I’ve been talking to lots of people for the last three days, and that’s gotten in the way of completing the blog post I started on Monday. But on the internet, who knows what time it is?
Here’s the rest of the story.
Back during the Bush(2)-era FCC, the Commission agreed with the cable industry that cable modem Internet access wasn’t a basic “telecommunications” service because pure transport hadn’t been sold separately by them. By integrating transport with other services (like hosting and caching), the cable industry had deregulated itself.
Then the Supreme Court deferred to the Commission’s classification of cable modem services in 2005 (Brand X). Justice Scalia characterized the Commission’s argument for deregulation as “[W]hat the Commission hath given, the Commission may well take away – unless it doesn’t.”
Right after the Brand X decision came down, the Commission announced that it was deregulating DSL access to the internet as well.
For both of these steps, the Commission decided to place internet access under what it called its “Title I” ancillary jurisdiction. It could have decided not to apply some elements of Title II common carrier jurisdiction instead (“forbearance”), but it didn’t take that path.
These decisions left the providers of high-speed internet access free to discriminate in any way they chose.
Around the same time, there was further consolidation in the telephone services market. SBC merged with AT&T and took the AT&T name; Verizon merged with MCI.
Internet access, meanwhile, continued to replace telephone as Americans’ general-purpose communications network.
When Comcast in the fall of 2007 started throttling BitTorrent, the Commission declared that this amounted to unreasonable network management. It said that its authority to issue this kind of declaration came from its ancillary Title I jurisdiction. Now the DC Circuit has signaled that it is likely to find that the Commission didn’t have the authority it claimed under Title I to say anything about what Comcast had done.
This signal has caused a good deal of consternation in many quarters. Now what? Where does the FCC’s authority to say anything about the basic transmission of Internet communications come from? If the FCC lacks this authority, can it say anything about universal service obligations shifting to support high-speed internet access, or anything else having to do with transmission?
That’s where we are today. The FCC could re-classify high-speed Internet access as a Title II service. There is no longer a nondiscriminatory basic network to which Internet access attaches – this basic assumption behind the earlier classification decision has disappeared. Internet access itself is the basic network. And internet access is no longer inextricably intertwined with other services, like email, hosting, or domain name lookup services – this second assumption behind the earlier classification has also disappeared.
The incumbents suggest that such a reclassification would necessarily affect all of the online services that use transmission – like nytimes.com, or eBay, or Google. Responses to the incumbents’ letter say that the FCC could instead leave online services in the “enhanced” nonregulated bucket while being clear that transmission via a general purpose, interactive network is different. And “forbearance” is an available route to avoid imposition of unnecessary regulation on the transmission layer under Title II.
So while my neighbor is busy downloading tons of movies and music to the extent that my email & web browsing slows to a crawl, my internet access provider is powerless to do anything to improve my poor service?
Why should bandwidth hogs not be treated differently, either by charging them more or throttling their service?
The motivations of these companies are also important. Old time common carriers, like the telephone companies, didn’t like regulation because it included rate of return regulation — limiting the profit they could earn — by controlling the price charged consumers. When DSL came along, the telephone companies wanted out of regulation in order to earn higher rates of return on that service and to get the government out of such nasty details as scrutinizing executive compensation. The telcos intended to market these services to affluent customers, who could pay more, and they didn’t want to provide these services on a universal basis, i.e. to lower income customers, unless they were clearly profitable.
The motivations in broadband are different still. Generally, the commercial broadband companies not only want to offer data communications services, but they also want to offer content. The old telephone companies never were allowed to offer content. Content was what the consumer provided when she picked up a phone and spoke over it. The cable companies came to broadband from the opposite direction. They were created to provide the content of television programs to consumers. The telephone companies were jealous. Cable companies could use public rights of ways for their lines and yet not only did they escape rate of return regulation but they also earned money from content.
The point is that when we talked of “discrimination” in old Title II regulation, we usually meant discrimination against someone who wanted to provide a basic communication service. MCI, for example, got its start by essentially providing telephone service over AT&T lines at a lower price. AT&T tried to discriminate against MCI in the pricing of the lines AT&T provided. With regard to DSL, the fight was pretty much the same. Competing DSL providers used the telephone companies’ wires to provide service to consumers. What the competitors provided were two boxes: one on the consumer premises and one in the competitors’ offices to send signals over the telephone companies’ wires. With newer broadband services, the discrimination is different in kind. The concern is that the companies with the wires to consumers’ premises will discriminate against the content that someone else tries to send over those wires in order to protect their own content offerings.
from a game theory perspective, the major players are dug in deep and have little reason to move off dead center
the only serious challenge to the ISPs from the private sector is the indirect one from Google, primarily as a countervailing political power – otherwise, they’re content to play winner-take-all games between each other that passes for “competition”
non-discriminatory access to a homogenous “pure transport commodity” is no longer possible – large customers like eBay, NTY and Google benefit from individual contracts due to their bargaining power, and the associated discrimination in terms of particular terms, conditions and prices is heavily played up by ISPs as a reason for not prohibiting discrimination anywhere of any kind, on bogus grounds that it “suppresses” innovation in terms of added economic value
adding content owned and controlled by ISPs expands and complicates tremendously the economic downside resulting from market power to discriminate, in terms of “subtracted economic value”
relegating regulatory powers of the FCC to options such as “forbearance” and oversight of a “general purpose interactive network” is a weak, last resort to offset powerful, negative economic discrimination, because it keeps in play political forces which can undermine it
certainty and risk reduction can be achieved through private market power as well as regulatory outcomes, and in this case, it’s acquired through market power for the benefit of a few, large players, shoving most of the uncertainty and risk onto all the remaining players by turning the regulatory outcomes into case-by-case resolutions
@Fred Goodwin
The so-called “bandwidth hogs” are [a] chimeras and [b] canaries. If you did a Google search on that term you would quickly turn up articles that show that those are the leading (perhaps even bleeding) edge consumers of network content. Those people are also “canaries” in that they show where the network has inappropriate chokepoints due to design or underinvestment.
My stance is that the RBOCs sabotaged the American economy by their strangling of ISDN through high prices. And the jumbo CATV companies have done their share of foot dragging as well. Both sets of incumbents should have been deploying hybrid cabling from the mid-1990′s. Today, as a result of their foot-dragging, we have an obsolete copper cable infrastructure, limited fiber roll-out that’s treated like a nuclear secret (how much dark fiber is out there ?), and wireless networks that are stillborn (e.g. Silicon Valley and San Francisco).
Keep in mind the hassles wireless innovators have had in trying to use available spectrum like the guard gaps in the television frequencies. Consider how much easier it would be if every household had as a minimum a unified cable that included a fiber pair, two copper pairs, and a co-ax cable. Then an installation of additional services would simply be the plugging in of a module plus any INTERIOR wiring that might be needed. But the EXTERIOR wiring work (pole climbing / cherrypicker riding, trenching, etc.) would not be a barrier because a full set of choices would be in place.
I would be very surprised if the FCC does NOT codify the common carrier status of the CATV firms. They are de facto common carriers right now but are taking advantage of a de jure loophole to evade that status. I pray that the FCC does something similar to the old AT+T – computer firewall that kept AT+T out of the computer industry*. To have a giga-corp ($1G+ annual gross revenue) like Comcast with a double-ended Internet stranglehold would harm both consumers and content providers. It would be a new media version of the old steel / coal / railroad trusts. There are precedents (e.g. market concentration rules) that would make it easier to defend such regulations.
*On an internal basis AT+T was as big of a mainframe company as IBM. The technology behind the ESS5 could have produced mainframes as good as the IBM System/370. And the phrase “glass teletype” points to their terminal strength (e.g. Teletype ASR-33 and 40-series) and the corporate chain Teletype Corp. -> WECO -> ATT+T. And what was the birthplace of Unix ?
NB – I’m a former mainframer (IBM S/370) and have used Teletype equipment at school and work. Both the ASR-33s and the 40-series printers were very rugged.
P.S. Here’s a link to more info on the WECo ESS family :
WECo (Alcatel/Lucent) Modern Telephone Switching Systems