Society and Culture, Media and Technology

Net neutrality struck down: TechPolicyDaily experts respond

Image Credit: shutterstock

Image Credit: shutterstock

Earlier today, a US Appeals Court struck down the latest effort by the Federal Communications Commission (FCC) to enforce net neutrality, the requirement that internet providers treat all traffic the same. The Court ruled that the FCC did not have the legal authority to enact the 2011 regulations, which were challenged in a lawsuit by Verizon.

Internet and communications experts at AEI’s Center for Internet, Communications, and Technology (CICT) Policy have been following the lawsuit closely, and are available to comment on today’s decision:

Jeffrey Eisenach, Director of AEI’s Center for Internet, Communications, and Technology Policy (CICT) and Editor of TechPolicyDaily.com:

While the Court’s discussion of Internet economics leaves much to be desired, its ultimate conclusion — which leaves in place the freedom to innovate which has applied to the Internet since its inception – is good for consumers, for innovation and for economic growth. It is clear that we still have a lot of work to do explaining the economics of competition in high-tech industries to the DC Circuit.

Richard Bennett, AEI Visiting Fellow:

Congress has given the FCC a very specific range of powers, and randomly applying “feel good” regulations to the Internet isn’t among them. America’s Internet access providers have done an outstanding job of bringing high speed, affordable service to the vast expanse of our nation, so this order never made any sense.

Roslyn Layton, Visiting Fellow at AEI’s CICT:

Today the court upheld that FCC does not have the authority to regulate the internet.  This is the second time the DC Circuit Court has needed to remind the FCC that it’s the American people through Congress, not a federal agency, that should have the power to regulate the internet. Congressional rules on net neutrality have consistently failed.  Net neutrality is not an important issue for most Americans.

It sends a great signal to the rest of the world that internet ecosystem is alive and well. We don’t need government meddling. The market and consumers are sorting things out.

Daniel Lyons, Visiting Fellow at AEI’s CICT:

Today’s decision opens the door for innovation throughout the Internet ecosystem, including by broadband providers. Although the Court found that the Commission has limited authority to regulate broadband networks under Title I, this authority flows from Congress and cannot create new obligations that contradict Congress’s explicit statutory directives.

Bret Swanson, Visiting Fellow at AEI’s CICT:

The court’s basic finding is correct and good for the Internet economy. Common carriage style regulation is not appropriate for the Internet. The Internet is a fast changing, multipurpose network, built and operated by numerous firms, with many types of data, content, products, and services flowing over it, all competing and cooperating in a healthy and dynamic environment. Old telephone style regulation, meant to regulate a monopoly utility that used a single purpose network to deliver one type of service, would have been a huge (and possibly catastrophic) step backward for what is today a vibrant Internet economy.

Babette Boliek, Visiting Fellow at AEI’s CICT:

Today’s decision marks a win for both consumers and democratic principles.  Consumers win because investment and innovation at all levels of the Internet ecosystem are now possible.  More importantly, the court affirmed democratic principles by limiting FCC authority to the statutory powers Congress gave it.

Gus Hurwitz, Visiting Fellow at AEI’s CICT:

This is a good outcome, one that ultimately benefits consumers. ISPs should be able to work with content & application providers to develop new and innovative ways to deliver content to consumers, to develop pricing models that increase access (especially lower-cost and mobile access) to Internet-based content and services, and to recover costs that individual services may disproportionately impose on their networks. These are all wins for consumers that were prohibited by the non-discrimination rule. And both the FCC and other agencies continue to have the power to go after firms that use this power, or that block services outright, for purposes that harm consumers. A lot of questions remain: will the FCC appeal; how would this case fare before an en banc DC Circuit; what does this mean for the future of Common Carriage; will Congress intervene; how will it affect ongoing discussions about reforming the Communications Act? But for today at least, we can rest easy knowing that the DC Circuit reached the right decision for consumers.

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9 thoughts on “Net neutrality struck down: TechPolicyDaily experts respond

  1. I’m not quite clear on this.
    So internet providers will NOT have to treat all traffic the same? They can pick on particular traffic of their choosing?

    • Yes. Just like an airline, they can give better service to their best customers or those that pay them for a better level of service. Not much different either than the Post Office does when they tell you that the charges for getting your package delivered overnight are different than getting them delivered in a week or so.

  2. There are two versions of net neutrality; I’ll call them weak and strong. Strong neutrality requires all traffic to be treated the same, period. I don’t have heartburn with letting, say, Netflix pay for a guaranteed service level. If that leads to degradation of other traffic to the point that the ISP’s customers start leaving, well, that indicates they should have used the money to boost their internal infrastructure.

    Weak neutrality would prohibit an ISP from deliberately degrading specific targeted providers who don’t pay a fee for anti-competitive reasons. E.g., if Comcast wanted to offer a streaming video service, weak neutrality would prohibit them from deliberately degrading Netflix and Hulu to artificially make them appear less desirable. As a customer of an ISP, I _would_ have heartburn over them actively and selectively interfering with other providers I might otherwise prefer. Unless they put it explicitly in their service agreement with me (in which case I’d find another provider), I’d consider it a violation of the reasonable and expected terms of service. I think there is a place for a weak neutrality requirement – one that prohibits unadvertised anti-competitive degradation of traffic.

  3. I disagree with the consensus of posters here. The sad fact is I do not have a choice of broadband internet. There is ATT and nobody else serves my area. So, I can expect my vonage traffic to suddenly be slowed down in favor of ATT much pricer but otherwise identical service.

    • You are asserting that at any point in time, all data has equal value? That cannot possibly be true. And the value of different data streams is unequal, then forcing equal pricing results in economic inefficiency.

      • But who’s deciding that value? I pay the same for all the electricity coming into my house, and prioritize its usage based on the value of the devices/appliances *I* want to run. I should be able to do the same thing with data going into my house.

        It would be ridiculous to be charged more because my fridge is made by GE instead of LG, because my power company struck a deal with LG. It should be equally ridiculous for my Amazon streaming quality to be poor if Comcast decides to strike a deal with Netflix.

    • @Dahveed – See my previous comment on weak vs. strong net neutrality. Your worry is sufficiently addressed by weak neutrality. In other words, AT&T should not deliberately single out competitors such as Vonage and MagicJack for degradation as an anti-competitive move.

      If they are not doing that, then they would only delay other traffic if it were needed to achieve the minimum service level for their own product. After all, if their product derived no detectable benefit from slowing down other traffic, then the only effect of doing that would be to make their broadband service seem slower and increase interest in finding a competitor.

      If they did need to delay other traffic to maintain minimum service levels, as long as they respected weak neutrality, the delay would be spread evenly across all other traffic sources that were not paying for guaranteed service levels. It would mainly affect Vonage, Netflix, Hulu, YouTube, and other bandwidth-hungry services; it might or might not be noticeable. If the needs of their own service grew to the point where it caused unacceptable drag on other traffic, they’d either need to upgrade the network or risk a competitor seeing the dissatisfaction and jumping into the market.

      You probably have other choices right this minute. Dish Network offers satellite-based internet service. So does HughesNet – up to 40GB/month of traffic.

      • Given that I have no low-latency, high-bandwidth options beyond Comcast, and no prospects of that changing any time soon, your anti-strong-net-neutrality recourse of me leaving my ISP is laughable.

        In a thriving marketplace where ISPs can voluntarily be net-neutral and use that as a competitive advantage, you might have a case. But for much of the country it’s a de facto monopoly of service, so ISPs can squeeze content providers to increase profits while harming the quality of service to their customers, and there’s nothing their customers can do about it.

        Furthermore, even WITH options at a local level, much of the internet backbone is controlled by a few entities, and if they decide they want to shape traffic based on deals they’ve made, there’s nothing consumers can do about that either.

        • @ChrisC – ” I pay the same for all the electricity coming into my house, and prioritize its usage based on the value of the devices/appliances *I* want to run. I should be able to do the same thing with data going into my house.”

          Once it’s in your house, you can do with it as you like. What you are demanding is that the data have the same priority all the way from the source to you as any other data. Do you also demand that something sent by bulk mail get exactly the same priority in handling as something someone paid express mail rates for? Note that once the two pieces of mail arrive at your house, you’re free to open the junk and leave the expensive letter sit unopened.

          “It would be ridiculous to be charged more because my fridge is made by GE instead of LG, because my power company struck a deal with LG.”

          Not necessarily. Haven’t you seen cars such as BMWs advertised with free oil changes for some period of time? If you don’t buy one of those cars, you are paying more for your routine maintenance than someone with a BMW. But that’s not really what’s happening. Rather, BMW baked the maintenance cost into the price of the car and collected it up front rather than collecting it at time of use. (That may not be exactly what’s happening, but for the purposes of this discussion it’s good enough.) Why can’t LG do the same thing, charging a bit more for their refrigerators and using that to subsidize the power bills for their purchasers? How does that harm you? It’s only a change in the method used to get the money to the power company. It did _not_ actually change the price you pay.

          But that’s actually not a good analogy. A much better one would be if LG paid the power company to give their customers preferential access to electricity during brownouts. I’ll flesh this out below.

          “It should be equally ridiculous for my Amazon streaming quality to be poor if Comcast decides to strike a deal with Netflix.”

          If your Amazon streaming quality is poor because Netflix paid Comcast to actively sabotage Amazon traffic even when no Netflix traffic is on the network, you get no argument from me. But we’re talking about the case when the network is overloaded, and a choice must be made about how to cope with the excess. The choices are to leave it to random chance, on average slowing all traffic equally, or to implement some sort of prioritization method that makes a deliberate choice about which packets get to go first.

          What Netflix would be buying – at least, if they’re at all smart – is not a “best effort” agreement. This is because if everyone bought the same “best effort” contract, things would return to the exact same state of affairs and nobody would get any benefit from the agreement. Rather, Netflix would be buying something called a Service Level Agreement, or SLA for short. It would say something like, “99% of the time, Netflix traffic will move at a guaranteed rate of X Mbps”. If the carrier fails to deliver on that contract, they get at least some of their money back. That way, if more vendors bought SLAs, the ISP would _have_ to upgrade their equipment in order to be able to honor them all simultaneously.

          So as long as Amazon is free to strike exactly the same SLA deal, why is it ridiculous? People sending you junk mail are just as free to pay USPS $10 to get it to you overnight. If they’re not doing that, and you’re not getting your junk mail as fast as you’d like because priority is being given to express mail, you should complain to the sender, not to USPS.

          Let’s turn your complaint around. It sounds as if you paid money to Amazon, either for a specific movie, or for Amazon Prime to get the library of free content. You’re upset that your streaming might be slowed if Netflix customers get priority. But why aren’t you even more upset that if all your neighbors decide to start streaming YouTube videos for which they did not pay a cent (at least, not directly), they are making the Amazon content for which you paid unwatchable? As one of your neighbors, I am grateful for your selfless willingness – in fact, insistence! – to have your own paid service slowed by network congestion so that I can watch my free cute cat videos.

          Returning to the brownout analogy, if you are a night owl who watches videos (whether YouTube, Netflix, or Amazon) at 4AM, it’s likely that your traffic has little competition and will move at the maximum speed of the slowest pipe in the network. (This is likely to be either your home, or the connection between your home and the ISP). It would actually cost your ISP more to slow your traffic down than to let it run full speed.

          The problem comes when you’re watching during prime time, and there’s network congestion. Strong net neutrality requires that all traffic have an equal chance of being degraded – your paid Amazon content and my YouTube kitty porn.

          In the DC area, on the Beltway in Virginia there is often congestion. Originally, all traffic was equally slowed by congestion. Now, however, there is a mechanism to give priority to high-occupancy vehicles and also to cars that pay a toll that rises and falls according to current demand. Yet the people who don’t pay anything don’t have their service degraded by this – it improved! This is because additional lanes were created for the priority traffic, taking it out of the free lanes. Instead of just slowing down other traffic on the backbone to give priority to Netflix, the money paid by Netflix and others for SLAs could be used to create a similar set of parallel channels that benefit both their customers and everyone else. Sounds like a win-win to me. Yet you think we need a rule to forbid it. Why?

          Coming back to the brownout analogy one last time, how would it hurt you if LG paid the power company to build extra capacity for the sole use of LG customers? It would help you, because LG customers would no longer be competing with you for the current system capacity. Win-win again.

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