Giving internet users the power to prioritize

Washington Post tech blogger Brian Fung had an interesting post up yesterday out of the FCC’s day-long series of roundtables on net neutrality in which he floated the notion that momentum is building behind a compromise position that would give consumers the power to choose which applications they want in their internet fast lanes rather than leaving it up to their ISPs and paid prioritization deals.

Fung cites the comments of Stanford University net neutrality scholar Barbara van Schewick (definitely the star of the show for her clearly rigorous analysis of the issue and for irritating the right people), who endorsed the idea of giving end users the power to prioritize under certain conditions.

“The rules we propose would allow for user-controlled prioritization,” van Schewick said (her full proposal is here).

Fung notes that van Schewick’s proposal is similar to that of AT&T, which advocated user-driven prioritization in its formal comments to the FCC, making it the first major ISP to formally endorse the idea (although van Schewick was at pains to distinguish her proposal from the telco’s, noting that she is calling for provider-agnostic discrimination, such as prioritizing streaming video over online gaming but not Hulu over Netflix). Her comments at times also seemed to echo the academic work of newly named FCC CTO Scott Jordan and came in response to a question from an FCC official, indicating some interest in the idea within the agency.

While I’m not sure the momentum is quite as robust as Fung suggests, the idea of user-driven prioritization is definitely gaining new traction, if only because it seems to offer a way out the contentious debate over provider-driven paid prioritization and has an appealing, pro-consumer vibe.

That doesn’t necessarily make it a good idea, though. In fact, in some ways it could be worse than paid prioritization because of its potential to create bad incentives for ISPs.

Under a user-driven model, ISPs could actually have less incentive to improve broadband service across the board. Instead, their strongest incentive would be to keep a lid on overall performance to create demand for selective prioritization by end users at a price. The result could be higher prices for consumers, once they’re done paying to prioritize all the applications they need or want, and lower overall quality for those who can’t or choose not to prioritize. Price regulation by the FCC might prevent some such abuses by ISPs (and would require Title II authority), but I doubt the agency wants to go there.

Under a paid-prioritization model, at least the application provider is shouldering most of the cost of riding the fast lane instead of dumping it all on the user. Nor does it create an incentive for ISPs to play QoS chicken with their own subscribers (“We see you like to watch Netflix. How’d you like to get it without buffering and in HD?”)

Moreover, fear of provider-based paid prioritization itself rests in part on questionable assumptions about motives and incentives. The last thing Netflix or any other large content provider wants to have to do is pay for priority in distribution. Contrary to what many fear, allowing paid prioritization is unlikely to set off a stampede for the fast lane by major content providers; it’s at least as likely that new entrants would be the ones looking for priority as a way to gain whatever edge they could against entrenched competition.

Netflix’s competitive advantage over smaller players lies in its vast and superior library of content, including its popular originals, not in how fast it can deliver bits. In media markets, with very few exceptions, content always wins out over distribution in the long run, even if, as with Comcast and Netflix today, distribution temporarily has the upper hand. Once upon a time, broadcast networks paid their local affiliates for last-mile delivery of their programming. Today, the shoes are on the other feet. Affiliates pay the networks for the right to carry network programming, just as cable and satellite operators do. When carriage disputes break out between programmers and cable or satellite operators the operators rarely, if ever, prevail.

To be sure, the internet is different from a cable system in that it is not simply a dedicated distribution pipeline for programming. Broadband service provides value to the user beyond the ability to watch Netflix, which gives ISPs leverage that cable operators do not have (a reality certainly not lost on cable ISPs like Comcast). But insofar as it can be used to distribute video there’s no obvious reason to think the historical dynamic between content and distribution won’t eventually assert itself as the IPTV market matures.

When it does, Netflix will be in a better position than its subscribers to bargain for priority.