The New Net-Neutrality Debate: What’s the Best Way to Discriminate?

1Executive Summary

Supporters and opponents of the Federal Communications Commission’s proposed net neutrality rules achieved a rare moment of agreement Thursday. Speaking at a panel discussion organized by the Washington, D.C.-based think tank Arts + Labs, Public Knowledge Legal Director Harold Feld, a strong proponent of the regulation, acknowledged that complete neutrality toward all bits on a network can never be achieved and should not be policymakers’ goal.

“We understand there has never been a day when all packets were treated equally,” Feld said.  “We understand that the Internet is a network of networks, and that has always meant there were opportunities for things like local caching content, for what companies like Akamai do, for private networks like Google, which hauls a lot of its own traffic and then contracts with other networks to move it out when necessary.”

Where Feld parted company with opponents of regulation was on the question of how to decide which bits are more equal than others. That question has quickly emerged as the crux of the debate since the FCC made clear that its definition of net neutrality includes allowances for “reasonable network management.”

“It’s a question of whether [broadband] providers are able to make decisions about prioritization on behalf of their users that are based on things other than engineering issues, that are based on things like economic rents or economic affiliation,” he said at Thursday’s event. Instead of leaving the decision up to providers, Feld says broadband users should be given the tools to do their own prioritizaton of bits, through packet marking and variable pricing, based on their own criteria.

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  1. I am still baffled as to why this remains in the “court of the FCC” as a technology regulatory issue. Bits do not not need protection or rights, but rather the commerce they represent. If we had an effective jurisprudence system for arbitrating uncompetitive practices (like the FTC and DOJ), then the techies from both sides of the net neutrality argument could go wild with their technical solutions. For example, Comcast and its “Network Management” escapade could never pass a reasonable anti-competitive litmus test of resetting packet flows of an alternative video distribution technology, however, it does seem like a reasonable answer when looked at only through the eyes of technologist, which the courts seem to have agreed with so far.

  2. Richard Bennett Sunday, November 8, 2009

    Derek, as the Internet currently operates, the only entity that can successfully determine which packets need low latency and which don’t is the ISP. In principle, applications can mark priority requirements and ask the network to act accordingly, but in practice this isn’t a widespread practice. So there’s no choice, in the short term, but to have the ISP use Deep Packet Inspection to detemine what’s what. As long as this is done correctly, it’s not a problem. See this video for a discussion on this phenomenon:

    Regarding competition, it doesn’t strike me that an unbundling regime in areas where we have facilities-based competition is a good thing. Yes, the government can set the wholesale price of access to the copper low enough that consumer prices fall marginally as new entrants get into the carriage market with faster and cheaper DSLAMs than those already installed, but the problem for broadband policy isn’t fundamentally about cheaper and faster DSL, it’s about how we get fiber to the home. Unbundling siphons off the funds that drive investment in driving fiber deeper into the network, and are therefore counter-productive in the long run.

    The challenge in crafting national broadband policy is how we create a framework that gives us a carriage industry that continually improves its services and replaces legacy, copper-based technologies with fiber. One-time injections of taxpayer money and artificial wholesale price caps don’t move the carriage economy in that direction.

  3. Richard2
    “Price discrimination is an essential element of every economic theory on the efficient allocation of resources.”

    Trained as an economist, I think that’s an overly broad generalization, to the point of being wrong in various scenarios.

    Price discrimination, while not inherently evil, is a method most often used by suppliers to grab all the consumer surplus as well as the supplier’s surplus. That is, price discriminators aren’t looking for the “win / win” deal – they seek the “I win more / you will barely tolerate it” deal.

    The prevalence of price discrimination is inversely related to the freedom and competitiveness of a market. Glowing examples include marketing to misinform consumers about the value of a product, ex: selling filtered, bottled water to those willing to pay in a country with clean tap water. I’m not sure that speaks to the efficient allocation of resources, as we truck around water and landfill plastic bottles.

    I think you were going for something else in your argument. Certainly, it is the case in competitive markets (which USA doesn’t really have in broadband) that higher costs should be reflected in higher prices. That’s a simpler point, but it seems to be the one you were making, vis a vis efficient resource allocation. I’m with you on that.

    I’m also with KevinMarks. I don’t want the carriers deciding which services are high priority on my behalf. Just carry the bucket, and let me worry about the water. I understand, as Richard proposes, that some characteristics of my water flow may require different fees, but please, no value judgments on the nature of my content, it’s origins, or it’s destinations. That said, I’m also worried about regulations interfering with how my packets should be treated. Long term, a poorly-crafted law could have as deleterious effect as telcos gone wild. And I would expect a poorly-crafted law, judging by the heft of lobbies, and our congresspeople’s absent technical aptitude.

    Good article. It sets the tone about how religion on either side of this debate is foolish. It is a very nuanced, detailed topic wherein the “free” market won’t work since we have oligopoly, but regulation could be worse than oligopoly. Really, what this country needs is some @#$# competition like our “socialist” friends in Europe have. Bring back something like UNE-P, and all this debate goes away as competition solves the problems better than congress ever could.

  4. Nobody said subscription video, Kevin, we were talking about videoconferencing. Cable TV-type service needs low latency channel surfing, but that’s a slightly different problem.

    The writer is confused about the role that managed/special services play in the NPRM. The FCC’s current position is that positive discrimination is permissible for a managed service like IPTV, but not permissible as a for-fee service that applies to packets transiting the public Internet. This is a cornerstone of the approach that Markey and the other FoG’s (Friends of Google) have been pressing all along, and the backdrop of the anti-discrimination rule, which currently would allow an ISP to positively discriminate only as long as they don’t charge anyone but the end user for it.

    Price discrimination is an essential element of every economic theory on the efficient allocation of resources, so the advocates of best-efforts pricing for Internet-based services are chasing unicorns. If services offered over the Internet are going to be competitive with managed services, they’ll need similar transport priority, which it costs money to provide. If best efforts delivery were sufficient, the carriers would be using that themselves. As better than best-efforts has a cost, service providers should be able to cover it on behalf of their customers.

    The NPRM and the net neutrality movement in general are promoting a program that’s riddled with contradictions.

  5. The ‘subscription video needs low latency’ myth is still being propagated I see.
    2-way communications (voice, gaming) need low latency. One-way communications (video subscriptions) don’t.
    most p2p is an arbitrage around asymmetric connection speeds, and assuming it ‘low value’ is an example of the problem.

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