FCC proposes not-entirely-neutral Net Neutrality rules

Hardcore “Net Neutrality” advocates won’t be very happy with the rules proposed by the FCC today, since as Reuters reports, the rules “may let Internet service providers charge content companies for faster and more reliable delivery of their traffic to users.”

“Content companies” means, above all others, Netflix and similar streaming-video providers.  There’s still a good deal of angst over this decision at the FCC, whose commissioners are no doubt aware of the grief they’ll take from neutrality purists:

Federal Communications Commission Chairman Tom Wheeler has come under fire from consumer advocates and technology companies for proposing to allow some “commercially reasonable” deals in which content companies could pay broadband providers to prioritize traffic on their networks.

Wheeler’s two fellow Democrats at the FCC concurred with him for a 3-2 vote to advance the proposal and begin formally collecting public comment, though they expressed misgivings about the plan.

“I believe the process that got us to this rulemaking today is flawed. I would have preferred a delay. I think we moved too fast to be fair,” said Commissioner Jessica Rosenworcel.

“The real call to action begins after the vote today,” said Commissioner Mignon Clyburn. “This is your opportunity to formally make your points on the record. You have the ear of the entire FCC. The eyes of the world are on all of us.”

Critics worry the rules would create “fast lanes” for companies that pay up and slower traffic for others, although Wheeler has pledged to prevent “acts to divide the Internet between ‘haves’ and ‘have nots.'”

Taken to its extreme, Net Neutrality is basically rent control for Internet real estate, and it could wreak the same kind of havoc rent control causes in real-world big cities.  As with building space in a city, bandwidth is a limited resource, and demand exceeds supply.  Some system for allocating this resource must be devised.  If there is no way to control that allocation through cost – if regulators force all bandwidth to be sold for essentially the same price – then allocation will be achieved through rationing.

Look at it this way: suppose you’re a Netflix enthusiast who streams movies and TV series several hours a day.  Your next-door neighbor, on the other hand, uses the Internet primarily for a bit of light web surfing and email.  Your bandwidth usage is vastly higher than your neighbor’s – you are pulling down hundreds, maybe even thousands, of times more data.  That’s not a big problem in a world of nearly limitless bandwidth – and we’re getting there – but for the time being, there’s only so much to go around.  Who should bear the cost of all that extra Internet “real estate” your Netflix mansions are gobbling up, while your neighbor lives in a teeny little hut of email and blog reading?

A further twist: you, the online video aficionado, require a high-performance connection to enjoy the best picture and sound, but your neighbor – currently paying the same price for Internet access from the same provider – might not notice if her connection degraded by 30 or 40 percent in speed.  Should the Internet service provider charge you more for your immense usage, offering your neighbor a cheap discount plan for the modest Web user?  That’s not generally the way it works now, and strict Net Neutrality would absolutely forbid it.  

What the FCC is considering would be rules that allow the ISP to charge Netflix for the high-quality connection you’re using, presumably passing that cost along to you.  But that’s a disturbing idea for some, as you can see from the FCC commissioners’ quotes above, because it could become a form of extortion – pay up for “fast lane” access, or you web site will run slow as molasses.  The advocate of unrestricted Internet markets might counter that many website proprietors would be perfectly satisfied with low-cost “slow lane” performance, if they’re not running interactive games or heavy audio-visual data services; it’s sensible for those “fast lane” providers to pay more.  But such costs then become a barrier to market entry for small competitors, as no upstart web service would be able to pay the kind of price Netflix and Amazon.com can easily afford.  

Then there’s the problem of ISPs deliberately slowing down the performance of certain competitors – i.e. the ISP sells movie streaming, so they sabotage Netflix transmissions to make their own service look better.  There have been more accusations of such sabotage than proven cases of it happening, but the absolutist opponent of Net Neutrality might ask why ISPs can’t set whatever price they want for the bandwidth they provide, or privilege their own in-house transmissions.  The response to that point would surely mention that ISPs are pseudo-monopolies, using physical infrastructure that was probably built with a combination of business investments and government subsidies or services, so their ownership of the bandwidth they provide is not total…

It’s a sticky issue, or more properly, a number of interlocking sticky issues.  (For instance, if Internet providers are treated as semi-public “utilities,” many regulations become possible; if they’re not, some proposed Net Neutrality controls are non-starters.)  The Washington Post adds a political dimension to the discussion, noting that some Obama supporters feel betrayed by his FCC turning away from strict Net Neutrality dogma:

This week, a small group of demonstrators camped in tents outside the agency’s headquarters, calling for Wheeler to drop his “pay for play” rules. A question-and-answer session this week on Twitter with one of Wheeler’s top aides made “#FCCNetNeutrality” one of the top trending terms on the site for the Washington region.

Silicon Valley is “very frustrated,” said Marvin Ammori, a technology-policy consultant who helped organize a letter of protest to the FCC from more than 100 tech start-ups and big companies including Google, Facebook and Yahoo.

Ammori said the tech community picked Obama over Hillary Rodham Clinton in the 2008 primaries after he aggressively courted them, partly with his stance on the Internet. “They were the only really rich people in 2008 who weren’t already rich in 1996 and therefore not part of the Clinton family legacy,” Ammori said.

But now the White House insists on the FCC’s independence, saying only that the President “will be closely following developments.”

The American people are probably 90 percent on board with the idea of a “free and open Internet,” but the different sides of the Net Neutrality debate profoundly disagree on exactly what that means.  Consumers probably think it means cheap and easy access to everything they want to see on the Web.  Until technology can provide such a nirvana, we’re edging closer to some hard choices becoming necessary between “cheap” and “easy.”