Leftward Thinking

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n April 23rd the Wall Street Journal reported that the FCC was preparing to release new Open Internet (aka Net Neutrality) Rules that would allow for broadband providers to offer paid ‘fast lanes’. The leak of this information has lead to a media firestorm forcing FCC chairman Tom Wheeler has scrambled to clarify his proposal and defend it from the onslaught of critics.

What is Net Neutrality?

To understand these latest developments and their implications it is important to have at least a basic understanding of what net neutrality actually means. The issue of net neutrality can get technical and the devil is always in the details but the basic concept is quite simple. Think of the internet as a series of pipes. On the one end of the pipes in an internet user who requests something from the internet, whether that be Netflix, a connection to a Skype conversation, or a post from this blog. On the other end are a bunch of servers where all the information on the internet sits. When a request is made, perhaps for a cute cat video, that video runs from the servers through the internet ‘pipes’ to the user. The principle of net neutrality states that these ‘pipes’ should be neutral, they should not care what is running through them, the service they should provide should solely be the conduit through which internet traffic can flow. In reality these pipe operators are the broadband internet service providers like Comcast, Time Warner Cable, Verizon etc.

The advantage of this system is that people can access my website, or another startup, with the same level of speed and access that they can access a Facebook or a Google. Proponents of net neutrality argue that this is the key to innovation on the web and what allows for great ideas to quickly spread around the world and become popular internet services.

Alternatives/Violations of Net Neutrality

For the most part net neutrality is how most people perceive the internet to function. They buy access to the ‘pipes’ through their cable company and then they are able to request any internet service they wish to be sent through those ‘pipes’ to their computer. However their are several behaviors broadband providers have been known to do, or are want to do, that would violate the net neutrality principle.

Blocking/Throttling Traffic and Applications

One way to violate net neutrality is for network operators to slowdown or altogether block certain applications from running on their networks. This discrimination is exactly what Comcast did in the late 2000’s when they slowed down peer-to-peer traffic over their network. After denying this behavior they admitted to their actions and agreed to a small settlement. In a different example AT&T banned Skype outright on it’s networks until 2009, fearing that Skype would compete with it’s existing voice services AT&T. In most cases broadband providers block or “throttle” (aka slowdown) services that they perceive as competing against their own interests. Now that Comcast owns NBC, and AT&T is trying to buy DirectTV, many advocates are concerned that Comcast and AT&T have an even stronger interest in meddling with certain internet services that compete with their own properties. Outside of true competition or FTC anti-trust law, which in my opinion should not allow internet service providers to own any specific internet/content companies, net neutrality is the only way to prevent these types of abuses.

Note: sometimes providers violate net neutrality by blocking traffic simply for political reasons, like when Verizion blocked text messages from a pro-choice group from being sent out.

Fast Lanes and Slow Lanes

One scheme that cable companies would love to implement, and that is directly related to the new FCC rules, is a system where content providers (Youtube, Facebook, Leftward Thinking) would pay Comcast varying amounts to receive varying levels access to customers. If I wanted my customers to receive the fastest availble access to my blog I would have to pay Comcast for that privilege. This is exactly what happened to Netflix (cool graph). This system doesn’t deal directly with internet customers but would affect which websites load quickly for customers and which load slow, only rich companies that pay Comcast would have their websites load fast. Cable companies justify this plan by saying certain companies like Netflix are hogging up their ‘pipes’ with all their traffic and as such should pay more if they want to give their customers reliable service. However this is the wrong, way of looking at the issue. In fact internet users are the one choosing to use the Comcast internet they pay for to watch Netflix. It is not Netflix that is flooding Comcast’s networks, it is Comcast’s own customers that are deciding to use Comcast’s service to access Netflix, instead of accessing other sites.

Data Caps With Trickery

This method is one of the more sneaky threats to net neutrality. It starts with broadband providers placing data caps (a maximum amount of internet usage per month) on peoples’ internet plans. This is a familiar practice to people in the mobile sphere but has begun being rolled out, granted with much higher limits, on landline broadband as well.

As an aside, this practice is already flawed and deceptive because the internet is like electricity in that there is a not giant pool of it somewhere that might run out if users take much per month, but there are capacity levels that are reached at peak times. An honest approach by broadband providers would be to charge a premium at peak times when the ‘pipes’ are most busy, and offer lower rates in the middle of the night when there is plenty of capacity (aka bandwidth) available.

But getting back to the nefarious ‘cap and trick’ scheme. After capping users’ amount of internet per month broadband providers then do one of two things. First they can then offer certain affiliated services that don’t count against the user’s monthly cap. Comcast does exactly this with it’s TV Anywhere Xfinity app on the Xbox. If you use Netflix on your Xbox it will fill up your monthly cap, but if you use Comcast’s own Xfinity video app it will not. In this way broadband providers favor their own services over competition. The second approach is to offer certain apps or services with “sponsored data”. In a real life example ESPN is in talks with Verizon to pay Verizon so data that users use through the WatchESPN app won’t count against their plan. In this way Verizon can charge both it’s own customers (that are paying for internet access to content), and the content providers themselves, something internet advocates call “double dipping”. Companies likes ESPN that can afford to pay will become preferable to customers because they don’t use ‘data cap’ data, while internet startups will be left at a competitive disadvantage.

A Tiered Internet for Customers

This system is the absolute dystopian nightmare explained entirely by the image to the right. In this world the internet is sliced and diced by cable companies who allow access to certain sites depending on how much you pay, much like how you can buy bundles of TV channels from them today.

The FCC’s New Rules

The new FCC rules, which have not yet been finalized, would allow broadband providers like Comcast to offer faster lanes to entities that pay. For example YouTube could pay Comcast so that its videos get delivered fast, while a competing video service would be subjugated to slower speeds when it comes to delivering to their customers. This discrimination and the ability for cable companies to divide the internet into different tiers has many internet advocates worried that it may signal the end of the internet as we know it as it transitions into a more controlled platform.

The full set of rules has yet to be published but an outline of the principles is a available at the FCC here. The full rules are expected to be release May 15 which would then start off a period of public comment.

In 2010 the FCC released an Open Internet Order  that was supposed to regulate internet service providers to generally comply with net neutrality principles. The rules were weak and full of loopholes, for example they didn’t apply at all to mobile internet, but Verizon sued anyway. The case was decided on appeal in January of 2014 and dismantled many of the rules on the grounds that the FCC did not have the power to make such regulations but gave the FCC two options. The first option was for the FCC to reclassify internet service providers as common carriers under “Title II”, as telephone companies have been regulated throughout their history, and how many lay people already view internet providers. This path was advocated by many public interest groups as an alternative to the original 2010 open internet order, and would give the FCC  all the authority it would need to enforce net neutrality. The second option was to not reclassify ISPs but instead rely on authority of “section 706” (of the Telecommunications Act of 1996) which gives the FCC the power to regulate and encourage the deployment of broadband technologies to all Americans. Chairmen Wheeler chose the 2nd option.

It’s the FCC that refuses to accept the best answer even after all its legal gymnastics to avoid reclassifying [to Title II] have been laughed out of court.

-Craig Aaron, CEO of Free Press

The problem with not reclassifying ISPs to “Title II” common carriers is that the power given in section 706 is limited to encouraging broadband adoption and doesn’t directly give any authority in the net neutrality sphere. So Wheeler, now left to write net neutrality rules under the guise of encouraging broadband use, has performed some linguistic gymnastics changing phrases like “no unreasonable discrimination” to “may not act in a commercially unreasonable manner” in the hopes that such wording would hold up in court. However no one knows what “commercially unreasonable” means, and the FCC’s legal grounds is still much shakier and limited than if they would reclassify internet service providers as “Title II” common carriers.

*Here is a good article describing this cycle that the FCC keeps going through and why it is actually Congress’s fault, not the FCC.

The Initial Reaction

When news of this new proposal first broke on April 23rd the internet went bezerk. With article titles such as, “The FCC is dealing the internet away”, “Goodbye, Net Neutrality; Hello Net Discrimination”, “The FCC May Change How the Internet Works, Which Sucks For You”, “ISPs Hold Us All To Ransom”, and “How The FCC Plans Neuter The Net” the uproar quickly lead to an official FCC response “Setting the Record Straight on the FCC’s Open Internet Rules”. However the headlines continued to roll out “FCC fails to clarify new net neutrality plans”, “FCC Scrambles to Clarify Its New Net Neutrality Rules”, and Tom Wheeler issued a second response on the 29th “Finding the Best Path Forward to Protect the Open Internet” after his speech at the NCTA Cable Show. In this response Wheeler tried to clarify what he thought “commercially unreasonable” practices were (though it’s the courts’ opinion that really matters) and said that he would not “hesitate to use Title II if warranted”. Responses to this statement are best summed up in this headline “FCC’s Wheeler Says That If These Lame Net Neutrality Rules Don’t Work, He’ll Implement The Real Rules Next Time”.

.@TomWheelerFCC: “I will not hesitate to use Title II if warranted.” #cable2014

— Gigi Sohn (@GigiBSohnFCC) April 30, 2014

Opposition from Congress and The FCC Itself

Senator AL Franken, who has been a leader on net neutrality issues in the past was the first to come out with a letter to FCC chairmen Tom Wheeler

“I am deeply disappointed that you are considering rules that would allow deep-pocketed companies to pay for preferential access to Internet Service Providers… Pay-to-play deals are an affront to net neutrality and have no place in an online marketplace that values competition and openness.

-Senator Al Franken

He followed that letter with an interview on net neutrality to Time Magazine, where he described the perils of the FCC’s proposal. Close behind him came a letter to the FCC from 11 high profile Senators including Ron Wyden, Charles Schumer, Elizabeth Warren, Kirsten Gillibran and Barbara Boxer.

Particularly concerning are reports that the NPRM will allow “paid prioritization arrangements”… Changing the rules — to let broadband Internet Service PRoviders (ISPs) demand payment from websites and app developers — would eradicate nEt Neutrality, not preserve it

-Group of eleven Senators

Other congressmen let their concerns known via Twitter, telling the FCC that they were watching closely.

Monopolist interests cannot be allowed to pick winners & losers on what must be a level playing field. Watching @FCC closely #NetNeutrality — Ron Wyden (@RonWyden) April 24, 2014

Recode.net recapped these reactions in a piece titled “Does Anyone Like the FCC’s Proposed Net Neutrality Rules?” where they noted…

The problem facing Wheeler is simple. Republicans have never liked net neutrality regulation; they feel it’s unnecessary because there have been very few complaints. Democrats, who have consistently supported net neutrality, don’t like this proposal because they object to letting content providers pay for priority delivery.

The pushback didn’t only come from Congress but from inside the FCC itself. After it was clear that Wheeler’s proposal was being met with nothing less than outrage, fellow Democratic Commissioner Jessica Rosenwocel asked the chairmen to delay his proposal saying in that..

I believe that rushing headlong into a rule making next week fails to respect the public response to his proposal

-Jessica Rosenwocel

Rosenwocel’s request was apparently denied by the chairman. On the same day a second Democratic commissar, Mignon Clyburn, released a blog post  distancing herself from Wheeler’s proposal, restating her commitment to net neutrality, and declaring that she would like to prohibit pay-for-prioirty deals outright. Then from the other side of the aisle conservative Republican commissioner Akit Pai joined in asking for Wheeler to delay the proposal…

“I have grave concerns about the Chairman’s proposal on Internet regulation and do not believe that it should be considered at the Commission’s May meeting,”

-Republican FCC Commissioner Ajit Pai

A second conservative commissioner, Michael O’Rielly, then published an op-ed describing the conservative opposition “FCC’s grab for new regulatory power could go beyond broadband providers” With opposition from ideologically opposed commissioners support for the chairman’s plan seemed to be greatly diminished.

Silicon Valley Starts Making Noise

But it wasn’t only public officials that rushed forward in opposition. Netflix, who is currently in a net neutrality with fight Comcast, was one of the first companies to voice their opposition. Close behind was the non-profit Mozilla, maker of Firefox, which came out with a blog post critical of the FCC’s plan and also proposed a very well detailed alternate proposal, which they asked the FCC to officially consider (here is a similar official comment from Engine Advocacy).

Also wasting no time in letting their opposition be known was a group of nearly 50  a‑list venture capitalists. The group included investors from Union Square Ventures, Andreessen Horowitz, First Round Capital, Y Combinator and many more. Together they have funded companies like Twitter, Facebook, Foursquare, Tumblr, Giga-Om, and Reddit. In their plainly worded letter they point out the obvious…

If established companies are able to pay for better access speeds or lower latency, the Internet will no longer be a level playing field.Start-ups with applications that are advantaged by speed will be unlikely to overcome that deficit no matter how innovative their service.

Then on May 7th the large tech titans of the valley, including Amazon, Google, Facebook, Yahoo, Microsoft, Ebay and many more came forward with their own letter to the FCC. While their letter did not offer a clear alternative, like Mozilla’s proposal, it was clear and decisive in it’s opposition to “fast lanes”…