Very good piece today by Peter Suderman, managing editor at National Review Online, on Timothy Wu and regulation of wireless. His conclusion:
Over the last two decades, wireless phones have morphed from awkward, brick-sized contraptions with laughably poor reception into slim, sleek fashion accessories with impressive feature sets. Meanwhile, wireless service has gone from novelty to convenience to necessity. Society may not always love the cell-phone industry, but consumers have integrated its products into daily life to a remarkable degree. If these trends are any indication, the wireless industry will continue to adapt to the demands of consumers all on its own — somewhat fitfully and frustratingly for sure — but without any need for government meddling, no matter how well intentioned.
Exactly.
The Boston Globe reports that some broadband customers are confused by their provider’s acceptable use policies, which sometimes place ambiguous limits on customers who are aggressive Net users. The problem that some cable operators are trying to deal with is that a very small handful of users who are heavy downloaders can sometimes impose significant delays on other network users because of the way cable high-speed networks work. According to the story, Comcast estimates that only .01 percent of its 11.5 million users fall into this category, but I’ve heard other estimates. Mike Lajoie, chief technology officer of Time Warner (TW), told the Wall Street Journal a year ago that fewer than 10 percent of TW subscribers consume more than 75 percent of the network bandwidth. And I’ve actually heard even more extreme numbers reported by other broadband providers (BSPs), with the ratio being more along the line of 5-10 percent of users eating up closer to 90 percent of bandwidth. To mitigate the problem, some network operators are apparently sending letters to those heavy users requesting that they scale back their downloading activities or else face the possibility of being kicked off the network for violating the firm’s acceptable use policies.
Regardless of what the exact number is, it is clear that a small handful customers really do impose more of a burden on the system and potentially degrade the broadband experience for other users. The question then becomes: How should BSP deal with these bandwidth hogs? As I wondered aloud in this old essay on network pricing issues, I think a metered pricing scheme might help solve this problem by fairly allocating costs to customers who use the most bandwidth. And yet, at least so far as I can tell, no BSP seems interested in taking that path. Why is that?
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WASHINGTON, March 7, 2007 – The country’s two satellite television companies have joined forces with four major technology companies and a wireless company to promote the auction of frequencies currently used by television broadcasters.
In a March 5 meeting at the Federal Communications Commission with FCC Commissioner Jonathan Adelstein, the tech companies – Google, Intel, Skype and Yahoo! – joined with Access Spectrum to promote their “Coalition for 4G in America.”
The engagement of Internet giants like Google and Yahoo!, which traditionally have not lobbied the FCC, suggests considerable interest by the technology industry in the upcoming auction, which is set to begin no later than January 28, 2008. In 2006, Congress fixed February 19, 2009, as the end-date for analog television, freeing a wide swath of radio-frequencies for use by new technologies.
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I know it’s just hideously trite for my very first post on TLF to be about net neutrality, but there it is. Let it go.
I’m taking an (unintentionally) hilarious political writing class right now, so something that’s been on my mind is issue framing. Framing network pricing structures as an issue of “neutrality” has been phenomenally successful, because neutrality is a concept that is intuitively appealing. For our part, there have been sort of clumsy efforts to shift the framing by adding “regulation” to the end of it, so it’s net-neutrality-regulation-this or net-neutrality-regulation-that, but it’s a bit of a mouthful and it doesn’t really solve the problem.
So I tried to come up with something better, or at least more rhetorically effective, and I think there’s a case to be made for “network price controls,” which is basically what we’re talking about. I know it certainly doesn’t cover all the philosophical problems one might have with mandated neutrality, but it certainly covers the core of the economic problem.
Just think of the time we’ll save! Instead of saying:
“Yes, well, neutrality may seem superficially appealing, but it will create disincentives in technology investment, broadband deployment, and higher speed transmissions, all of which we’re totally going to need when the exaflood comes, not to mention the subsequent yottabyte flood that will follow once we figure out how to actually send people over the Internet or whatever,”
we can just say:
“Price controls cause shortages,”
Tim Wu has an interesting (rough draft of a) short paper here that re-conceptualizes the network neutrality issue as a question of termination fees. He draws a little diagram showing you connected to eBay like this:
And Wu says:
What is notable is the lack of termination fees, or fees charged to reach customers. That is, your ISP, ISP1, doesn’t charge eBay an additional fee to reach you. Similarly, eBay’s ISP, ISP2, doesn’t charge you any money to reach eBay.
Viewed from this perspective, much of the current network neutrality debate can be cast as a debate over termination fees. The “priority-lane” proposals advanced by AT&T and others can be understood as proposals to begin charging a fee, not for transport, but to reach their customers.
That charging such a fee is possible as a matter of technology and economic power is clear. In our diagram above, in order to reach you, eBay must go through ISP1. In telecom jargon, ISP1 has a “termination monopoly” over you. Provided eBay wants to reach you, it would have to pay the termination charge ISP1 wants to charge. The diagram below shows this.
It seems to me that Wu makes precisely the same conceptual error that Yochai Benkler makes in The Wealth of Networks.
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In case you missed it, Paul Kouroupas left a good comment following up on Thursday’s post:
What you (and others) are missing is an appreciation for the havoc the Bell Companies can wreak with regulation. Look at the experience of the VoIP providers. They launched an innovative product that competes well with Bell Company service. Just as they started gaining traction and attracting investment capital the Bell Companies claimed VoIP traffic should be subject to “access charges”. Most industry observers would tell you their argument was specious at best, but they made it anyway because it triggered a regulatory process that continues to this day and leaves a black cloud hanging over VoIP services. This cloud dampens investment enthusiasm and raises the costs of VoIP providers.
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Paul Kouroupas, a lobbyist for Global Crossing, makes a good point about network neutrality:
Why would government agencies that have historically shown a preference for the incumbent interest over the public interest all of the sudden get it right with net neutrality? Isn’t it more likely that these agencies will favor the incumbent interests when they adopt regulations implementing a vague Congressional statute? (And you know it is going to be vague because it has to be the subject of compromise in order to garner enough votes.) And won’t this lead to protracted litigation before several layers of federal courts? And don’t the Bell Companies hold the advantage in resources for this sort of war of attrition? After all, AT&T has the legal, regulatory, and political resources of the former SBC, Pacific Bell, Ameritech, SNET, AT&T and BellSouth. For those of us who remember the CLEC wars of the 1990s, any one of these former companies was a formidable foe. Now all of those resources sit under the control of one company! It doesn’t take a rocket scientist to figure out how this movie ends.
Obviously, anything a lobbyist says should be taken with a grain of salt. An interesting question is how one would apply Matt Yglesias’s “vulgar Marxist” method of political analysis to GC’s stance. In a nutshell, Matt’s theory (which he expands on here) is that when we’re unsure about the details of a complex policy issue, we should line up with the companies whose interests are most likely to be aligned with our own.
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Wharton professor Kevin Werbach has posted an interesting new paper on net neutrality that’s not really about net neutrality. His thesis is that while he agrees with the proponents of regulation that broadband network operators will disadvantage content and application providers and thus stifle innovation, he doesn’t think anti-discrimination rules are the way to go. In fact, he does a great job of explaining why they’re not a good idea and how discrimination of all kinds–from content delivery networks (CDNs) like Akamai, to propriety video services like ESPN 360–serve the interests of both consumers and network operators. He also highlights how difficult it would be under neutrality rules to distinguish anti-competitive discrimination from benign discrimination like spam blocking or legitimate traffic management.
Instead he argues that the real issue missed by the neutrality debate is interconnection. “The defining characteristic of the Internet is not the absence of discrimination, but a relentless commitment to interconnection,” he writes. Networks withholding interconnection is the real threat to innovation. In particular, he is concerned about access tiering, “[broadband networks] charging content and application providers additional fees for preferential access to their broadband access customers.”
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Well, it’s been more than 48 hours since my last post blasting the Wu-Skype “wireless Net neutrality” proposal, so I’ve been itching to write another essay about my favorite subject du jour! Luckily, when I arrived home today, I found my monthly copy of PC World magazine in the mail–yes, I am a geek–and randomly opened to an article by Cyrus Farivar entitled “Six Things You Never Knew Your Cell Phone Could Do” He begins the essay by noting that:
Right before your eyes, your cell phone has morphed into a portable computer. Whether you’re searching Google via text messages, using Short Message Service (SMS) to make international calls, or e-mailing a voice message, these tips will help jump-start your cell phone’s inner PC–and make your life easier to boot.
… and then Farivar goes on to highlight many “useful tips and tricks that you can teach even an old cell phone to do.” As I read through the article, all I kept thinking to myself is: “But according to Tim Wu and Skype, this stuff isn’t supposed to be possible!”
Should the FCC enforce net neutrality rules? No, says Google’s top policy executive. According to Andrew McLaughlin, the firm’s global public policy head: “Cutting the FCC out of the picture would be a smart move.”
The comments were made yesterday at the Tech Policy Summit in San Jose. As reported in Tech Daily and Communications Daily, McLaughlin argued that neutrality should be thought of as “an attorney general or FTC problem.”
This is a surprising statement from Google, which has lead the fight for neutrality regulation for over a year. Most proposals for neutrality regulation have put the FCC in charge–including the S. 215, by Sen. Olympia Snowe and Byron Dorgan.
Its also a sensible idea–one that many of us have long advocated. (See, for instance, this statement by the Progress and Freedom Foundation’s DACA working group.) At its heart, the net neutrality debate is over competition: how much is there, is it enough, and what to do if it is not. Such issues are the bread and butter of the FTC–which has close to a hundred years experience dealing with them.
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The Technology Liberation Front is the tech policy blog dedicated to keeping politicians' hands off the 'net and everything else related to technology.