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The outrage over the FCC’s attempt to write new open Internet rules has caught many by surprise, and probably Chairman Tom Wheeler, as well. The rumored possibility of the FCC authorizing broadband “fast lanes” draws most complaints and animus.

Gus Hurwitz points out that the FCC’s actions this week have nothing to do with fast lanes, and Larry Downes reminds us that this week’s rules won’t authorize anything. There’s a tremendous amount of misinformation, because few understand the intricacies of administrative law. Yet many net neutrality proponents fear the worst from the proposed rules, because Wheeler endorses the consensus position that broadband provision is a two-sided market, and prioritized traffic could be pro-consumer.

Some fast lanes have been permitted by the FCC for years because of the obvious competitive benefits. Some broadband services — like video and voice over Internet protocol (VoIP) — need to be transmitted faster or with better quality than static Web pages, email and file syncs. Don’t take my word for it. The 2010 Open Internet NPRM, which led to the recently struck-down rules, stated:

“As rapid innovation in Internet-related services continues, we recognize that there are and will continue to be Internet-Protocol-based offerings (including voice and subscription video services, and certain business services provided to enterprise customers), often provided over the same networks used for broadband Internet access service, that have not been classified by the Commission. We use the term ‘managed’ or ‘specialized’ services to describe these types of offerings. The existence of these services may provide consumer benefits, including greater competition among voice and subscription video providers, and may lead to increased deployment of broadband networks.”

I have no special knowledge about what ISPs will or won’t do. I wouldn’t predict in the short term the widespread development of prioritized traffic under even minimal regulation. I think the carriers haven’t looked too closely at additional services because net neutrality regulations have precariously hung over them for a decade. But some of the net neutrality proponents’ talking points (like insinuating or predicting that ISPs will block political speech they disagree with) are not based in reality.

We run a serious risk of derailing research and development into broadband services if the FCC is cowed by uninformed and extreme net neutrality views. As Adam Thierer eloquently said, “Living in constant fear of hypothetical worst-case scenarios — and premising public policy upon them — means that best-case scenarios will never come about.” Many net neutrality proponents would like to smear all priority traffic as unjust and exploitative. This is unfortunate and a bit ironic because one of the most transformative communications developments — cable VoIP — is a prioritized IP service.

There are other IP-based services that are only economically feasible if jitter, latency and slow speed are minimized. Prioritized traffic takes several forms, but it could enhance these services:

VoIP: This prioritized service has been around for several years, and has revolutionized the phone industry. Something unthinkable for decades — facilities-based local telephone service — became commonplace in the last few years, and undermined much of the careful industrial planning in the 1996 Telecom Act. If you subscribe to voice service from your cable provider, you are benefiting from fast-lane treatment. Your “phone” service is carried over your broadband cable, segregated from your television and Internet streams. Smaller ISPs could conceivably make their phone service more attractive and cheaper by pairing up with a Skype- or Vonage-type voice provider, and there are other possibilities that make local phone service more competitive.

Cloud-hosted virtual desktops: This is not a new idea, but it’s possible to have most or all of your computing done in a secure cloud, not on your PC, via a prioritized data stream. With a virtual desktop, your laptop or desktop PC functions mainly as a dumb portal. No more annoying software updates; fewer security risks. IT and security departments everywhere would rejoice. Google Chromebooks are a stripped-down version of this, but truly functional virtual desktops would be valued by corporations, reporters, or government agencies that don’t want sensitive data saved on a bunch of laptops that they can’t constantly monitor. Virtual desktops could also transform the device market, putting the focus more on a great cloud and (priority) broadband service, and less on the power and speed of the device. Unfortunately, at present, virtual desktops are not in widespread use because even small lag frustrates users.

TV: The future of TV is IP-based, and the distinction between “TV” and “the Internet” is increasingly blurring, with Netflix leading the way. In a fast lane future, you could imagine ISPs launching pared-down TV bundles — say, Netflix, HBO Go and some sports channels — over a broadband connection. Most ISPs wouldn’t do it, but an over-the-top package might interest smaller ISPs that find acquiring TV content and bundling their own cable packages time-consuming and expensive.

Gaming: Computer gamers hate jitter and latency. (My experience with a roommate who had unprintable outbursts when Diablo III or World of Warcraft lagged is not uncommon.) Game lag means you die unnecessarily because of your data connection, and this makes a game almost unplayable. There might be gaming companies out there that would like to partner with ISPs and other network operators to ensure smooth gameplay. Priority gaming services could also enable more realistic, beautiful and graphics-intensive games.

Teleconferencing, telemedicine, teleteaching, etc.: Any real-time, video-based service could reach critical mass of subscribers and become economical with priority treatment. Lag absolutely kills consumer interest in these video-based applications. By favoring applications like telemedicine, providing remote services could become attractive to enough people for ISPs to offer standalone broadband products.

This is just a sampling of the possible consumer benefits of pay-for-priority IP services we possibly sacrifice in the name of strict neutrality enforcement. Further, and more worrying, there are other services we can’t even conceive of yet that will never develop. Generally, net neutrality proponents don’t admit these possible benefits, and are simply trying to poison the well against all priority deals, including many of these services.


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Most troubling, net neutrality turns the regulatory process on its head. Rather than identify a market failure and then take steps to correct the failure, the FCC may prevent commercial agreements that would be unobjectionable in nearly any other industry. The FCC has many experts who are familiar with the possible benefits of broadband fast lanes, which is why the FCC has consistently blessed priority treatment in some circumstances.

Unfortunately, the orchestrated reaction in recent weeks might spark rash political decision-making, and leave us with onerous rules, delaying or making impossible new broadband services. Hopefully, in the ensuing months, reason wins out, and FCC staff are persuaded by competitive analysis and possible innovations, not T-shirt slogans.

A version of this essay was published at TechLiberation.com.

Brent Skorup is a research fellow with the Technology Policy Program at the Mercatus Center at George Mason University. He has an economics degree from Wheaton College and a law degree from GMU. Reach him @bskorup.



4 comments
SteveChang
SteveChang

Missing from this dry article is the reality that large corporations will only look out for themselves with no thought given to either the greater good or the customer.  There are countless examples in the news of the shortsightedness where greed has triumphed and the consumer has lost.

bojennett
bojennett

Again, another bad article claiming these new rules are good.  Between this and the one yesterday saying we can't regulate broadband because it isn't a "rotary phone", this just seems to be an attempt to, I dunno, cozy up to service providers.  The examples used are completely not what about this new proposal is, and it uses the same, tired, idiotic Ayn Randian philosophy that government involvement ends "innovation".


We are in this situation because ISPs have been caught flat-footed with services like Netflix and Amazon ramping up online video distribution.  They have not made the roads wide enough to accommodate this traffic, because they were too damned blind to it.  They have spent the last several years NOT upgrading their network - instead using their outsized profits (due to being a monopoly in an area or part of a duopoly in an area) to then gobble up content providers.  Why does Comcast own NBC? Why were they buying a content provider instead of beefing up their infrastructure?  Because owning NBC means you can perhaps charge your users for content.  They didn't NEED to beef up pipe coming into your home, because you had nowhere else to go.


Why do both of the proponents here on Re/Code never talk about what internet service is like overseas?  You want to scare people about "government", yet you never acknowledge that in Europe and Asia, you get much faster internet service into your home for much less money than here in the states.  And it isn't because these places are all "high density".  Sweden, for example, has a population density of the US, and their service blows the bejeezus out of our service.


You know you must have a bad argument if you can't even acknowledge that your argument fails when looking at other countries.  If you could knock their service, you would.  But you can't, so you pretend that it doesn't exist.  BTW, those totally horrible socialist, government involved in the internet countries?  They are the ones that invented LTE and deployed it, while we sat here on crappy 3G service at exorbitant prices.  Tell me again how the free market somehow always encourages innovation?


Pathetic.  

mknopp
mknopp

As Phillip Dampier stated, this isn't increasing the understanding of the issue at all. You are not talking about the same thing that I have seen proposed. What is proposed is not network management for a particular type of traffic, it is selling a fast-lane to a company. Which that company may do with as it pleases.


As for people expecting the worst case scenario. That is completely the fault of the media conglomerates. They have abused and taken advantage of their customers for decades. They are greedy, condescending, and exploitative. In other words, they are sowing what they reaped.


They have built up a huge load of distrust and downright hatred by their very actions. People don't trust them to do what is right for consumers because they have rarely ever done what is right for consumers. And no matter what the FCC and certain journalist want people to believe most people are not insane. Where insanity is doing the same thing and expecting different results. Every single time that any power has been handed to the telecos and cable companies that dominate the ISP arena they abuse that power. Why in the world would anyone not beholden to them want to give them even more power?


No, this isn't about Wheeler or the FCC. This is about people getting sick and tired of the companies that run the major ISPs. Only a blind, deaf, and dumb man would be surprised by the reaction that any measure which gives the ISPs more power to exploit and abuse their position would be welcomed.


People in the US see the telecos and cable companies as the enemy, and that is totally these company's fault.

Phillip Dampier
Phillip Dampier

The difference between your examples and the kind of Net Neutrality Mr. Wheeler (and his friends in the industry) are proposing is that you write about traffic management of general applications and Wheeler's proposal deals with individual companies cutting deals so their applications work better while non-payers don't enjoy those benefits.


If a provider wants to agnostically enhance the efficiency and performance of certain types of traffic without regard to its source, I don't think most people would object to that. But that isn't what is on the table here. 

Completely ignored is the fact customers already pay some of the world's highest prices for broadband service that should more than perform adequately for VoIP, gaming, and online video. There is no technical or financial reason cable and phone companies cannot upgrade their networks to meet customer demand considering the huge margin broadband earns for them and the relatively low cost to manage upgrades.


What we simply have here is an effort to further monetize broadband by establishing yet another revenue stream. It would be like phone companies charging BOTH the person making a call and the person receiving it to guarantee it won't be disconnected. It's a double-dipping protection racket. "Either pay us or your customers will have to cope with our "standard" network that we have reduced investment in upgrading."

There would be no market for these paid prioritization deals if broadband networks performed adequately. Take Netflix's peering arrangement with Comcast. The only time that kind of deal made sense was when Comcast stopped keeping up with needed upgrades to maintain a level of service their paying broadband customers expect. It's not like Comcast isn't already flush with cash, but in the barely-competitive broadband market, Comcast can afford to put customers second when playing hardball with content companies. 


BTW, cable "digital phone" service is a particularly bad example. That traffic does not pass over the cable operator's public Internet/broadband network. Most companies dedicate a separate channel for their telephone traffic, creating in effect a private network that does not compete with other traffic.


Phillip M. Dampier

Editor, Stop the Cap!

http://www.stopthecap.com


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