[CAnet - news] A Democratic Voice of Caution on Network Neutrality

[On Dave Farber's IPer list there have been some excellent discussions pro
and con on behalf of Network Neutrality.  As for my personal opinion, I am
in full agreement with Alfred Kahn and Gerry Faulhaber - I don't believe
Network Neutrality can be, or should be regulated.  However I still think it
remains a critically important issue - which requires new research into
network architectures and business models that are inherently network
neutral.  I suspect that very soon the telcos and cablecos will soon find it
in their business interest to be network neutral.  With the advent of small
and large companies creating new business models offering free broadband and
free triple play (and soon free quadruple play) - the only opportunity to
make money for the telcos and cables will be in the connectivity, which
confirms a prediction made long ago by Andrew Oldzyko that content is not
king -- BSA]


Dave,



Thought you would like to know that the father of deregulation,  
Alfred Kahn, has chimed in on net neutrality. PFF published an essay  
by him yesterday that began as a comment he left on our blog. Anyone  
who has flown or purchased a good transported on a truck has to be  
thankful to him for deregulating the airline and trucking industries  
under the Carter administration. With this piece, he was responding  
to a blog I had written about how Democrat Bill Kennard had been  
criticized for urging caution when dealing with network neutrality  
legislation. Dr. Kahn's piece, "A Democratic Voice of Caution on  
Network Neutrality," can be found here (http://www.pff.org/issues- 
pubs/ps/2006/ps2.24voiceofcautiononnetneutrality.html ) and I'll  
paste in his opening:



The advocates of network neutrality have become distressingly,  
stridently apocalyptic, rallying all good liberals against (the  
following is a fair composite quote):

"those with the deepest pockets...corporations, special-interest  
groups, and major advertisers, who decide what you get to see and how  
much it costs, and especially the billion-dollar telephone and cable  
companies that now dominate the business of providing broadband  
connections to the public--who want to control what you read, see or  
hear online... Major corporate sites would be able to pay the new  
fees, while little-guy sites could be shut out."

Now wait just a minute.

I consider myself a good liberal Democrat. I played a leading role  
under President Carter in the deregulation of the airlines (as  
Chairman of the Civil Aeronautics Board) and trucking (as Advisor to  
the President on Inflation), against the almost unanimous opposition  
of the major airlines and trucking companies and--let's be frank  
about it--their strongest unions. Among our strongest allies were  
Senator Ted Kennedy, Stephen (now Supreme Court Justice) Breyer, and  
such organizations as Common Cause, Public Citizen, the Consumer  
Federation of America and Southwest Airlines.

This is not the place to argue about the consequences of those  
deregulations. What is unarguable is that airline deregulation has  
saved travelers many billions of dollars annually and made air travel  
affordable for people with modest means, just as we intended.

I have played an active role also as Chairman of the New York State  
Public Service Commission and consistently, both before and after,  
opposing the efforts of AT&T to induce the FCC and Congress to  
protect its historical monopoly. I have also over the last half  
century been a consistent public advocate of strong antitrust policy.

Our premise in all these efforts, in opposition to reactionaries and  
special interests, on the one side, and to the indifference or scorn  
of radicals, on the other, was that wherever it is feasible,  
competition is a far better protector of the interest of both  
consumers and content providers (think radio, television, motion  
pictures and, now, the Internet) than government ownership or  
regulation. In telecommunications, cable and telephone companies  
compete increasingly with one another, and while the two largest  
wireless companies, Cingular and Verizon, are affiliated with AT&T  
and Verizon, respectively, some 97 percent of the population has at  
least a third one competing for their business as well; and Sprint  
and Intel have recently announced their plan to spend 3 billion  
dollars on mobile Wi-Max facilities nationwide. Scores of  
municipalities led by Philadelphia and San Francisco, are building  
their own Wi-Fi networks. And on the horizon are the electric  
companies, already beginning to use their ubiquitous power lines to  
offer broadband--to providers of content, on the one side, and  
consumers, on the other.

By far the most promising intensification of that competition is the  
tens of billions of dollars that the phone companies themselves are  
spending converting copper to fiber, which will enable them to offer  
video programming pervasively, in direct competition with the cable  
companies. Can anyone seriously believe that competition would be  
forthcoming if those incumbents were still subject to public utility- 
type regulation? Or prevented from surcharging the heaviest content  
suppliers--the ones demanding the speediest possible access to  
subscribers that those telco investments will make possible?

<snip>



Patrick Ross

Senior Fellow and VP-Communications & External Affairs

The Progress & Freedom Foundation

1444 Eye St. NW Suite 500, Washington, D.C. 20005

202-969-2945 (direct) | 202-680-2445 (mobile)

www.pff.org | ipcentral.info


From: Gerry Faulhaber 
Subject: Re: [IP] more on Two notes on Network Neutrality

[for IP]
Actually, slow-rolling DSL to DLECs is a particularly apt analogy.   
The FCC required the resale of DSL at regulated rates.  However, the  
complexity of the relationship between ILECs and reselling DLECs  
demanded a level of monitoring that was far beyond the ability of any  
regulatory agency to enforce compliance, and as a result the ILECs  
could forestall something they didn't want: mandated direct  
competitors.  There is a growing consensus that the mandated resale  
of both DSL and wireline has been a failure: we gave the FCC a  
virtually impossible job to do.  Not that they didn't try, but the  
Telecom Act of 96 was virtually unimplementable (I wrote a paper  
about this a few years ago: "Policy Induced Competition: the  
Telecommunications Experiments," in Information Economics and Policy,  
at http://rider.wharton.upenn.edu/~faulhabe/732/Policy-Induced% 
20Competition.pdf) . If we enact network neutrality legislation/ 
regulation, the complexity of enforcement (due to complexity of  
monitoring) will again be far from the capabilities of any regulatory  
agency, and for exactly the same reasons that mandated resale of DSL  
lines didn't work.  So we get a raft of new regulations (in the name  
of competition) that will also not work; what a great idea!

Net neutrality is a different story; with the exception of wireline  
telephone/VoIP, the BB ISPs are not really in the applications  
provider business, so they have no direct competitors (again, save  
VoIP).  Their profit optimal strategy is to maximize the value that  
customers get from their service, the better to raise prices.  You  
don't get people to pay you more by giving them worse service; you  
get more $$$ by providing a better service.  Does this mean we don't  
have to watch the telcos/cable guys like a hawk in the VoIP space?   
Of course not.  But the proper tool to protect against  
anticompetitive actions is not regulation (the DLEC case proves  
that's a loser; why do we want to do it again?) but antitrust, and in  
particular private antitrust suits.  If you've got a beef as an  
applicaton provider against an ISP, well, take 'em to court.  It is,  
after all, the American Way.  Since we already have antitrust laws to  
protect against anticompetitive behavior, we don't need a whole bunch  
of new regulations (that won't work) to solve this problem.  Use the  
tools we have; if you think your blood is on the floor because of  
anticompetitive conduct by an ISP, then prove it in court, based on  
the facts.

And I repeat the challenge: other than Madison River, show me  
anticompetitive conduct by the BB ISPs that would be fixed by NN  
regulation.

Professor Gerald Faulhaber

>
> Begin forwarded message:
>
> From: "Mike O'Dell" 
> Subject: Re: [IP] Two notes on Network Neutrality
>
>
>
> David Farber wrote:
>> A note from Lauren and a note from Faulhaber (a co-author of a
>> memo  with me and others)
>
> Lauren may be ranting, but that doesn't make him wrong.
>
> the DSL CLECs were methodically slow-rolled out of existence by 
> aggressive predatory tactics by the RBOCs.  we saw that first-hand 
> every day trying to install and support DSL customers.
>
> for someone to suggest that the broadband service business is just
> peachy,
> and that industry-destroying anti-competitive behavior in the space  
> hasn't happened
> before and is unlikely to happen again, especially given its   
> unchallenged
> success at eliminating competition, is patently absurd.
>
> -mo



From: Lauren Weinstein 
Subject: Why consumers should care about Network Neutrality


Dave,

In a recent New York Times op-ed, former FCC Chairman Kennard characterized
the network neutrality debate as simply a battle between the extremely
wealthy and the merely rich, and suggested that it was distracting us from
what he considers to be the truly important telecom-related issues.

No matter where one stands on network neutrality questions, Kennard is
missing the point -- the outcome of this controversy will affect every
consumer who ever comes into contact with the Internet in any manner.

The interests of ordinary consumers and small businesses all too often are
left in the lurch regarding important issues.

That's what's happening now in the continuing arguments over network
neutrality on the Internet, where anti-neutrality forces -- primarily the
large telephone companies and other increasingly conglomerated telecom
giants -- are attempting to manipulate the debate to their own advantage,
and to the detriment of nearly everyone else.

Starting from their Defense Department research days, the Internet and its
ancestors have thrived on providing essentially neutral channels of
communications, with the networks themselves not imposing skewed restraints
on the actual applications using its facilities, be they e-mail, file
transfers, Web browsing, or newer innovations such as audio/video streaming,
and many others.

As the Net has become ever more integral to our daily lives, we've come to
depend on straightforward access to these services via the many firms of all
sizes that currently provide them.

But to the telcos and their ilk, neutral transmission isn't a big enough
profit center.  They want a cut of everybody's action, as exemplified when
AT&T's CEO Edward Whitacre made his infamous swipe at Google and other major
Internet services, claiming that they were using "his pipes" for free.

This is utter fallacy and the anti-neutrality folks know it.  We're all
already paying for our Internet access.  Google pays for their connections
-- undoubtedly not small change either.  Every small business, every family
with an Internet DSL or Internet cable hookup
-- we all of us are already feeding money into the telecom company coffers.
Even if we choose to use VoIP phone services, we're still paying the phone
or cable company for the underlying Internet circuits.

The technical term for most of the anti-neutrality argument is simply greed.
The telecom providers have watched business models shift around them, and
now, true to their roots, are looking for ways to strangle the competition,
no matter how skillfully their PR machinery attempts to obscure this
fundamental truth.

And if that sounds too strong, let's keep in mind that the telecom landscape
is littered with the broken promises and unfair tactics of the dominant
telephone companies in particular -- promised broadband rollouts never
delivered, "cherry-picking" of advanced services only to the most lucrative
neighborhoods, rates gone wild as soon as regulatory scrutiny is lifted, and
so on.

These guys are virtually the textbook definition of predatory practices.  No
wonder that it's so difficult to believe them now, and why so many observers
feel that laws mandating neutrality -- today, before neutrality slips away
-- are the only practical approach to maintaining Internet fairness.

Anti-network neutrality forces have suggested that since a large and
powerful firm like Google has taken a strong pro-neutrality stance, that
somehow this invalidates pro-neutrality arguments.  To be sure, Google has a
financial interest in the outcome, but so do the rest of us as well.

In the sort of non-neutral Internet world of which the telecom providers
dream, it's questionable that Google, Vonage, eBay, or many other household
Internet names could even have afforded to really get started in the first
place.  A non-neutral Net would likely be a death knell for a whole future
of competitive Internet entrepreneurs who might otherwise have brought us a
vast range of useful new services.  It's very much start-up and other small
to medium-sized businesses that are most at risk if a non-neutral Internet
regime takes hold.

Ironically, neutrality is one of those aspects of the Net that is so taken
for granted that it seems invisible and intrinsic.  But the everyone
pay-through-the-nose environment that would be the logical, ultimate outcome
of anti-neutrality wins would make very clear how drastically such invisible
attributes have been critical to the Internet's success to date.

It's unfortunate that the network neutrality controversy has escalated to an
emotional level, which indeed can sometimes obscure the underlying facts.
But the reality is that this is truly important stuff, and most Internet
users don't realize how drastically and negatively they could be affected if
anti-neutrality arguments hold sway.

Getting true network neutrality back after it's been lost is likely to be
effectively impossible.  Except for the anti-neutrality cadre themselves,
we'd all be worse off with a non-neutral Internet.

--Lauren--
Lauren Weinstein

-----------
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www.canarie.ca/~bstarn
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