Dang it, “House of Cards.” You ruin everything!
Netflix, which accounts for something like 30 percent of Internet traffic, revealed this weekend that it will be paying Comcast for an improvement to its interconnections to speed up streaming to Comcast customers.
So it begins.
As Timothy Lee points out at The Switch, this would seem to indicate a fairly fundamental shift in the way business happens between Internet companies and broadband providers. Could this be the beginning of the end of net neutrality, the tacit understanding that all Internet traffic gets treated equally?
And, if so, how worried should you be about this?
Pretty worried. Move the Loss of Net Neutrality up the worry list above the Imminent Eruption of the Yellowstone Volcano.
The difficulty of formalizing net neutrality is handily summed up in what Dorothy Parker said about love: it’s “like quicksilver in the hand. Leave the fingers open and it stays. Clutch it and it darts away.”
The instant you try to codify the underlying assumption that the Series of Tubes that comprise the Internet do not privilege one kind of traffic over another, you lose your ability to cover everything. It’s like a playground. If you operate on the unspoken assumption that everyone is welcome as long as they play nicely, and everyone does, in fact, play nicely, you’re fine. But what happens if Little Charlotte bites Baby Dan on the ear? Once you go from the General Understanding That We All Play Nicely to the specific rule No Ear-Biting, suddenly the whole tenor of the place changes. All heck breaks loose. Everyone starts running around throwing sand and tearing up the monkey bars and doing everything except ear-biting, instead of playing nicely the way they used to do.
The lack of specific rules is fine as long as someone has the authority to intervene if play gets out of line. That was going to be the Federal Communication Commission’s one job — you had ONE JOB, FCC! — but it’s been getting harder and harder. Having failed to classify broadband access as a telecommunications service (which would have enabled the FCC to regulate Internet service providers as common carriers), the FCC has been trying to regulate them by other roads. The ISPs, in turn, are swatting away these efforts the way King Kong swatted down airplanes.
Part of this is not directly the FCC’s fault — in recent years, the number of companies competing in the broadband market has shrunk to a few big names. The same appeals court ruling that sucked the wind out of the FCC’s Open Internet Order pointed out that “many end users may have no option to switch, or at least face very limited options: ‘[a]s of December 2009, nearly 70 percent of households lived in census tracts where only one or two wireline or fixed wireless firms provided’ broadband service. . . . As the Commission concluded, any market power that such broadband providers might have with respect to end users would only increase their power with respect to edge providers.’” That’s to say, if an edge provider like Netflix wants to reach an end user like yours truly, it can only go through one or two companies, and it might have to cut a deal like the one that just happened. And this has been pernicious, as Tim Lee points out, in a whole different way, by turning the Internet into a series of smaller tubes rather than one big tube.
But it doesn’t help that the FCC has been backing itself into a corner. First it classified Internet service providers as “information services” providers instead of “telecommunications carriers,” meaning that they aren’t subject to regulation as common carriers. People are beginning to sense that this may have been a mistake — yes, it avoided a fight at the time, but it’s hard not to notice how broadband service has become a kind of utility at this point. It’s more vital than water. Sometimes I go whole days without water. But take me away from streaming video for 10 minutes, and I get faint and dizzy.
Now the FCC is trying to claw its way back into regulating ISPs (look for its new set of rules later this year) using Section 706(a) of the 1996 Telecommunications Act, which empowers the commission to “encourage the deployment on a reasonable and timely basis of advanced telecommunications capability to all Americans . . . by utilizing, in a manner consistent with the public interest, convenience, and necessity, price cap regulation, regulatory forbearance, measures that promote competition in the local telecommunications market, or other regulating methods that remove barriers to infrastructure investment.” That’s where net neutrality comes in: the FCC can make the case that keeping ISPs from discriminating among Internet traffic on the basis of the traffic itself is the way to promote communication and remove barriers to infrastructure investment.
Then again, ISPs, such as Verizon, have been trying to make the case that what REALLY stifles innovation is when the FCC tries to regulate ISPs like Verizon. Yes, the question they raise about who should bear the cost of infrastructure upgrades needed to manage traffic is a fair one. But I’m not sure that backing off as they acquire ever-larger market shares and more and more of a gateway position with regard to consumers is necessarily the ticket. It’s okay to be nervous when a company suggests that “really, what would help the consumer most would be if we were not encumbered. Give us free rein and innovation would flow through the land like a luscious river and the infrastructure would be perfect.” (I am paraphrasing a little, but you can see why this makes me jumpy.) As the court noted back in January with regard to the FCC’s efforts to keep the Internet open, “the record . . . contains much evidence supporting the Commission’s conclusion that, “[b]y comparison to the benefits of [its] prophylactic measures, the costs associated with the open Internet rules . . . are likely small.”
So hurry up with those rules, FCC! And make your regulatory authority stick this time, before the Internet turns into a tragedy of the not-quite-common carriers.
The nightmare scenario is a world in which we pay more for worse broadband, the tiny number of large companies who own the infrastructure have no incentive to upgrade it (because we are a captive market) and the future things that we don’t already know we want get trapped in a molasses-slow pipeline. The nightmare scenario is a cascading effect where only established Internet companies can afford the price of reasonable data speeds, and so we lose out on upstarts without fat wallets.
Why do we worry this will happen? Because the second scenario already has. The commission cited four examples in its case for its open Internet rules. And maybe, as Tim Lee points out, stopping this trend is already a forlorn hope: “in a world where Netflix and Yahoo connect directly to residential ISPs, every Internet company will have its own separate pipe. And policing whether different pipes are equally good is a much harder problem than requiring that all of the traffic in a single pipe be treated the same.” It’s, as Sherlock Holmes would say, a multi-pipe problem.
Where this usually comes to a head is when it comes to infrastructure costs. As the Electronic Freedom Foundation notes in a blog post, “Peering disputes often seem to boil down to which company should have to pay for the upgrades in network architecture required to connect users to innovative new services. Should it be the content providers, the backbone companies that own data links, or residential ISPs? Increasingly, big residential ISPs like Verizon are asking for money from other players who want to send more data to end users — data that must go through the ISPs to reach their customers.”
This is the central question. Netflix exists. Asking us to snuff that glorious new light would be like forcing our ancestors back from the wheel to the hexagon. We want nice things — fast video, pictures of everything. But who pays for us to get there? And how do we make sure that we keep the door open for the next Netflix? Is it already too late?
On second thought, I’ll go back to worrying about that volcano.