Thursday, December 02, 2010

Net neutrality, Comcast & the's just like old times

Following a lengthy period of discussion and debate, which brought suggestions from a wide range of parties, FCC Chairman Julius Genachowski yesterday announced how he intends to preserve “internet freedom and openness” – or, to put it more succinctly, he unveiled his latest proposals on net neutrality.

He began by revisiting previous misbehaviour:
“...we have seen clear deviations from the Internet’s openness – instances when broadband providers have prevented consumers from using the applications of their choice without disclosing what they were doing.”
Absolutely we have – have a look at this previous post to see what Comcast got up to in this regard. Yesterday’s announcement reiterates consumers’ right to transparency and to access the lawful content of their choice, as well as their right  to a level playing field which precludes “unreasonable discrimination in transmitting lawful network traffic”. These consumer protections are balanced against recognition of ISPs’ needs:
“...broadband providers need meaningful flexibility to manage their networks – for example, to deal with traffic that’s harmful to the network or unwanted by users, and to address the effects of congestion. Reasonable network management is an important part of the proposal, recognizing that what is reasonable will take account of the network technology and architecture involved.”
And in relation to the legal basis for this, given that that the ruling made in April 2010 went in Comcast’s rather than the FCC’s favour, it seems there has been a change of heart:
“Informed by the staff’s additional legal analysis and the extensive comments on this issue over the past year, the proposal is grounded in a variety of provisions of the communications laws, but would not reclassify broadband as a Title II telecommunications service. I am satisfied that we have a sound legal basis for this approach.”
So this spells the end of the third way proposed in May 2010, where broadband services would be reclassified as Title II services, albeit with only a handful of Title II provisions applying to broadband: only the transmission component of a broadband access service would be recognised as a telecommunications service, so providers wouldn’t be regulated in relation to, for example, web-based services and applications, e-commerce sites and online content. More on this from the BBC. The FCC's board of commissioners will vote on the proposals at a meeting on December 21 2010.

It’s interesting (deliberate?) that the FCC’s announcement coincides with Comcast making further headlines in relation to net neutrality, but for a different reason this time. From the FT (Comcast at the centre of ‘net neutrality’ row):
“The US cable giant was accused late on Monday of demanding fees for the first time in return for carrying internet movies and other traffic for Level 3, an internet backbone network operator. Level 3 accused Comcast of “effectively putting up a toll booth” on its broadband networks so that it could unilaterally set the price for online content that competes with its own services The Colorado-based company recently won a contract to carry video on behalf of Netflix, whose inroads into streaming movies pose a long-term challenge to Comcast’s own cable television business...Comcast said that there had been a doubling in the amount of traffic it was being asked to handle on behalf of Level 3, with the Netflix deal believed to account for the jump. It added that it was being asked to carry five times as much traffic for Level 3 as it sent in the other direction, which it said justified the imposition of fees.”
A Comcast blog post claimed that that it already charged other internet backbone companies the same fees that it was seeking to apply to Level 3. Level 3’s original complaint is here and their response to Comcast’s reply is here. Clearly an additional complication here is that the Netflix service could be argued to be a direct competitor to Comcast’s own services. In a word? Messy.

This is a good example of what Ofcom referred to as a two-sided market in their June 2010 consultation: ISPs serve both content providers (such as the BBC, in relation to iPlayer content – perhaps not the best example, given recent history!) and downstream customers accessing their content (you and me). Philosophical arguments about whether such fees undermine the so-called principles of Internet openness and freedom have to be balanced against the reality that broadband traffic volumes are continuing to increase rapidly whilst ISPs’ revenues remain largely static. Surely this can’t be sustained if we all want to continue to benefit from new, innovative services that can exploit the full potential of next generation networks? This graph from Ofcom’s 2010 Communications Market Report (page 283) shows the proof of this:

I find it frustrating that complex issues like these all get lumped together under the banner of net neutrality when I think there are some important distinctions to be drawn, as I’ve suggested in this previous post. There is one good thing about this continuing debate though –at least it gives people like me plenty to write about!

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