network reliability. The paper assesses how network management techniques can offer both quality of service improvements and deliberately inferior service. Because technological innovations provide the ability to build trust in Internet-mediated transactions, the paper will identify legislative and regulatory strategies that promote network management that enhances cloud computing, electronic commerce and other transactions without according ISPs unconditional opportunities also to harm competition and consumers.

Interconnection Incentives—The Commercial Aviation Example

            One would think airlines affiliated in one of the three major alliances would have a keen interest in interconnecting their reservation and other networks.    But even these motivated carriers come up short, largely because interconnection means more than the physical joining of lines.  Interconnection in commercial aviation requires affiliated airlines to use the same software, or at least devise ways for different software to become more compatible.

            It happens less than you’d think.

            On several international trips my itineraries have required a change of plane and airline, all of which are affiliated in the Star Alliance.  On a code share, where United Airlines operated the aircraft, but All Nippon Airways may have ticketed the flight, United all but disavowed the fact that I was an upcoming passenger.  No access to seating charts, buck passing to ANA for any questions or issues, lower frequent flier miles, etc.  Of course ANA did not have access to the reservation, because it was on a United aircraft, so around and around I went.  On a few flights Lufthansa was convinced my wife and I were blind and repeated efforts to claim sight failed.

            The point here is that even when carriers have motivations to cooperate and interconnect, incompatible operating software and protocols gum up the works.  So when unwilling and uncooperative parties have to interconnect imagine how many issues can arise that frustrate consumers.

            Despite efforts to emasculate and dilute the meaning of common carriage, both airlines and telecommunications service providers still have duties to cooperate.  Airlines—even those in separate alliances—generally have to accept baggage and passengers that may have originated or will terminate on another carrier.  Telecommunications generally have to accept traffic from other carriers.  But with and without incentives to cooperate bad things happen.  Without a referee consumers may end up short changes and some grand long term marketplace remedy seems far, far away.

FCC Makes the Right Call

The FCC today issued a Declaratory Ruling stating that "that no carriers, including interexchange carriers, may block, choke, reduce or restrict traffic in any way."
available at: http://hraunfoss.fcc.gov/edocs_public/attachmatch/DA-07-2863A1.doc. I trust that statement is clear enough for the wireline and wireless carriers who decided they could serve as judge, jury and executioner when one of their telecom brethren gamed the system.

Several major carriers decided not to complete calls to clever independent local exchange carriers who pump up call volume and access charge interconnection payments by offering "free" conference and international calling. Ample FCC and case law precedent conclusively states that telecommunications service providers operate as common carriers. Likewise the "Filed Rate Doctrine" binds both carriers and end users to pay tariffed rates. If the blocking carriers did not like the access charge rate of compensation--and they surely should not like 7 or cents per minute rates--then they can contest the tariff when filed.

Remarkably the FCC made the right call.