[x-pubpol] Fwd: NYT OpEd on Net Neutrality

Thu May 10 01:22:41 PDT 2012

http://www.nytimes.com/2012/05/09/business/economy/net-neutrality-and-economic-equality-are-intertwined.html
May 8, 2012
Keeping the Internet Neutral By EDUARDO
PORTER<http://topics.nytimes.com/top/reference/timestopics/people/p/eduardo_porter/index.html?inline=nyt-per>

Imagine a network of private highways that reserved a special lane for
Fords to zip through, unencumbered by all the other brands of cars
trundling along the clogged, shared lanes. Think of the prices Ford could
charge. Think of what would happen to innovation when building the best car
mattered less than cutting a deal with the highway’s owners.

A few years ago, Tim Wu, a professor at Columbia Law School and a leading
thinker about the evolution of the “information economy,” warned
members <http://commdocs.house.gov/committees/judiciary/hju27225.000/hju27225_0.HTM>of
the House judiciary committee that this could be the fate of the Internet.
Companies offering broadband access, he said, should not be allowed to
discriminate among services online. If they did, the best service would not
always win the day. “It’s not who has a better product,” he explained.
“It’s who can make a deal with AT&T,
Verizon<http://topics.nytimes.com/top/news/business/companies/verizon_communications_inc/index.html?inline=nyt-org>
, Comcast<http://topics.nytimes.com/top/news/business/companies/comcast_corporation/index.html?inline=nyt-org>
or
Time Warner.”

That world may be right around the corner. Last month, the online video
powerhouse Netflix<http://topics.nytimes.com/top/news/business/companies/netflix-inc/index.html?inline=nyt-org>
started
a political action committee to complement a budding lobbying effort in
support of the idea that all content must be allowed to travel through the
Internet on equal terms. Netflix is trying to build a coalition of
businesses to make the case for this open access, also called network
neutrality<http://topics.nytimes.com/top/reference/timestopics/subjects/n/net_neutrality/index.html?inline=nyt-classifier>
.

“Net neutrality<http://topics.nytimes.com/topics/reference/timestopics/subjects/n/net_neutrality/index.html?inline=nyt-classifier>
has
broad consumer and voter support,” Reed Hastings, the chief of Netflix,
said in an interview. “It is important for the sake of public access that
the rules apply equally.”

Netflix’s immediate concern is Comcast, the biggest broadband provider in
the country, whose cable brings the Internet to one in five connected
homes. In March it announced that watching its Xfinity TV service on
the Microsoft
Xbox<http://nytimes.com.com/consoles/microsoft-xbox-360-elite/4505-10109_7-32390552.html?tag=api&part=nytimes&subj=re&inline=nyt-classifier>
 360 would not count<http://bits.blogs.nytimes.com/2012/03/27/comcast-xbox-net-neutrality/>
against
subscribers’ broadband data allowance of 250 gigabytes a month.

This, Mr. Hastings says, will give Comcast’s television lineup an edge over
rival shows streaming through the device, which will consume subscribers’
data allotment. And nobody cares more than Netflix, whose movies and TV
programs account for about a third of the peak online traffic.

“If I watch last night’s ‘S.N.L.’ episode on my Xbox through the Hulu app,
it eats up about one gigabyte of my cap, but if I watch that same episode
through the Xfinity Xbox app, it doesn’t use up my cap at all,” Mr.
Hastings wrote <https://www.facebook.com/reed1960/posts/10150706947044584> on
his Facebook page <http://www.facebook.com/reed1960>. “In what way is this
neutral?”

Comcast argues that its Xfinity move is not subject to the Federal
Communications Commission<http://topics.nytimes.com/top/reference/timestopics/organizations/f/federal_communications_commission/index.html?inline=nyt-org>’s
neutrality rules because the video travels exclusively on its network and
not on the public Internet.

But the issue is not a mere business spat to be resolved between Comcast
and Netflix. Comcast’s data cap policies are reportedly giving Sonysecond
thoughts<http://arstechnica.com/tech-policy/news/2012/05/sony-warns-comcast-cap-will-hamper-video-competition.ars>
about
a planned Internet video service to compete against cable and satellite
television. It’s not even just a spat about TV.

The emerging dispute between Netflix and Comcast underscores the core
weakness of the Internet economy. To reach the multitude of online services
competing for your attention, you must first get through a bottleneck that
is not competitive at all: high-speed broadband access.

Today, 96 percent of Americans have a choice of at most two broadband
providers — a cable company and a phone provider. For consumers who desire
very high speeds, cable is often the only choice — along with Verizon’s
FiOS and AT&T’s U-verse in small pockets of the country. If given free
rein, these gatekeepers could determine which services get to drive through
the pipes that make up the Internet at what speeds and prices.

Costs are higher when there is little competition. If only 43
percent<http://www.ntia.doc.gov/report/2011/exploring-digital-nation-computer-and-internet-use-home>
of
American households with income under $25,000 a year have wired access into
the home, it’s because most of the rest cannot afford it. The cheapest
available broadband package is more
expensive<http://www.oecd.org/dataoecd/22/42/39574970.xls> in
the United States than in 28 of the 34 industrialized countries in the
Organization for Economic Cooperation and Development, when measured in
dollars per megabit of speed.

Just look at your phone or cable bill. In New York, Verizon offers its fast
FiOS triple-play plan — including unlimited national calls and downloads at
25 megabits per second — for a promotional rate of $84.99 a month. In
France, Iliad offers
<http://cyber.law.harvard.edu/pubrelease/broadband/> packages
that include free international calls to 70 countries and a download speed
of 100 megabits per second for less than $40.

There is little mystery here. About a decade ago, the government forced
France Telecom to lease capacity on its wires to rivals for a regulated
price, allowing competitors like Iliad to storm in. The United States took
a different path: the Telecommunications Act of 1996 had opened the
possibility of similar unbundling, but the F.C.C. decided against such
action out of concern it would discourage investment in physical
infrastructure.

The F.C.C. appears to have made the wrong call. Iliad started piggybacking
on France Telecom’s wires, but soon began laying wires of its own. In 2002,
the United States had the sixth-highest broadband penetration among all
O.E.C.D. countries. Last year it was in 15th
place<http://www.oecd.org/dataoecd/22/12/39574779.xls>.
Of 34 industrialized countries, the United States ranks 17th in terms
of average
download speeds <http://www.oecd.org/dataoecd/10/53/39575086.xls>. Among
the 31 countries that have very-high-speed broadband access, the United
States is more expensive <http://www.oecd.org/dataoecd/60/49/49839644.xls>,
trailing only Turkey, Israel and Chile.

And a spate of deals between cable companies and Verizon Wireless to
cross-sell one another’s services does not bode
well<http://gigaom.com/broadband/verizons-spectrum-deal-with-cable-is-the-end-of-broadband-competition>
for
competition and investment in the future. Verizon does not plan to expand
its FiOS network beyond the 18 million homes it set out to reach six years
ago. This suggests a market carve-up is about to take place, with Verizon
focusing on wireless broadband and cable companies on wires into the home.

With fewer competitors in the way, broadband’s gatekeepers will face less
resistance to a strategy of carving special lanes out of the Internet.

Technology, of course, will shape competition and innovation online. Google
is wiring Kansas City <http://www.google.com/fiber/kansascity/index.html> with
fiber. If it extends that experiment, it could become a formidable
competitor. Next-generation wireless may bring fast broadband to rural
areas where laying fiber is unprofitable. But regulation will be crucial,
too.

And right now, regulation appears
weak<http://www.reuters.com/article/2011/11/10/idUS211494328220111110>.
The F.C.C. has net neutrality rules. But the agency lost
one<http://www.nytimes.com/2010/04/07/technology/07net.html?pagewanted=all>
neutrality
case against Comcast in 2010, and Verizon is
challenging<http://news.cnet.com/8301-30686_3-20114142-266/verizon-sues-again-to-block-net-neutrality-rules/>
the
new rules issued in response to the ruling. The rules, moreover, have
loopholes<http://arstechnica.com/tech-policy/news/2010/12/did-the-fcc-just-bless-a-capped-two-tier-internet.ars>.
For instance, they allow broadband providers to allocate portions of their
pipes for special “managed” services.

Still, the government has a track record of keeping the telecommunications
highway open. It sliced the Ma Bell monopoly into Babies, and ensured they
carried one another’s calls. In the era of dial-up Internet, it ensured
that phone companies allowed rival Internet service providers to reach
their customers.

The F.C.C. is under siege in Congress — where the phone and cable companies
have unleashed their lobbying might. In March, the House passed a
bill<http://thehill.com/blogs/floor-action/house/218589-house-votes-to-limit-fcc-on-regulations-merger-authority>
to
limit the agency’s ability to issue new regulations. Members of Congress
might remember that government regulation was
crucial<http://transition.fcc.gov/Bureaus/OPP/working_papers/oppwp34.pdf>
for
the development of the Internet we know today.

Fifty years ago, consumers were allowed to hook up only Bell telephones to
their Bell phone lines. But in the 1960s, the F.C.C. and the courts forced
the Bells to accept any device that didn’t threaten the network. The
decision unleashed a torrent of innovation — including the answering
machine, the fax and the first device that allowed us to explore what would
become the Internet: the modem.

Innovation online requires an open playing field, too.

E-mail: eporter at nytimes.com

Twitter: @portereduardo

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