“In this democratized system we call the Internet, anyone can put up an idea and it can be weighed fairly and openly by the consumer,” one Internet start-up CEO says. As consumers increasingly turn to video streaming services, what will that mean for net neutrality?
In a town hall meeting in Los Angeles earlier this month, President Barack Obama reaffirmed his commitment to net neutrality and his opposition to the notion of “fast lanes,” or special rates for unrestricted broadband access for specific customers.
“I am unequivocally committed to net neutrality,” Obama told a group of company startup founders in response to the proposed Open Internet rules, which would create the theoretical fast and slow lanes. “It’s what has unleashed the power of the Internet, and we don’t want to lose that or clog up the pipes.”
Since Federal Communications Commission Chairman Tom Wheeler proposed the now-controversial rules in April, the Obama White House has been besieged with accusations that the administration is attempting to give Internet service providers the ability to charge more to content companies for faster or more reliable access to the Internet’s bandwidth, but without explicitly granting ISPs the right to slow or block a user’s access to websites. The Open Internet rules have proven so unpopular that they yielded a record 3.7 million comments to the FCC — almost all in opposition to the rule changes, as well as two successful viral campaigns from comedian John Oliver, a number of corporations and grassroots organizations joining forces, and many possible presidential candidates — including Hillary Clinton — taking public stances against Wheeler’s proposal.
Even the president felt compelled to distance himself from Wheeler: “My appointee, Tom Wheeler, knows my position. I can’t, now that he’s there, I can’t just call him up and tell him exactly what to do,” Obama said during the town hall meeting. “But what I’ve been clear about, what the White House has been clear about, is that we expect whatever final rules to emerge to make sure that we’re not creating two or three or four tiers of Internet. That ends up being a big priority of mine.”
While this current rift between the president and the FCC chairman reflects the wisdom of selecting a former cable industry insider to head the regulatory agency — Wheeler had served as president of the National Cable and Telecommunications Association and CEO of CTIA – The Wireless Association, an industry trade group — and prompts questions on the administration’s links to Hollywood, it also speaks to the uncertainty of how the Internet and broadband access will develop in the future. Without the ability to fully control their infrastructure, there is concern that ISPs will pull back on broadband development or actively oppose non-commercial ISPs’ network implementation attempts.
This disagreement may also reflect the difficulties in both preserving the ideals of an open Internet and satisfying consumer demands.
“Nothing will likely come of net neutrality because despite all the hype on its behalf, it’s not really in the public interest,” said Paul Levinson, professor of Communications and Media Studies at Fordham University. “What consumers want is their Netflix and Amazon streams of movies and television shows working as smoothly as possible. Giving corporations like that preferred access will serve millions of viewers.
“This is likely why President Obama has been lukewarm in his support of net neutrality. As more and more people watch television and movies via Internet streaming on smart televisions, the logic of giving the biggest carriers preferential treatment will become more clear,” Levinson told MintPress News.
“Gig City” and ISPs
In Chattanooga, Tennessee, the practical realities of this debate are being played out in real time. The city has implemented the first citywide fiber optics-to-the-premise network in the Western Hemisphere, offering all city residents download speeds of one gigabyte per second for approximately $70 per month. This is 50 times the average broadband speed available from cable broadband at a comparable price point to cable broadband. This has led to the city nicknaming itself “Gig City,” as it is arguably the first city in the United States to make gigabyte transfer rates available to all residents.
This single technological innovation effectively reversed Chattanooga’s economic trajectory overnight. The small eastern Tennessee city is currently in the midst of a tech industry boom, with new populations of computer programmers, investors and entrepreneurs settling into the community formerly known as America’s most polluted city. In 2011, Volkswagen expanded its Chattanooga plant and Amazon.com established new facilities in the city, which were both credited to the existance of the citywide network. The fiber optics grid — controlled and managed by the municipality-owned Electric Power Board — is but the latest project in a city revitalization program, which included a high-tech economic development plan.
While it is unclear what lasting effect the Chattanooga fiber optics grid will have on the city’s employment or tech sector development statistics, it is generating buzz — not only in Tennessee, but nationwide. This is creating a telecom-backed legislative pushback to limit such non-commercial development. In 2012, Comcast and AT&T filed suit against Chattanooga to prevent plans to expand the city’s municipal network to its neighbors.
Saying it is unfair to be forced to compete with publicly-funded expanded networks, ISPs are arguing that Chattanooga violated a 1999 state law which prohibits state municipalities from offering Internet services past their utility service areas. Chattanooga and Wilson, North Carolina, both petitioned the FCC to preempt their state laws under federal supremacy, as the laws — which exist in 20 states — directly contradict the intent of Congress to ensure every American access to broadband, according to the cities.
On July 16, the House of Representatives voted 223-200 to approve an amendment introduced by Tennessee Rep. Marsha Blackburn that would block the FCC from intervening in state-based community Internet restrictions. Blackburn counts the cable industry among her largest political supporters, with $66,750 donated to her campaigns from AT&T, $59,650 from Verizon, $36,000 from Comcast and $56,000 from the National Cable and Telecommunications Association.
The question of choice
In short, the question surrounding net neutrality is not one of control, but of choice, Gabriel Rottman, legislative counsel and privacy advisor for the Washington office of the American Civil Liberties Union, told MintPress. “Consumers cannot ‘vote with their feet’ by switching to another broadband provider if their provider starts acting inappropriately.”
“But, because there is no significant choice in the broadband market, the providers can force consumers to pay more for less speed. This creates a scenario in which larger consumers that can afford the mark-ups will have an advantage to smaller start-ups, which are increasingly facing barriers to entry into the online market. The concentration of network control by the ISPs is directly causing a concentration of control among the content providers,” Rottman explained.
Among the larger American companies, the major ISPs — Verizon, Time Warner Cable, Charter, Qwest and AT&T — typically rank dead last in customer satisfaction. This lack of focus on customer service — despite public outcry to the contrary — reflects a critical axiom in American business: If you are the only game in town, you don’t have to worry about making anyone happy.
In January, the U.S. Court of Appeals for the D.C. Circuit ruled for Verizon by striking down the FCC’s Open Internet rules. These rules forced ISPs to act as “common carriers” — that is, to treat all content traveling on their networks equally and to not discriminate against whom can have access to the networks, as is the case with telephone networks — without the FCC actually ruling that ISPs are common carriers. Heavy Republican opposition prevented the FCC from formally recognizing ISPs as common carriers under the leadership of former FCC chairman, Julius Genachowski. Wheeler has indicated that he has no interest in entertaining the notion of making broadband a common carrier.
Under common carrier rules, no one service provider can claim exclusivity on a geographic area. For example, even though Verizon may have set up the telephone network in a community, a customer has the right to use another provider’s service — such as AT&T’s long-distance service — while connected to the Verizon network. Under the current set-up, however, ISPs are free to demand exclusivity on their networks. Potential competitors would be forced to create new infrastructure on top of the existing infrastructure in order to enter a market.
This could prove to be prohibitively expensive. Verizon attempted to create a fiber optics-to-the-premises network — FiOS — to directly compete with cable providers. Following the national banking collapse of 2007 and the company’s own poor financial returns, Verizon determined that it was grossly overspending in developing its nationwide network and limited future construction to communities where it already had franchise agreements. In many cities, such as Syracuse, New York, deployment remains incomplete, with most areas of the city proper yet to receive any infrastructure construction.
With development of the broadband network being driven by commercial interests and with return-on-investment being the primary consideration for investment, large swathes of America are without adequate broadband access. As these corporate interests are heavily invested in lobbying efforts at both the federal and state levels — the National Cable and Telecommunications Association spent $19.87 million and Comcast spent $18.81 million on lobbying efforts in 2013, for example — government-led initiatives to create a nationwide network have universally been met with opposition and severe pushback.
A complicated dance
This lack of choice creates a moral quagmire of sorts. One of the key considerations raised in Verizon’s suit against the FCC is that if the company is not a common carrier, shouldn’t it have the right to determine how it chooses to conduct business and use its infrastructure? For example, if a customer demands a higher percentage of bandwidth than another, is it not fair for the network owner to charge more for the domination of such a larger chunk of the network’s resources? Not doing so, it has been argued, creates a consequence-free route to unchecked usage of the finite bandwidth and the possibility of smaller end-users being squeezed out.
Today, video-on-demand services, such as Netflix and Google’s YouTube, dominate network usage in North America. With Netflix streaming at one gigabyte per hour for standard definition and three gigabytes per hour for high definition, the subscription service accounted for 34.2 percent of all downstream Internet usage in primetime for the first quarter of this year, according to network equipment vendor Sandvine. This marks an 8 percent increase from the second quarter of 2013. Second-place YouTube had 13.2 percent of the downstream bandwidth.
The practical reality is that the top 15 percent of bandwidth users controlled 54 percent of the total network traffic for North America, leaving the bottom 85 percent with less than half of the Internet’s bandwidth. It can be argued that it is fair to say that this top 15 percent should pay more and be more responsible for the maintenance and operation of the network.
Yet doing so would constitute an open acknowledgment that ISPs do indeed run the show when it comes to broadband. While there is no immediate indication that the creation of “fast lanes” on the Internet would significantly harm smaller content providers or end-users, it could, as it creates a precedence for tiered pricing.
The answer to this, as pointed out by Fordham’s Rottman, is to break the concentration of control ISPs hold on broadband access. By increasing competition in the broadband market, consumers would have more choices and the providers would be forced to provide better service to compete. However, in light of the AT&T/DirecTV and Comcast/Time Warner Cable mergers, the number of choices available to consumers is likely to shrink instead of grow.
On top of all of this is the fact that the top 15 percent’s dominance of the bandwidth is a product of consumer demand. While YouTube saw a rollback in demand recently, the popularity of Netflix has skyrocketed. If there is demand for these services, it can be argued that it may be in the ISPs’ best interest to ensure preferential access to them.
This, balanced with the recent record outcry to the FCC to protect net neutrality, suggests a complicated dance politicians and regulators are being forced to negotiate. Due to lobbying and corporate influences, there increasingly seems to be no right moves in this “dance,” but there is a clear indication of what may be the appropriate beat.
“For the future of innovation, net neutrality must be preserved,” said Craig Walker, CEO of Switch Communications, an Internet start-up which produces online apps, including the telephony applications UberConference and Switch.co, to MintPress.
“The coolest innovations on the Internet didn’t come from the big names, but from small guys with an idea. No one knows what will be a hit. In this democratized system we call the Internet, anyone can put up an idea and it can be weighed fairly and openly by the consumer. It’s important that this openness be protected and left available for the next dreamers, regardless of if the big players like it or not.”