Does Granny Need a Platinum Plan to Get Her Mission Critical Medical Bits Timely Delivered?

In previous posts and academic writings I have parted with network neutrality advocates who want absolute parity of access. I agree with Wall Street analyst Craig Moffett (see http://tech.fortune.cnn.com/2010/08/11/net-neutrality-for-wireless-dont-count-on-it/) that heart pacemaker telemetry should get priority over surfing squirrels on the Internet, but only when current network conditions necessitate such prioritization. This is key: if under current network conditions the telemetry feed would get near instantaneous routing, then what good would absolute prioritization do?

Generally the surfing squirrel video clip and the telemetry feed experience no congestion and hold up. If and only if delays, dropped packets, resend commands and any other problem would likely occur under the best efforts norm, then I would support better than best efforts routing.

Even the Google-Verizon proposal acknowledges that the prioritization accorded specialized and managed traffic should not become so widespread as to eliminate the plain vanilla best efforts option. These two players appear to state that better than best efforts should apply solely to “additional or differentiated services” and that the exception should not swallow up the norm.

But of course this requires everyone to be on their best, yankee doodle-dandy behavior, eschewing any and all opportunities to tilt the competitive playing field in favor of a corporate affiliate or favored venture. I have noted that at least insofar as cable television operators are concerned, the FCC worries when a venture has both the incentive and the ability to act anticompetitively. No one has to disparage Comcast and the character of its managers to note that blocking, distorting and throttling peer-to-peer traffic might directly or indirectly handicap a technological alternative to video on demand and pay per view.

I would like to think that the template Google and Verizon now join in advocating is not a front for a partitioning ISP networks to all but guarantee that medical telemetry subscribers will have to buy the platinum plan.

Summary of Court Decision Reversing the FCC Sanctions of Comcast

The FCC’s attempt to sanction Comcast for interfering with subscribers’ peer-to-peer traffic absent legitimate network management requirements failed to pass muster with the D.C. Circuit Court of Appeals. [1] This decision severely sidetracks the Commission’s attempt to establish binding network neutrality policies, rules and regulations absent an explicit legislative mandate.
Noting that the Commission invoked no express statutory authority, the court considered whether “barring Comcast from interfering with its customers’ use of peer-to-peer networking applications is ‘reasonably ancillary to the . . . effective performance of its statutorily mandated responsibilities.’” [2] Notwithstanding the Supreme Court’s broad deference to the FCC’s assertion of ancillary jurisdiction in the Brand X case, [3] where the Court affirmed the FCC’s determination that cable modem provided Internet access constitutes a lightly regulated information service, the D.C. Circuit required evidence that the FCC’s regulatory action had a direct link to its statutorily mandated responsibilities. [4] The court vacated the FCC’s sanctioning order of Comcast based on the view that the FCC could only refer to congressional statements of policy which do not provide a precedent for creating such responsibilities and to various section of the Communications Act that the court deemed inapplicable for substantive and procedural reasons.

The D.C. Circuit vacated the Commission’s reprimand of Comcast based on the court’s refusal to accept the Commission’s claim of ancillary jurisdiction. The court referred to the three major cable television cases [5] where the Supreme Court had affirmed the FCC’s ancillary jurisdictional claim “at a time when, as with the Internet today, the Communications Act gave the Commission no express authority to regulate such systems.” [6] As it had done in the case rejecting the FCC’s attempt to require television set manufacturers to build units capable of processing digital right management, “broadcast flags,” the court distilled the precedent for ancillary jurisdiction established by these cases into a two part test whether: “(1) the Commission’s general jurisdictional grant under Title I [of the Communications Act] covers the regulated subject and (2) the regulations are reasonably ancillary to the Commission’s effective performance of its statutorily mandated responsibilities.” [7] The court determined that the FCC had not satisfied the second part of the test. [8]

The court flatly rejected the FCC’s attempt to infer congressional intent for the Commission to extend its regulatory wingspan to include Internet access. In a series of references to provisions of the Communications Act, [9] the Commission expansively read congressional policy as sufficient ground for undertaking regulatory policy:

Instead, the Commission maintains that congressional
policy by itself creates “statutorily mandated responsibilities”
sufficient to support the exercise of section 4(i) ancillary
authority. Not only is this argument flatly inconsistent with
Southwestern Cable, Midwest Video I, Midwest Video II, and
NARUC II, but if accepted it would virtually free the
Commission from its congressional tether. [10]

The court concluded that the FCC could invoke ancillary jurisdiction to apply any number of regulatory requirements to cable modem provided Internet access without explicit congressional authority to do so. [11]

NOTES

[1] Comcast Corp. v. F.C.C., __F.3d __, slip op. (D.C. Cir. April 6, 2010)(No. 08-1291); available at: http://pacer.cadc.uscourts.gov/common/opinions/201004/08-1291-1238302.pdf.

[2] Id. at 3 citing Am.Library Ass’n v. F.C.C., 406 F.3d 689, 692 (D.C. Cir. 2005).

[3] The court does not interpret the Brand X case as precedent for the imposition of plenary authority over any matter involving cable television company provided Internet access. “By leaping from Brand X’s observation that the Commission’s ancillary authority may allow it to impose some kinds of obligations on cable Internet providers to a claim of plenary authority over
such providers, the Commission runs afoul of Southwestern Cable and Midwest Video I.” Id. at 14. “The Commission’s exercise of ancillary authority over Comcast’s network management practices must, to repeat, ‘be independently justified.’” Id. at 16, citing National Ass’n of Regulatory Utility Commissioners v. FCC, 533 F.2d 601, 613 (D.C. Cir. 1976)(rejecting the FCC’s preemption of state and local regulation of two-way, intrastate, non-video cable transmissions).

[4] “The Commission therefore rests its assertion of authority over Comcast’s
network management practices on the broad language of section 4(i) of the Act: “The Commission may perform any and all acts, make such rules and regulations, and issue such
orders, not inconsistent with this chapter, as may be necessary in the execution of its functions,” Id. at 6, citing 47 U.S.C. § 154(i) and In re Formal Compl. of Free Press & Public Knowledge Against Comcast Corp. for Secretly Degrading Peer-to-Peer Applications, 23 F.C.C.R.
13,028, 13,036, (2008).

[5] United States v. Southwestern Cable Co., 392 U.S. 157 (1968), United States v. Midwest Video Corp., 406 U.S. 649 (1972) (Midwest Video I), and FCC v. Midwest Video Corp., 440 U.S. 689 (1979) (Midwest Video II).

[6] Id. at 6.

[7] Id. at 7.

[8] The court noted that Comcast had conceded “ that the Commission’s action here satisfies the first requirement because the company’s Internet service qualifies as “interstate and foreign communication by wire” within the meaning of Title I of the Communications Act.” Id. at 7-8 citing 47 U.S.C. § 152(a). The court also rejected the Commission’s claim that because Comcast had used the existence of FCC jurisdiction in another case the company should be judicially stopped from challenging the Commission’s jurisdiction now. The court interpreted Comcast’s position in the other case as simply acknowledging the FCC’s jurisdiction over wire and radio services, which includes what Comcast offers. “Because Comcast never clearly argued in the
California litigation that the Commission’s assertion of authority over the company’s network management practices would be ‘reasonably ancillary to the Commission’s effective
performance of its statutorily mandated responsibilities’ (American Library’s second requirement), 406 F.3d at 692,that question remains for us to answer.” Id. at 12.

[9] The Commission cited to Secs. 1, 230(b), 706, 257, 201 and 623 of the Communications Act.

[10] Id. at 23.

[11] “Were we to accept that theory of ancillary authority, we see no reason why the Commission would have to stop . . [at imposing regulation of Internet Service Providers’ rates] for we can think of few examples of regulations that apply to Title II common carrier services, Title III broadcast services, or Title VI cable services that the Commission, relying on the
broad policies articulated in section 230(b) and section 1,would be unable to impose upon Internet service providers.” Id. at 23-24.

Something on the Op-Ed Page of the WSJ With Which I Agree

At long last an op-ed piece in the Wall Street Journal makes a statement I endorse: “In the Internet age, transparency is the foundation of trust.” You bet L. Gordon Crovitz (“Climate Change and Open Science,” WSJ 2/22/2010 at A17).

I wonder if Mr. Crovitz would expect the same sort of transparency in the network management disclosure requirements of Internet Service Providers. You see it’s easy for someone to claim that the specifics of network management constitute a trade secret, a “special sauce” for which disclosure would bring financial calamity, or at the very least rob a company of some kind of comparative advantage. Yet transparency is the very thing lacking in ISPs’ decisions whether and how to engage in price and quality of service discrimination.

I readily support many types of QOS and price discrimination provided it is offered on a transparent basis and made available to anyone on the same terms and conditions. I am okay with “better than best efforts” routing sought and paid for by end users and even by content, applications and software providers so long as this option does not guarantee congestion and unusable basic service, or provide the basis to favor ISPs’ corporate affiliates and preferred third parties.

Who would dispute that Comcast was not transparent in its claim that legitimate and lawful network management responsibilities necessitated disrupting peer-to-peer traffic, even in the absence of congestion? So if Comcast was not transparent, how am I and any other Comcast subscriber to trust that the company won’t engage in the wrong kinds of discrimination, i.e., discrimination to provide an boost for corporate affiliates, to favor certain third parties, to discipline subscribers having the temerity to take the company at its word that unmetered service is unmetered?

So Mr. Crovitz climate change advocates surely need to be transparent in their research and statistical compilations and so does the FCC, ISPs and your fellow network neutrality opponents.

Summary of FCC's Rulemaking on Net Neutrality and Preserving the Open Internet

Consistent with President Obama’s campaign promise to support network neutrality, the FCC has issued a broad sweeping Notice of Proposed Rulemaking proposing to codify the four Internet principles adopted by the Commission in 2005[1] along with two additional principles requiring nondiscrimination and transparency. [2] With the two Republican Commissioners dissenting in part and concurring in part,[3] the FCC has only started the controversial process for assessing what enforceable rules it should establish for regulating Internet Service Providers (“ISPs”), and possibly applications and content providers in certain instances, [4]independent of additional statutory authority. Because the FCC currently only had articulated a Policy Statement on the topic and because the scope of its jurisdiction conferred by statute remains uncertain, the FCC seeks to establish “rules to preserve an open Internet—the next step in an ongoing and longstanding effort at the Commission.” [5]

The FCC offers “draft rules, including a codification of the existing Internet policy principles, additional principles of nondiscrimination and transparency, [and] an acknowledgement that these principles apply to all forms of broadband Internet access . . .. [6] The Commission also proposes to exclude ‘managed’ or ‘specialized’ services” from network neutrality rules in light of the fact that that services such as IP-enabled ‘cable television, VoIP telephony, and specialized telemedicine [7] may not fit within the Commission’s definition of broadband Internet access [8] in light of the nature of these services and user requirements, i.e., the need for such “mission critical” bits to arrive without delay, possibly triggering prioritized processing which might otherwise constitute a violation of the Commission’s proposed nondiscrimination requirement.

The FCC proposes the following language as establishing the foundation for Internet neutrality with an emphasis on the wireline or wireless [9] link providing end users with access to the Internet [10]:

1. Subject to reasonable network management, a provider of broadband Internet access service may not prevent any of its users from sending or receiving the lawful content of the user’s choice over the Internet.

2. Subject to reasonable network management, a provider of broadband Internet access service may not prevent any of its users from running the lawful applications or using the lawful services of the user’s choice.

3. Subject to reasonable network management, a provider of broadband Internet access service may not prevent any of its users from connecting to and using on its network the user’s choice of lawful devices that do not harm the network.

4. Subject to reasonable network management, a provider of broadband Internet access service may not deprive any of its users of the user’s entitlement to competition among network providers, application providers, service providers, and content providers. [11]

5. Subject to reasonable network management, a provider of broadband Internet access service must treat lawful content, applications, and services in a nondiscriminatory manner. [12]

6. Subject to reasonable network management, a provider of broadband Internet access service must disclose such information concerning network management and other practices as is reasonably required for users and content, application, and service providers to enjoy the protections specified in this part.[13]

In addition to the exemption for managed and specialized services, the Commission proposes to exempt ISPs from having to comply with the six principles when reasonable network management, [14] law enforcement, [15] and public safety and homeland/national security factors [16] warrant.

The FCC concludes that it has jurisdiction to establish enforceable rules on Internet access notwithstanding the fact that ISPs provide information services explicitly exempt from common carrier regulation established in Title II of the Communications Act. [17] The Commission bases it lawful authority to regulate ISPs on the basis of “ancillary jurisdiction” conferred by Title I of the Communications Act [18]as well as Sections 201(b), 230(b) and 706(a) of the Communications Act.[19] The Commission expects to adjudicate violations on a case-by-case basis and solicits comments on what procedural rules to adopt that could lead to citations and financial penalties for noncompliance.




[1] Appropriate Framework for Broadband Access to the Internet over Wireline Facilities, Policy Statement, 20 F.C.C.R. 14986 (2005) (2005).

[2] Preserving the Open Internet, Notice of Proposed Rulemaking, GN Docket No. 09-191, FCC 09-93 (rel. Oct. 22, 2009); available at: http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-09-93A1.doc.

[3] Commissioner McDowell stated that “I do not share the majority’s view that the Internet is showing breaks and cracks, nor do I believe that the government is the best tool to fix it. I also disagree with the premise that the Commission has the legal authority to regulate Internet network management as proposed.” Statement of Commissioner Robert M. McDowell Concurring in Part, Dissenting in Part, Id. at 96 (questioning the scope of the FCC’s Title I “ancillary jurisdiction” and whether Sections 230 and 706 of the Communications Act, as amended, provide “the ancillary hook.”

[4] “Although the question of Internet openness at the Commission has traditionally focused on providers of broadband Internet access service, we seek comment on the pros and cons of phrasing one or more of the Internet openness principles as obligations of other entities, in addition to providers of broadband Internet access service.” Id. at ¶101.

[5] Id. at ¶2.

[6] Id. at ¶11. The Commission identified a number of prior proceedings that it implies support the inference that the rulemaking constitutes a logical and lawful extension of previous work: “As this history illustrates, the Commission is not writing on a blank slate in this proceeding. Rather, we are proposing a next step—seeking public input on draft rules—that is based on a substantial record, which includes discussion of nondiscrimination, transparency, and application of Internet openness principles to wireless broadband Internet access service providers.” Id. at ¶46.

[7] See Id. at ¶108.

[8] The Commission proposes to define Broadband Internet access as “Internet Protocol data transmission between an end user and the Internet. For purposes of this definition, dial-up access requiring an end user to initiate a call across the public switched telephone network to establish a connection shall not constitute broadband Internet access.” Id. at p. 65, Appendix A, Draft Proposed Rules for Public Input, Part 8 of Title 47 of the Code of Federal Regulations, §8.3 Definitions.

[9] “As our choices for accessing the Internet continue to increase, and as users connect to the Internet through different technologies, the principles we propose today seek to safeguard its openness for all users. We affirm that the six principles that we propose to codify today would apply to all platforms for broadband Internet access.” Id. at ¶154.

[10] “The rules we propose today address users’ ability to access the Internet and are not intended to regulate the Internet itself or create a different Internet experience from the one that users have come to expect. Instead, our proposals attempt to build on existing policies (discussed below) that have contributed to the Internet’s openness without imposing conditions that might diminish innovation or network investment. We seek to create a balanced framework that gives consumers and providers of Internet access, content, services, and applications the predictability and clarity they need going forward while retaining our ability to respond flexibly to new challenges.” Id. at ¶14.

[11] Rules one through four are set out at Id. ¶92.

[12] Id. at ¶104.

[13] Id. at ¶119.

[14] The FCC proposes to define reasonable network management as: “(a) reasonable practices employed by a provider of broadband Internet access service to (i) reduce or mitigate the effects of congestion on its network or to address quality-of-service concerns; (ii) address traffic that is unwanted by users or harmful; (iii) prevent the transfer of unlawful content; or (iv) prevent the unlawful transfer of content; and (b) other reasonable network management practices.” Id. at ¶135, Appendix A.

[15] “Nothing in this part supersedes any obligation a provider of broadband Internet access service may have—or limits its ability—to address the needs of law enforcement, consistent with applicable law.” Id. at ¶143, Appendix A.

[16] “Nothing in this part supersedes any obligation a provider of broadband Internet access service may have—or limits its ability—to deliver emergency communications, or to address the needs of public safety or national or homeland security authorities, consistent with applicable law.” Id. at ¶146, Appendix A.

[17] “Beginning in 2002, the Commission has classified cable modem service, wireline broadband Internet access service, wireless-enabled broadband Internet access service, and broadband-over-powerline-enabled Internet access service as information services, removing them from potential regulation under Title II of the Communications Act.” Id. at ¶29 (citations omitted).

[18] “We have ancillary jurisdiction over matters not directly addressed in the Act when the subject matter falls within the agency’s general statutory grant of jurisdiction and the regulation is “reasonably ancillary to the effective performance of the Commission’s various responsibilities.” That test is met with respect to broadband Internet access service.”
citing United States v. Southwestern Cable Co., 392 U.S. 157, 172–73 (1968); United States v. Midwest Video Corp., 406 U.S. 649, 662 (1972); Comcast Network Management Practices Order, 23 FCC Rcd at 13033–44, paras. 12–28; and the Commission’s Brief in Comcast v. FCC, No. 08-1291, at 25–50 (filed Sept. 21, 2009), available at http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-293573A1.pdf.

[19] Section 201(b) authorizes the FCC “to prescribe such rules and regulations as may be necessary in the public interest to carry out the provision of th[e] Act.” 47 U.S.C. §201(b); Section 230(b)(1) states that “It is the policy of the United States-- (1) to promote the continued development of the Internet and other interactive computer services and other interactive media;” 47 U.S.C. §230(b)(1); 706(a) states that the Commission “shall encourage the deployment on a reasonable and timely basis of advanced telecommunications capability to all Americans.” 47 U.S.C. §706(a).

Do Transparency and Non-Discrimination Requirements Impose De facto Common Carriage Duties?

Birtelcom has asked whether a Network Neutrality requirement of transparency and nondiscrimination in effect imposes a common carrier responsibility on ISPs serving Goggle to provide edge caching. Fair question.

As Information Service providers, not subject to Title II telecommunications service regulation of the Communications Act, ISPs do not have to provide any service they do not care to offer. This means that any ISP can elect not to offer edge caching, or any form of premium, better than best efforts routing. An ISP serving Goggle can decline to offer Google what it wants—as ill-advised as that would appear.

A Title I (ancillary jurisdiction) requirement of transparency and nondiscrimination would require any ISP, voluntarily electing to provide edge caching service, to do so in such as a way as to provide any similarly situated client the option of taking the premium service. This requirement does not impose common carriage and tariff filing duties. It only would prohibit ISPs from cutting exclusive, “most favored customer” arrangements that no other client would know about and have an opportunity to take.

ISPs should have the opportunity to offer tiered services that offer different levels of service. But in doing so, ISPs should not have the option of making exclusive deals, obscured by nondisclosure agreements.

Quality of service and price differentiation can provide legitimate and lawful discrimination, subject to conditions and sanctions. ISPs would trigger sanctions for engaging in unfair trade practices by degrading service, e.g., dropping packets, to non-premium customers in the absence of severe congestion, and by deliberately partitioning their networks so that best efforts routing options are guaranteed to achieve unacceptably inferior service.

Wall Street Journal 100% Record Sustained—Deliberately Getting it Wrong on Network Neutrality

Month after month the Wall Street Journal (“WSJ”) pursues what appears to be a deliberate strategy of misinformation on the issue of Network Neutrality. The latest installment appears in Dec. 23rd editorial written by Gordon Crovitz who attempts to equate Google’s enhanced use of edge caching as evidence that the entire matter of Network Neutrality has been much ado about nothing. See http://online.wsj.com/article/SB122990349014725127.html.

Mr. Crovitz starts by referring to a widely discredited WSJ article that reported on Google’s edge caching strategy and implied that such a strategy would violate Network Neutrality principles and evidences Google’s abandonment of advocacy for such principles. I would think the WSJ would applaud Google’s apparent change of heart from free rider of Internet resources to conscientious underwriter of the links that take content from the Googleplex to various servers closer to people making Internet searches. Instead Mr. Crovitz reiterates the red herring that companies like Goggle, Yahoo and Microsoft (key Network Neutrality advocates) “don’t want to have to pay tolls to the companies that provide the Web infrastructure.”

Does anyone see the irony in this statement? Goggle intends on paying more than it previously has paid for what I call “better than best efforts” routing of traffic. The existing traffic routing (“peering”) arrangements of the Internet Service Providers (“ISPs”) that carry Google’s traffic on a plain vanilla, “best efforts” basis do not include premium service. So Google will have to pay for superior distribution of the most commonly searched for results, just as CBS pays for ISPs to deliver “mission critical” bits corresponding to webcasts of March Madness college tournament basketball games.

Previously Google was pilloried for allegedly not paying for any access to consumers, a falsity that many believed despite the fact that Goggle does pay its ISPs and apparently has expressed a willingness to pay more. By the way, the downstream ISPs that also handle Google traffic also have received payment, directly from subscribers and also through barter agreements where ISPs offer access to their networks in lieu of direct payments.

As I have written in my blog, (see http://telefrieden.blogspot.com/2008/12/edge-caching-and-better-than-best.html) premium routing of content does not violate my sense of Network Neutrality, provided ISPs offer such service in a transparent and nondiscriminatory manner. My sense of Network Neutrality would only require ISPs not to drop packets deliberately as a ruse to force either end users or content providers to trade up in service, or to so partition their networks to all but guarantee that plain vanilla, regular service (best efforts routing ) becomes inadequate.

No fair minded advocate for Network Neutrality has rejected reasonable efforts by ISPs to manage their networks, nor does Network Neutrality somehow convert ISPs from information service providers into common carrier, public utilities as Mr. Crovitz alleges. He also makes the bold assertion that the United States’ poor standing in terms of broadband access directly results from Network Neutrality advocacy that creates disincentives for ISPs to invest in infrastructure.

Surely Mr. Crovitz knows that the FCC does not treat ISPs as telephone companies. Likewise neither the FCC nor any reasonable interpretation of its Internet policies foreclose ISPs from providing tiered services, or from accruing triple digit rates of return for Internet access, a reality some of the WSJ’s buy side stock analysts could confirm.

Perhaps Mr. Crovitz sees common carrier regulation in the manner in which the FCC responded to complaints about how Comcast throttled peer-to-peer traffic. Of course the FCC did not mandate common carrier nondiscrimination. The Commission did state that an ISP cannot use software that deliberately drops packets and thwarts delivery of traffic all the time without regard to whether actual network congestion exists. It strains credulity to characterize Comcast’s tactics as nothing more than ensuring that non peer-to-peer traffic “could move more smoothly,” unless Mr. Crovitz has some new evidence to prove that if Comcast did not resort to traffic throttling its network would perform in an inferior manner.

Lastly Mr. Crovitz appears to dismiss the Network Neutrality as nothing more than a tactical strategy by major content providers to avoid having to pay their fair share of the costs ISPs incur to provide Internet access. Like other opponents of Network Neutrality he ignores the major investments Google and other content providers have made to create compelling content which provide reasons for consumers to pay sizeable rates for Internet access. He conveniently ignores that the ISPs providing content delivery offer reciprocal access in lieu of cash payment, or perhaps he has bought into the notion that somehow Goggle and other content providers have managed to cheat ISPs of the right to charge both end user subscribers and upstream content providers.

Unlike telephone networks, the Internet seamlessly combines telecommunications bit delivery with access to content. Monthly Internet access subscriptions amply compensate ISPs and one would think Mr. Crovitz and the WSJ would use their bully pulpit to praise Google and others for providing new revenue streams for incumbent telephone and cable companies.

Another Wrong-headed WSJ Editorial

Those wacky editorial writers at the Wall Street Journal just cannot seem to get the facts straight about network neutrality and what the FCC has done or can do on this matter. In the July 30, 2008 edition (Review and Outlook A14), the Journal vilifies FCC Chairman Kevin Martin for starting along the slippery slope of regulating Internet content.

The Journal writers just seem to love hyperbole, and are not beyond ignoring the facts when they do not support a party line. Here are a few examples from the editorial.

The editorial states that Chairman Martin wants to use a “set of principles” to punish Comcast for engaging in legitimate network management. Chairman Martin’s predecessor Republican Michael Powell drafted a Policy Statement and a Republican majority FCC approved them. See http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-260435A1.pdf.

The network management undertaken by Comcast involved masquerading as the recipient of a peer-to-peer (“P2P”) file transfer and issuing a command to reset, i.e., to stop sending traffic and start again. Comcast forged so-called TCP reset packets even though it appears that the company could have handled the actually occurring traffic volume without having to degrade anyone’s traffic.

The Journal editorial characterizes Comcast’s action as a technical dispute over network management apparently resolved when Comcast discussed P2P traffic management issues with BitTorrent one of many firms that create software used to send and receive P2P traffic. In a world of non-disclosure agreements, we have no sense of what the parties agreed to, and more importantly if Comcast will extend to other software providers and Comcast subscribers fairer network management terms and conditions.

One infers from the editorial that the FCC’s action amounts to overkill, but the FCC has not yet issued an order, much less announced a fine or other sort of punishment. Nevertheless, the upcoming decision apparently will start a regulatory regime ruining the Internet, because the FCC allegedly has leveraged a Policy Statement into the apparent resurrection of common carrier regulation resulting in “unprecedented control over how consumers use the web.”

The editorial claims that network neutrality advocates want the FCC to “prohibit Internet service providers from using price” to address “ever-growing” bandwidth demand and network management functions. I do not know of any network neutrality proponent who thinks the FCC should outlaw the practices of Akamai and other providers of “better than best efforts” traffic routing at premium prices. I did not hear of any network neutrality advocate argue against proposals by Time Warner and other Internet Service Providers (“ISPs”) to offer subscribers various tiers of service instead of a one size fits all, unmetered service.

What does trigger concern are undisclosed practices, unavailable to subscribers and content providers alike, that create artificial bottlenecks and congestion. If smart Enron traders could extract incredible wealth by manipulating the flow of electrons along a grid, what prevent Comcast and others from manipulating packets for similar gain?

I am at a lost to understand how the Wall Street Journal regularly attempts to pillory FCC Chairman Martin as itching to impose heavy-handed regulation. Despite the Journal’s penchant for alarmism, Chairman Martin has not abdicated his general free market advocacy. The Chairman realizes that ISPs cannot operate completely free of a rule enforcing referee. Nondisclosure agreements, and the lack any effective means to monitor performance creates conditions where ISPs have unprecedented opportunities to engage in practices that are characterized as necessary network management, but in reality serve a specific agenda, e.g., to punish heavy network users whether they be highly popular content sources, or consumers of P2P file transfers.

Rather than surreptitiously drop packets to degrade service, ISPs need to find ways to enhance heavy users’ Internet experience as Akamai does. The FCC has to act when an ISP decides to punish a heavy volume user that might cause congestion even though the ISP has yet to offer the heavy user premium service options.

What to Do With Heavy Internet Users?

Comcast’s heavy handed treatment of its peer-to-peer networking customers made me wonder if these customers deserve to expulsion or a fruit basket. In other words do heavy users present an opportunity or a threat to network managers?

ISPs, like airlines, only make money when customers use their services. Airlines and many other businesses typically reward heavy users with rewards. Other ventures can use data mining to determine the profitability of any particular heavy user. So I readily agree that that not all heavy users are desirable.

The problem with Comcast’s approach appears to be that the company assumed any peer-to-peer user is a problem customer deserving degraded service, rather than a candidate for upselling. Comcast should offer more expensive service to the power user who needs better than best efforts traffic routing. I do not consider this a violation of network neutrality. My beef with Comcast or any ISP lies in instances where the carrier without disclosure or reasonable explanation drops packets and otherwise degrades service, or vice versa.

For me network neutrality is primarily about transparency in a transaction that increasingly presents opportunities for mischief. At the WIK conference I recently attended on the European approach to Network Neutrality, there was much discussion on how parties frame the issue. The most common U.S. frame involves a referendum on the virtues of marketplace competition, assumed to exist, versus marketplace failure assumed to exist.

Other alternative frame considers technical standardization of the Internet and whether TCP/IP promotes or retards innovation, i.e., a variation on the dumb versus smart pipe argument. Others in Europe involve consumer protection, contract law and ex ante versus ex post facto regulation.

In Praise of Relatively Dumb Pipes

Comcast's furtive and undisclosed traffic manipulation reminds me of a curious, red herring asserted by some incumbent carriers and their sponsored researchers: that without complete freedom to vertically and horizontally integrate the carriers would lose synergies, efficiencies and be relegated to operating "dumb pipes." For example, see Adam Thierer, Are "Dumb Pipe" Mandates Smart Public Policy? Vertical Integration, Net Neutrality, and the Network Layers Model, 3 Journal on Telecommunications & High Technology Law 275 (2005)

Constructing and operating the pipes instead of creating the stuff that traverses them gets a bad rap. It may not be sexy, but it probably has less risk. But of course with less risk comes less reward, and suddenly no one in the telecommunications business is content with that. So incumbent carriers assert that convergence and competitive necessity requires them to add "value" to the pipes.

Put another way, they would assert that any limitation on a carrier's "right" to add value is an unconstitutional taking. Of course we used to have common carriers that operated as neutral conduits carrying the content produced by someone else, but apparently that is an anachronism now.

The dumb pipe argument comes across to me as disingenuous. Would anyone buy an argument from an electricity carrier that it should not have to provide a neutral conduit for the carriage of electricity? It would seem that everyone makes more money and has more fun using the electricity to make something more valuable than just carrying electrons.

So it appears with Comcast. Hellbent to cash in on convergence, or at least generate greater returns for its pipe investment, Comcast wants to operate a non-neutral network with all sorts of intelligent packet sniffers ready to prioritize or degrade traffic. And I thought consumers would beat a path to Comcast instead of Verizon, because Comcast offered faster and better service. Who would want that when they can have a smart pipeline whose genius owners stand ready to delay and drop packets according to some secret and real smart plan?

Empirical Evidence of Net Bias—Now What? (part two)

ISPs now acknowledge that they may meddle with subscribers’ traffic streams, but only to “manage” and “shape” traffic. ISPs typically reserve the option for such meddling in their contract with subscribers. Should you ever take the time to read this document, and a second documents about “Acceptable Use” you will see language that does reserve to the ISP the right to manage their network, ostensibly to optimize it for the benefit of subscribers. The subscriber agreement also attempts to foreclose litigation as an option by stating that subscribers can only seek arbitration to settle any grievance.
In reality the subscriber contract constitutes a unilateral, non-negotiable contract of adhesion, i.e., a “take it or leave” it proposition. In a truly competitive world, disgruntled subscribers could “vote” with their feet and dollars by taking their business elsewhere. But contrary to the FCC’s fantasy statistical reports about double digit service alternatives in most zip codes, consumers have limited options. Taking ones business from DSL to cable modem would not solve the problem if all carriers—through collusion or “conscious parallelism” had the same network management contractual language.
Because the FCC considers ISPs information service providers, the Commission offers no traditional consumer safeguards applicable to telecommunications service providers under Title II of the Communications Act., ISPs must use contracts in lieu of filed tariffs. However, ISP contracts must pass muster with general law and equity principles regarding the fairness of the terms, consumer protection and fraud. In other words, ISPs cannot unilaterally set any terms and conditions and have them stick.
While the FCC may have limited jurisdiction to examine ISP contracts, state and federal courts can lawfully assess whether an ISP has lawfully interpreted the terms of the contract it created and more broadly whether the agreement violates the court’s sense of fairness. In light of the FCC’s deregulation of information service providers, the Commission cannot readily claim that it should preempt judicial review because it still has “primary” jurisdiction to resolve fairness and consumer protection issues.
We may soon see an onslaught of individual and class action law suits against ISPs on grounds that they have not complied with the clear language of their service agreements. For example ISPs have cut off or throttled service to customers for using too much network resources despite an agreement that offers unlimited and unmetered “all you can eat” service. Peer-to-peer customers experience artificial network congestion—a hard thing to prove—may claim that the ISP has violated the service agreement.
A court may serve as the forum for assessing whether an ISP’s reserve right to manage its network includes preemptive strategies that mimic network congestion even when actual traffic conditions do not necessitate network conservation tactics.

Empirical Evidence of Net Bias—Now What?

A widely distributed and unassailable study by the Associated Press (see http://www.forbes.com/feeds/ap/2007/10/19/ap4240786.html) confirms what many Internet Service Provider (“ISP”) industry observers had speculated: some ISPs exploit deliberately ambiguous subscriber contracts to reserve the option for blocking, dropping, and downgrading certain types of traffic even when network conditions do not necessitate such congestion abatement strategies. ISPs frame the issue in terms of their contractual right to “shape traffic.” However such traffic “management” tactics generate false congestion and trigger delayed or dropped packets.

For years ISPs representatives and their snarky, righteously indignant sponsored advocates stated unequivocally that ISPs would never deliberately degrade the Internet access experience for any paying subscriber. See http://www.filmfestivaltoday.com/article_item.asp?ID=853 quoting Verizon CEO Ivan Seidenberg: "We don't block anything…never have, never will." see also, http://commdocs.house.gov/committees/judiciary/hju27225.000/hju27225_0.HTM.

Later they shaped the debate in terms of fair and appropriate allocation of their costs among low and high volume users. Now they consider the issue one of how they manage their network to maximize service to their subscribers.

In fact ISPs have two very key reasons for creating congestion of packets, just like Enron created congestion of electrons:

1) blocking, delaying, and degrading certain types of expensive to handle traffic, such as peer-to-peer file sharing, delays or forecloses the need to invest in costly network upgrades; and

2) blocking, delaying, and degrading certain types of expensive to handle traffic, such as peer-to-peer file sharing, can enable an ISP to create a new customer service tier for unblocked peer-to-peer traffic at premium price.

Heretofore I have stood midway between the groups claiming “no problem”camp and the “curtains for the free world” alarmists. However I have consistent stated that an ISP violates a reasonable sense of network neutrality, appropriate even for private carriers, when an ISP deliberately creates artificial network congestion to achieve an ulterior motive. See http://www.personal.psu.edu/faculty/r/m/rmf5/.

I would support Comcast’s option to create a premium “power user” peer-to-peer network optimized service. But I would equally protest any ISP strategy to extort such payments, or simply to punish peer-to-peer networkers, when the ISP network can easily handle such traffic without degrading service to other subscribers.

In another post I will Comcast examine whether Comcast and other ISPs can lawfully use language in subscriber contracts to degrade peer-to-peer traffic streams regardless of network conditions.