Net Neutrality is a Ruse

Oh, how the ISPs would love to have you believe that packet discrimination is their right.

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Note: This is one of my first articles of advocacy for net neutrality, and to provide some context, you should know that it was written in 2010. This is a subject near and dear to my heart, as you shall see below.

I’ve been following the debate concerning Net Neutrality and I’ve noticed something. The original decision to classify ISPs as “information services” rather than as “telecommunications services” (which you can find here) is missing something really important. Before I go on, I also want to point out that while I might use Comcast as an example here, the concepts I detail below can be applied to any ISP and/or common carrier.

First, in classifying cable modem services as information services rather than as telecommunications services the FCC attempts to ignore the behavior of the cable companies. The decision ignores the fact that companies like Comcast are common carriers because Comcast is acting like a telecommunications company rather than an information service. Comcast owns the lines and is (supposed to be) agnostic about the content it carries. Or at least it was until they realized that they could favor their own content.

Second, just because the FCC bestows a service with the classification of an information service doesn’t necessarily mean that it is. Does anyone here remember Compuserve? How about GEnie from GE? I’m sure some of you old-timers out there remember the humble Bulletin Board Services with your 14.4k modems. I used the 0x0 Republic BBS for some of my first ventures onto the Internet — that is where I got my first email address in 1991. All of the BBSs, Genie, and Compuserve needed a phone line for a connection. And all of them were information services. They didn’t own the lines, they were simply carried by the telecoms. The telecoms were “common carriers”.

It should also be noted that here in Utah, we have a service called the Utah Open Infrastructure Agency (UTOPIA). UTOPIA is a municipal broadband service and as such, acts as a common carrier, and they own the network. They sell access to their network to Internet Service Providers (really more properly labeled as “Information services”) such as Xmission (oldest ISP in Utah, still thriving), Connected Lyfe (defunct) and Prime Time Communications (defunct).

They all compete to provide access to the same network on an open-access network (more on open access below). The UTOPIA resellers are true “information services” rather than telecommunications services to the extent that they do not own the infrastructure. All they’re doing is reselling service on a network they don’t own, but they manage the service they provide with billing and customer service. That’s what makes them an information service. UTOPIA is the common carrier, the resellers are what we would commonly think of as ISPs. Confusing? I know.

Comcast, on the other hand, acts like a common carrier as an Internet Service Provider. Comcast simply carries the bits from the public network across their own network to their own customers. The fact that they connect to the public network, such as their connection to Level 3 Networks (now owned by CenturyLink), makes them a common carrier. Level 3 is a common carrier, too. Why? If L3 carries none of its own data, then it carries data for others.

I also want to put the lie to the claim that Comcast has a private network. As long as they connect to the public network and carry bits to their customers from the public network, they are part of the public network. That creates a public interest in their service. Unless and until they completely cut themselves off from all public networks and provide their own content to their own customers, they will remain a common carrier. While they may be tempted to do that given their resources, they would have to overcome the blowback from their customers. They would also have to pay back all the goodwill they received with cheap or free easements across property all over the country that they received along the way to becoming the largest ISP in the country. That might be in the form of rent they pay the landowners, or they might lose the easements altogether.

Comcast is different from L3 in another major respect: it has an incentive to favor it’s own data sources. Even it’s partners’ data sources provide an incentive to favor partner traffic over others. In fact, the latest conflict between the two is about L3’s contract with Netflix to carry traffic to Netflix customers many of which subscribe to Comcast. Comcast, it seems, would prefer to run a toll booth rather than to play fair.

Comcast seems to have forgotten that their customers are already paying for Netflix traffic as Comcast subscribers. Implicit in their actions is the goal of making their own product more competitive with Netflix by making Netflix more expensive. Comcast doesn’t seem to mind that their customers are paying for Netflix content twice. And they certainly don’t want to mention that their costs per byte for connecting to L3 have gone down while the rates they charge to their customers continue to increase at a rate higher than inflation.

The original decision to brand cable modem service providers as information services also had the effect of forcing the phone companies to share their lines while the cable companies did not have to. This created an uneven playing field that allowed an enormous consolidation of resources by the cable companies. During this time, cable companies were allowed to bundle their TV services with their ISP services and eventually they were providing voice services to compete with the phone companies. Phone companies didn’t have content to bundle, so they were at a definite disadvantage with the cable companies to compete.

Line sharing, as the phone companies had to do, is also known as “open access” and has, with the exception of the United States, proved to be wildly successful wherever it has been implemented. Japan is probably the best-known source of empirical evidence for the success of Open Access rules for the distribution of internet service. In Japan, the government bankrolled the financing of the infrastructure in a partnership with the largest telephone company in Japan, NTT.

The government paid NTT to build the infrastructure and is required to resell the use of that network at wholesale to its competitors. As a consequence, there are thousands of ISPs all competing in the same market. In Japan, you can get a 60 Mbs connection for around $35 a month. Of course, Comcast would prefer to have none of that since their business model is centered on creating scarcity in the market rather than abundance. And they want the entire market to themselves if they could get it. I guess to them, a private monopoly is much better than a public one.

So now we come to Net Neutrality. Net Neutrality is a ruse, pure and simple. Why? Because it assumes that the ISPs have rights that they really don’t have. Even ISPs like Comcast don’t have the right to favor traffic, shape traffic or to discriminate against traffic by charging a higher price based on the source of the traffic. The term Net Neutrality assumes that the ISPs have those rights when they don’t. If they weren’t common carriers, they would have those rights, but they are most definitely common carriers. No matter how the FCC classifies them, they still act and walk like common carriers. Comcast and AT&T are common carriers, by their actions rather than their classification.

I’m actually surprised that no one has sued the FCC to reclassify the cable companies as telecommunications companies by now. It’s important to reiterate here that telecommunications companies (the common carriers) are distinct from information services as they have no content to offer their customers. They are only carriers, and as such, must remain agnostic about the content they carry.

It should be plainly obvious by now that Comcast (and other content providers who own the pipes like them) have a conflict of interest to resolve. Their shareholders insist that they cannot remain agnostic about content while acting as common carriers at the same time as the temptation to favor their own content is too great to resist. This is true for any company that offers Internet access and its own content at the same time. That makes it nearly impossible to separate the incentive to provide access to content from everyone else and their own.

This conflict of interest requires that any company that offers Internet access and content to be split. In the case of Comcast, the Internet access service must be separated from the entertainment content service. The best way to separate these services is to require the company to be split into two entities: one for carriage and one for content. That is the best way we can be sure that they will act as common carriers. As we have seen by recent examples of their behavior, we cannot trust them to do so.

The solution I offer is simple to state but is rather difficult to implement without a big fight. Unfortunately, this is what I think we will need to do in order to remain competitive in world markets.

First, we need to separate content from carriage. To avoid the conflict of interest, as shown above, we need to make sure that carriers and content providers are separate. This will ensure that common carriers act like common carriers with no incentive to discriminate against traffic of any kind.

Second, we need to ensure proper classification. A common carrier owns the pipes, content providers do not. We can’t even allow a member of the board of directors for the content company to sit on the board of directors for a carriage company. Separation of interests and duties is very important to remove any conflict of interest.

Third, we need to enforce the open-access rules of common carriers. Common carriers own a resource that is a public network. It makes no sense to dig up the streets to build a duplicate network and wait years for the deployment to happen — you know, like with power transmission and water service, right? Better to create one really fast network for everyone and let the content providers share the network. This change will improve network maintenance and upgrades as well. I think in the long run, internet access will have to be a strictly regulated utility like the power company is. UTOPIA promotes this idea as many municipalities around the country and around the world have done. Even Google, which is becoming the 2nd biggest ISP by consolidating their networks and the sheer volume that it moves, is promoting the idea of open-access networks.

While this is a long post with lofty ideals, we know that the devil will be in the details, and we can be sure that the incumbent service providers would rather have a captive audience than to have to deal with competition. They are going to throw up roadblocks at the legislature, in the courts, and in the press to show what angels they really think they are and how they’re doing us such a big favor by fighting for the status quo.

The last ten years of the status quo have lost us our lead in Internet access, provided consolidation in the industry that eliminated much of the competition, left us with media giants snarling over their turfs and helped to expand or maintain the digital divide. That leaves the rest of us with very little power over a resource that started out as a novel source of entertainment and curiosity and has grown into an irreplaceable utility: the Internet. If we fail to act now, the power of the incumbent service providers will only grow until we are left with nothing more than a walled garden that leads only to their coffers.

Now is the time to reclassify the ISPs as common carriers and secure our future in a competitive global economy by recognizing Internet access as a utility that we are all dependent upon. I urge you to discuss this issue with your local, state and federal representatives to preserve our freedoms on the Internet.

Write on.

Originally published on my blog, The Digital Firehose, December 5th, 2010. Updated for clarity and grammar.

Husband, father, worker, philosopher, and observer. Plumbing the depths of consciousness to find the spring of happiness. Write on.

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