5 things neither side of the broadband debate wants to admit

September 17, 2013

(AP Photo/Gene J. Puskar, file)

As I was editing my interview with Jeffrey Eisenach, the director of the American Enterprise Institute's Center for Internet, Communications and Technology Policy, I had a sense of deja vu. Eisenach's arguments were thoughtful and cogent. But they were eerily similar to those I encountered when I first started thinking about Internet regulation a decade ago.

That's puzzling because the Internet has changed rapidly. Over the last decade, we've gotten Netflix streaming, the iPhone, or FiOS. So why are ideologues on both sides of the broadband debate still making the same shopworn arguments they were making in 2003?

The broadband debate desperately needs new, creative thinking. And the first step is for each side to admit where they've gotten it wrong. Here are a few suggestions.

1. American wireless service is working pretty well.

The wireless market has robust competition and a lot of innovation. In 2007, Tim Wu, the Columbia law professor who coined the term "network neutrality," expressed dismay at the dismal state of the mobile software market. He blamed the problem on excessive control by wireless network operators.

A few months later, Apple rendered Wu's obsolete by opening the iPhone up to third-party developers. Today, the terrible mobile development platforms of the early 21st Century are a distant memory.

Some left-leaning thinkers still bemoan the state of the wireless market. But the reality is that competition among the four major cell phone carriers has served American consumers pretty well.

2. We're falling behind on residential broadband.

A decade ago, America's broadband plan looked like this: deregulate the broadband market to give incumbents the confidence needed to invest in new infrastructure. Phone companies will build fiber optic connections to compete with cable incumbents. And the result will be a technological arms race that will benefit consumers.

That seemed like a reasonable policy to a lot of people, including me. And for a while, it seemed to be working. Verizon poured billions of dollars into its FiOS project.

But more recently, incumbent telephone companies have largely given up on competing with cable providers. That has given cable companies in many parts of the country a de facto monopoly on high-speed broadband service, resulting in slow innovation and poor customer service. Right now, my Comcast Internet service gives me 22 Mbps of downstream bandwidth. That's only slightly more than the 15 Mbps I enjoyed from the same provider in the same city in 2008.

Eisenach cites satellite and DSL services as counter-examples, but neither is persuasive. DSL service is improving, but with average speeds of around 3 Mbps it's not a serious alternative to cable broadband. Satellite service is faster, at 12 Mbps, but its $50 per month plan comes with a 10 GB bandwidth cap, too small for anyone who wants to do significant video streaming. And its high latency makes it annoying for voice calling and unusable for gaming.

3. We desperately need more broadband experimentation.

Our broadband present is mediocre, but the real problem is that for many communities, there's no serious plan for progress in the future. A few towns have been blessed with lightning-fast Google Fiber. Other towns have built their own networks. For example, this morning my colleague Brian Fung reported on Chattanooga's municipally-owned gigabit fiber network. Another project, called Gig.U, is bringing broadband to select university towns. But these are all niche projects. The majority of the country won't have access to any of them.

It's not clear what the best approach is for getting the whole country to gigabit fiber networks. More experimentation is needed. That means, for example, that state laws banning cities from building municipal networks are a bad idea.

4. Discrimination concerns are mostly about video streaming.

The network neutrality debate used to be complicated. Network neutrality advocates raised concerns about Internet Service Providers blocking critical Web sites or introducing jitter to sabotage voice-over-Internet services. But the emergence of smartphones with fast network connections has mooted both concerns. Telephone incumbents have far more to fear from cell phones than they do from VoIP applications. And with everyone carrying a web browser in their pockets, there's little danger of a residential broadband provider trying to censor websites

On the other hand, there really is reason to worry about the fate of Internet-based streaming services like Netflix. In most neighborhoods, the fastest Internet access is sold by the incumbent cable company. Many households don't have any serious alternatives for high-bandwidth video applications. And so cable incumbents' dual role as Netflix competitor and Netflix gatekeeper creates an obvious potential for mischief.

5. "Network neutrality" probably isn't the answer.

For the last decade, advocates of the open Internet have focused on network neutrality regulations that prohibit ISPs from blocking or degrading Internet content they didn't like. They finally got their wish, sort of, when Obama's FCC enacted an Open Internet Order in 2010. That order is now under review by the courts.

But while the courts and the FCC have wrestled with the issue, market developments have made the FCC's rule almost irrelevant. In 2010, Comcast forced the backbone provider Level 3 to pay it to upgrade its network to pay for increased traffic from video streaming giant Netflix. Technically this didn't violate network neutrality, which is a rule about network administration, not network upgrade decisions. But the practical consequences of Comcast's bargaining strategy was the same: Netflix was effectively forced to pay extra to deliver its content to Comcast customers.

As the Internet becomes increasingly dominated by large players that interconnect directly with each other, network neutrality rules will become less and less effective at preventing incumbents from using their market power against competitors. Other approaches will be needed to ensure the Internet stays open and competitive.

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Brian Fung | September 17, 2013