Hance Haney

Eric Schmidt and Laurence Tribe on Common Carriage and Net Neutrality Regulation

Over at Huffington Post, Timothy Karr claims that “One attendee — a member of the Darwin-challenged Discovery Institute — sought to argue that the Internet be completely free of regulation” during the question and answers following Google Chairman and CEO Eric Schmidt’s address to the Progress & Freedom Foundation’s Aspen Summit. That would be me. Actually, I make no such argument. There is a place for antitrust enforcement (provided it aims to protect competition, not competitors) and consumer protection. I draw the line at economic regulation, or competition policy, which tries to ensure that everyone who can afford to hire a lobbyist profits and no one who can afford to hire a lobbyist fails in the marketplace.


I asked Schmidt how he would feel if Google were unable to cut deals with broadband providers, for example, to feature the Google search bar as the default search bar for all of the broadband provider’s customers because a future Congress or FCC applies common carrier requirements which prevent broadband providers from differentiating between content in any way? He responded that if indeed there were a common carrier structure he would hope it would be defined “pretty narrowly,” focusing on bit rates. He said he hopes carriers wouldn’t be prevented from monetizing their services in any way they chose. Schmidt said he thinks common carriage – which would regulate “how carriers make their money” – is a mistake, adding that “you’re much better off regulating – if you have to regulate – at a level of equal access, equal treatment.”

In my opinion, there is little, if any, difference between common carriage and “equal access, equal treatment.” A common carrier serves all comers at a standard, published rate; it doesn’t discriminate at all. Many people frequently think of common carriers as heavily-regulated entities. For example, the rates that telephone companies can charge for basic service are set by regulators, who aim to keep the rates as low as possible while still allowing carriers to earn a “reasonable profit.” But airlines are also common carriers. Although airlines appear to be the antithesis of common carriers because they charge vastly different prices for the same seats, in fact what they have done is create separate products (low fares with high restrictions and high fares with low restrictions) in an effort to offer lower fares to leisure travelers while maximizing profit. But each product is offered to all comers, while supplies last, at a standard, published fare. Many people also tend to think of common carriers as government-protected monopolies who are not allowed to compete in adjacent markets (I believe one of the primary goals of net neutrality regulation, in fact, is to interfere with the ability of broadband providers to sell advertising). Even when we talk about common carriers, therefore, it is not always clear what we are talking about.

What I was attempting to get at with my question is the difference between common carriers and private carriers – such as newspapers, television and cable. None of these entities are treated as mere conduits for the views of others; they all get to exercise some degree of editorial control.

Anyway, also attending the summit was Harvard Law Professor Laurence H. Tribe (hardly a Reaganite, to borrow the description Karr applied to others). Professor Tribe was asked by another participant whether he thought broadband providers should be allowed to censor music lyrics critical of the President of the United States. Tribe rephrased the question: Can [broadband providers] be forced to act as common carriers? and answered in the negative,citing Tribe cited Hurley v. Irish-American Gay, Lesbian & Bisexual Group of Boston, 515 U.S. 557 (1995). as the decision that “would probably apply here.” In that case, the organizers of a parade did not want to include among the marchers a group espousing a view with which the organizers did not agree. The Supreme Court ruled that the parade was not merely a conduit for the speech of participants. The Court contrasted the parade organizers with cable operators who were the subject of Turner Broadcasting System, Inc. v. FCC, 512 U.S. 622 (1994) by noting that cable, unlike a parade permit, confers a “monopolistic opportunity to shut out some speakers.” But guess what? Like it or not, cable doesn’t confer a monopolistic opportunity anymore.

Don’t get me wrong (as Adam would say): I don’t want anyone to be able to limit what I can do on the Web; no one does. But I am more confident, apparently, than some that broadband providers will seek to satisfy (even gratify) consumer expectations. I suspect that broadband providers will experiment with advertising, since companies like Google are making a fortune from online advertising. But if their efforts annoy consumers, advertisers will balk and the efforts will fail. My guess is that the broadband providers will ultimately be forced to collaborate as partners with Google, Yahoo, Microsoft and others.

Schmidt stated, optimistically, that if we did end up with common carriage then “there would be other ways in which we would work with the operators and carriers to help monetize their services. There’s a lot of money to be spread around here.” Schmidt makes a good and often overlooked point here that is worth repeating: Content and conduit providers are reliant on each others’ success. One would think these people could get together and do a deal. Considering their relative strengths and weaknesses, they probably have much less to fear from each other than they realize. For example, the conduit providers are not imaginative risk-takers, and the content providers are not cautious and deliberate. But obviously no one wants to be a junior partner.

Schmidt’s remarks overall were very thoughful and contributed to better understanding in what has become a frustrating debate. I wish, if the format of the question and answer period and the late hour permitted, I could have prefaced my question – which sounded more confrontational than I would have liked – with a brief statement of appreciation for Google’s enormous contributions to the popularity of the Web and to learning, among other things (for example, I consider Google Book Search to be one of the greatest contributions to humankind in my lifetime).

August 24, 2007 | Comments |

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    I asked Schmidt how he would feel if Google were unable to cut deals with broadband providers, for example, to feature the Google search bar as the default search bar for all of the broadband provider’s customers because a future Congress or FCC applies common carrier requirements which prevent broadband providers from differentiating between content in any way?

    How would this work? The way computers and the Internet are typically configured, ISPs have little or no control over the content's of a browser's search bar. Those defaults are set by browser manufacturers such as Microsoft, Apple, and Mozilla. I realize this is just a hypothetical example, so maybe I'm nitpicking, but since the whole network neutrality debate is over what means ISPs should be allowed to avail themselves of in order to enhance their bottom line, I think it's important to be precise in our scenarios about things they might that would run afoul of neutrality regulation. While I don't think government regulations regarding search bars are desirable, I would certainly be pissed off if my ISP tried to dictate what appears in my browser's search bar.
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    Tim Lee -- you may be one of the few who sense how increasingly "out of touch" Libertarians and Conservatives appear in the tech centers (SJ, SF, NY, Seattle, Dallas, ...). The funny thing is that the tech community has traditionally been very Libertarian, but the loudest policy voices have not invested the time to understand new technology, or the competitive market environment.

    Not only do you need to be more precise in your scenarios, you also need to lose the ridiculous long-winded, never-could-happen hypotheticals.

    Why did everyone celebrate when the iPhone or AACS were cracked? It wasn't the traditional competitive market that caused the dominant companies to open up. It was individuals struggling for what they believed were opportunities to engage in open commerce. In the end, the tech community just wants to make money, and anyone who supports open commerce is their friend. Right now Libertarians and Conservatives appears to be on the side of closed commerce.
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    I didn't invent the hypothetical. See "Comcast Signals Unhappiness With Google," by Peter Grant, Wall Street Journal (Mar. 17, 2007):

    Comcast, the country's largest cable operator, also has been talking to Google about extending their relationship. Currently, Google provides search results when users of the Comcast.net portal enter queries into the search box on the site. But Comcast thinks it should get a larger share of the revenue generated by the arrangement. It also is unhappy about other terms of the deal, these people say....

    Google has shared advertising revenue from searches generated on Comcast.net, with Comcast's cut expected to be about $70 million this year, people familiar with the matter say. But Comcast feels that its share should be at least $100 million, these people say. Comcast.net, which gets about 15 million visitors a month, is one of the biggest non-Google sources of search queries handled by Google.

    Comcast also maintains that Google could do more to boost the number of searches from Comcast.net, for instance by making it possible for users viewing a particular news story to search easily for both text and video on that subject. Comcast executives also argue that Google has not provided sufficient information on how it uses data from Comcast.net users.


    I would respectfully submit that it is the proponents of new regulation who have the responsibility to be precise in their scenarios so that regulation can be structured to minimize unintended consequences. We need to be concerned not only with how proposed regulation will impact that which already exists, but also how it will impact that which hasn't been thought of yet.

    I think when you parse what Eric Schmidt is saying, it isn't at all clear what he is advocating.
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    Also check out the offerings from BareFruit and Paxfire. Earthlink is using the former, Global Crossing has been testing the latter.
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    Hance, I guess I misinterpreted what you were saying, as I thought you were talking about the search bar that appears in the upper-right-hand corner of most browsers. But it sounds like you're just talking about what happens on Comcast's own website, which I don't think would be affected by any of the network neutrality proposals out there. If I'm wrong and there's something in Snowe-Dorgan on what can appear on an ISP's website, please correct me.

    Again, I'm not disagreeing with you on the policy argument, just trying to get a clarification on the scenario you're talking about and how it relates to net neutrality.

    Jim, that's an intriguing example. It's not clear to me that network neutrality regulations would restrict ISPs' ability to do that, though. Ultimately, DNS is just an application, right? Most people use their ISP's DNS server, but if you don't like your ISP's DNS server, you can switch to someone else's right?
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    Your hypothetical is a valid description of what some DSL providers (and perhaps cable operators) have done at some points, although perhaps not today. Verizon used to require the DSL subscriber to run an install CD that installed a customized version of Internet Explorer. This included software needed to set up the account. Without using this, the customer would have to wait on the phone for a long time to get a customer service representative to set up the account and password. I don't recall if the customized version of IE set up a particular search vendor, but it clearly could have. Uninstalling the custom version of IE and installing the standard version didn't wipe out the customization, because the uninstaller did not remove the customized registry entries; one would have to manually clean up the registry or run a special tool from Microsoft.

    Needless to say, most people who ran the installer had the special Verizon IE browser as their default browser for years.
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    Thanks, Michael, for that great example. I had forgotten about that.

    But it sounds like you're just talking about what happens on Comcast's own website, which I don't think would be affected by any of the network neutrality proposals out there. If I'm wrong and there's something in Snowe-Dorgan on what can appear on an ISP's website, please correct me.

    Tim – Snowe-Dorgan (S. 2917, 109th Cong.) provides, among other things, that:
    “With respect to any broadband service offered to the public, each broadband service provider shall--(1) not block, interfere with, discriminate against, impair, or degrade the ability of any person to use a broadband service to access, use, send, post, receive, or offer any lawful content, application, or service made available via the Internet …”

    Now compare this with § 202 of the Communications Act of 1934 (47 U.S.C. § 202), applicable to telecommunications services:
    It shall be unlawful for any common carrier to make any unjust or unreasonable discrimination in charges, practices, classifications, regulations, facilities, or services for or in connection with like communication service, directly or indirectly, by any means or device, or to make or give any undue or unreasonable preference or advantage to any particular person, class of persons, or locality, or to subject any particular person, class of persons, or locality to any undue or unreasonable prejudice or disadvantage. (emphasis added)

    The two provisions are nearly identical. Therefore, if Comcast makes its Comcast.net portal a default setting for its customers, for example, it is discriminating against competing services. Btw, here is another interesting article (“Pressuring Microsoft, PC Makers Team Up With Its Software Rivals,” by Robert A. Guth and Kevin J. Delaney, Wall Street Journal (Feb. 7, 2006)) which describes how computer makers prepackage software and how they seek to gain advantage simply by how they present set-up options to consumers:
    It takes only about five minutes to set up a new personal computer by clicking through a series of introductory screens. In that time, however, many consumers choose software and services they will often use for the life of their machine. Historically, Microsoft Corp. held great sway over this "first-boot sequence" as well as other software preinstalled in the factory.
    Now PC makers including Hewlett-Packard Co. and Dell Inc. are beginning to take more control over this crucial real estate. They increasingly are trying to sell this space to service providers and software makers, such as Google Inc. After a year of sometimes tense negotiations with Google and PC makers, Microsoft has ceded ground on some key technical details.

    Like it or not, this is discriminatory and if Snowe-Dorgan applied to computer and software makers, they wouldn’t be able to do this.

    Speaking of Dell, every time I misspell a URL, I get redirected to a Dell search page crammed with sponsored links. If broadband providers wanted to do this, they couldn’t under Snowe-Dorgan (I hate the redirect and Dell’s search page, but I do defend the company’s right to do this).
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    not block, interfere with, discriminate against, impair, or degrade the ability of any person to use a broadband service to access, use, send, post, receive, or offer any lawful content, application, or service made available via the Internet …”

    I don't see how providing a CD containing software with a particular default falls under the language. With most broadband services I've signed up for, you've been able to throw the welcome CD in the garbage unopened and the broadband service works just fine. Even for consumers that do choose to install their ISP's suggested browser, I don't see how the presence of a search bar pointing to a particular search engine could "block, interfere with, discriminate against, impair, or degrade" the ability of a consumer to use a different search engine.

    The misspelled URL issue is similar. In that case, what your ISP would be doing is providing a DNS server (the server that converts a name like techliberation.com to 72.32.122.135) that returns the IP address of their search page when you query for domain names that don't exist. Reading Snowe-Dorgan to cover this behavior isn't as big of a stretch as the browser search bar example, but I still think it's pretty implausible. That "service" may be annoying, but it doesn't in any way prevent you from getting to the websites you want. In fact, if you want to you can set your computer to use a DNS server other than the one provided by your ISP, in which case your ISP's DNS server settings won't have any effect on you at all.

    Of course, we should never rule out the possibility that the FCC would twist the language of Snowe-Dorgan to dictate what can be on an ISP's installation CD or how an ISP can configure its DNS servers, but I don't think such a reading is very plausible. And it's certainly not consistent with the principles that Google and others have articulated.
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    It sounds like you are basically arguing that none of these examples are a big deal nor are they the type of practices you assume Snowe-Dorgan is meant to proscribe. But I am saying there is nothing in Snowe-Dorgan that would permit these things. The language is unequivocal. A broadband provider may not discriminate with respect to its broadband service in any way execept for some network management things (and some of the NN proposals would allow a broadband provider to offer a broadband service that blocks objectionable content for those who want it).
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    It doesn't say the broadband provider may not discriminate in any way. It say they may not discriminate against "the ability of any person to use a broadband service to access, use, send, post, receive, or offer any lawful content, application, or service." If Comcast signs a deal with Yahoo to bundle a browser with Live Search in its welcome CD, that doesn't in any way affect "the ability of any person to use a broadband service to access" Google's search engine.

    If Comcast distributed a welcome CD with a browser that refused to go to Google's site, or a DNS server that refused to perform DNS lookups for google.com, then they'd likely be in violation of Snowe-Dorgan. But I don't think that merely setting defaults a particular way is.
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    If Comcast signs a deal with Yahoo to bundle a browser with Live Search in its welcome CD, that doesn't in any way affect "the ability of any person to use a broadband service to access" Google's search engine.

    That would be an example of blocking, which Snowe-Dorgan also prohbits, obviously. As long as Comcast doesn't prevent you from bypassing its affiliate, Comcast isn't guilty of blocking. But blocking and discriminating are different. If Comcast bundles a Yahoo browser in the installation CD it is discriminating in favor of its affiliate, Yahoo.

    Black's Law Dictionary defines discrimination as follows:
    With reference to common carriers, a breach of the carrier's duty to treat all shippers alike, and afford them equal opportunities to market their product...

    When you present options to people, many choose the first one or whatever's at hand and that's a sigificant competitive advantage in the marketplace. For example, Google believes that built-in search boxes are the source of 30% to 50% of a user’s searches (see "New Microsoft Browser Raises Google's Hackles," by Steve Lohr, New York Times (May 1, 2006)). To use your example, Snowe-Dorgan would prevent Comcast from choosing Yahoo as the first choice its customers see. If Comcast were allowed to do so, that would deprive Yahoo's competitors of a marketing opportunity.
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