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Paid prioritization would get the GOP bill closer to ideal

Today the hashtags, #openinternet and #netneutrality were used extensively as the Senate Committee on Commerce, Science and Transportation and the House Sub-committee on Communications and Technology listened to testimony that they hope will help refine draft legislation designed to rein in the Federal Communications Commission while bringing clarity on paid prioritization, unreasonable network management, discrimination against network traffic, and access to legal websites.

The bill expressly prohibits paid prioritization, which allows content providers to enter agreements with broadband providers that allow traffic higher priority for certain traffic to end-users.  The argument against paid prioritization has been that smaller content providers would not be able to compete with the big dogs who have deeper pockets and can afford to pay to get their traffic placed before the rest of the dog pile.  But what this view fails to consider is that firms willing to pay for priority treatment of their traffic recognize the value to their subscribers that their traffic has and paying to get that traffic to content subscribers is a cost that will generate benefits.

Content providers are not shy about the how failure to get traffic to subscribers in a timely fashion might impact their business models.  Take for eample the investment information firm, Morningstar.

Morningstar is in the information and services delivery industry.  The Chicago-based firm provides independent investment research to subscribers around the globe.  It relies on internet technology to deliver its services, thus an ability to upgrade to the newest technology is necessary if content providers like Morningstar are to remain competitive.  Outages of their network data centers can result in lost customers and lost revenues.  According to Morningstar:

“Many of our client contracts contain service-level agreements that require us to meet certain obligations for delivering time-sensitive, up-to-date data and information. We may not be able to meet these obligations in the event of failure or downtime in our information systems. Our operations and those of our suppliers and customers are vulnerable to interruption by fire, earthquake, power loss, telecommunications failure, terrorist attacks, wars, Internet failures or disruptions, computer viruses, and other events beyond our control. Our database and network facilities may also be vulnerable to external attacks that misappropriate our data, corrupt our databases, or limit access to our information systems.

Most of our products and services depend heavily on our electronic delivery systems and the Internet. Our ability to deliver information using the Internet may be impaired because of infrastructure failures, service outages at third-party Internet providers, malicious attacks, or other factors. If disruptions, failures, or slowdowns of our electronic delivery systems or the Internet occur, our ability to distribute our products and services effectively and to serve our customers may be impaired.”

Question is, would a statutory ban on paid prioritization benefit Morningstar or other firms in the information delivery services industry where, again, timeliness ois of the essence?  If contracts with their clients call for liabilities where data is not delivered in a timely manner or where quality is eroded, can Morningstar afford prohibition from entering priority contracts?

While the bill is a good start toward bringing clarity and closure to the net neutrality debate, Congress needs to focus on the commercial aspects of the internet and keep in mind that speed and capacity are the characteristics that make the exchange of information over the internet far more superior, productive, and profitable than any other medium.  Paid prioritization is about meeting customer needs and recognizing the value certain content brings not only to the subscribing end users but to the economy as a whole.

 

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American Commitment sets the record straight on FCC’s open internet comment period

Pluralism is a magnet for influence and effective advocacy is not a “first strike and you are done” game.  The advocacy group, American Commitment, demonstrated that earlier this afternoon in a press release that describes analysis of the Federal Communications Commission’s comment period in its open internet rules docket.  According to the press release, the advocacy group won the second comment period by delivering 808,363 comments opposing any regulation of the internet.  The analysis was conducted by the Sunlight Foundation.

“We’re pleased that the Sunlight Foundation is finally confirming that American Commitment and Americans opposed to regulation of the Internet won the FCC comment period.  Better late than never,” said Phil Kerpen, president of American Commitment.  “The American people have spoken clearly in expressing their opposition to any effort by the FCC to impose regulations on the Internet.  A  Washington takeover of the Internet would be disastrous for free speech, commerce, and the future of the Internet as a sphere of innovation.”

Ironically the FCC, at least its three Democrats, appear to cite the voices of the alleged three million post-card proponents of Title II and net neutrality.  If the FCC members want to maintain their own image of balance, maybe they should acknowledge the voices that are opposed to the imposition of onerous rules on a medium that has been delivering knowledge and content via an open architecture for decades without a single tariff or contract disclosure requirement.

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My response to Keith Ellison’s Huffington Post op-ed

Posted October 9th, 2014 in Broadband, Internet, net neutrality, Network Compact, open internet and tagged , , by Alton Drew

Yesterday, U.S. Representative Keith Ellison, Democrat of Minnesota, voiced his support for net neutrality and asked the Federal Communications Commission to implement rules that would protect Internet openness while ensuring that communities of color have a place at the digital table.

Mr. Ellison expressed concern that Internet service providers were in a position, by choosing to not treat traffic equally, to squelch the voices of minority communities on issues of particular importance such as the shooting this past summer in Ferguson, Missouri of Michael Brown, an unarmed teenager.

Mr. Ellison is wrong on the issue.  There has never been equal treatment of traffic. From the early days of the Internet treatment of traffic has always depended on the type of traffic coming across the pipes.

As noted Internet pioneer Nicholas Negroponte recently noted, the idea of equal treatment of bits is “crazy.” A book is about one megabyte of data, yet one second of video represents more than one megabyte.

E-mail came to your computer a lot faster than video back in the early to late 1990s.  Remember buffering? Today that problem is resolved in part by providing the bandwidth necessary for moving video from the producer to the ISP and eventually to the consumer.
Mr. Ellison raises the big “if” when it comes to potential blocking or discrimination on the part of ISPs. The reality is that ISPs did not block the content provided by people on the ground in Ferguson. ISPs do not want to risk the value of their last-mile networks by sending competitors the signal that their networks are unreliable.

Ironically, that very video traffic that Mr. Ellison refers to would never get through to end-users unless backbone providers and ISPs agreed to the provision of greater bandwidth for video.

Mr. Ellison has simply made the anti-net neutrality argument.

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Losing the Internet global market for the broadband access trees

The New York Stock Exchange Tech-Media-Telecom Index fell 101.46 points or 1.35%, partly on news that the European economy was worse for wear.  Equity investors ran for the debt-income hills choosing to move their stash into government bonds.

I don’t think the fall in the tech, media, telecom sector had much to do with comments made today by panelists participating in a Federal Communications Commission forum on the law and economics of net neutrality.  The takeaway from that panel for most was that no matter what net neutrality rules the FCC comes up with, whether based on Title II, section 706, or some ungodly pairing of the two, there will be blood in the form of litigation.

The other takeaway in my opinion is how so far the FCC has completely ignored the opportunity to describe how regulation, especially under a Title II regime, is supposed to help maintain optimum performance of a globally competitive interconnection of 67,000 networks when a significant portion of the globe is experiencing an inept economic performance.

If economic performance stays this sluggish worldwide, information services companies will have to really emphasize to consumers the value of their content and information products if they are to stay afloat.  But when the FCC is seriously contemplating codifying a policy that would give equal treatment of a video of a dancing cat with life-saving online medical services, it is difficult to see capital and investment moving freely to activity that brings the most value.

Morningstar notes that the FCC’s tough stand on competition and net neutrality has deflated the value of wireless Internet access platform providers, casts doubt on pending acquisitions of DirecTV and Time Warner Cable, and lessens the chances of Sprint and T-Mobile walking hand-in-hand down the mergers and acquisitions aisle.  According to Morningstar, the inability to consolidate may make Sprint and T-Mobile’s ability to garner additional spectrum or eek out a profit all the more difficult.

If the FCC wants to maintain its economic regulation focus on the providers of broadband access platforms while positively impacting the end-to-end global nature of the Internet, it may want to ease up on the “consolidation is bad” mantra and either stick to a broadband policy based on section 706 or better yet abandon rulemaking on the Open Internet altogether.

 

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Google says “We love net neutrality. Why don’t you?”

Google is no longer silent on its position on net neutrality.  It wants to see strong net neutrality, as this blog post in The Washington Post points out.  In fairness to the company, however, it came out of the net neutrality closet to investors a few months earlier based on language in its February 2014 10-K, its annual financial report to the U.S. Securities and Exchange Commission.

Without using the terms, “net neutrality” or “Open Internet”, here is how Google described how the risk stemming from a lack of an open Internet would impact the company:

“business depends on continued and unimpeded access to the internet by us and our users. Internet access providers may be able to block, degrade, or charge for access to certain of our products and services, which could lead to additional expenses and the loss of users and advertisers.
 
Our products and services depend on the ability of our users to access the internet, and certain of our products require significant bandwidth to work effectively. Currently, this access is provided by companies that have significant market power in the broadband and internet access marketplace, including incumbent telephone companies, cable companies, mobile communications companies, and government-owned service providers.
Some of these providers have taken, or have stated that they may take measures, including legal actions, that could degrade, disrupt, or increase the cost of user access to certain of our products by restricting or prohibiting the use of their infrastructure to support or facilitate our offerings, or by charging increased fees to us or our users to provide our offerings.
Such interference could result in a loss of existing users and advertisers, and increased costs, and could impair our ability to attract new users and advertisers, thereby harming our revenues and growth.”
Google has actually shown it prefers taking action when it comes to net neutrality versus engaging in esoteric debates over an open Internet, as preferred by numerous grassroots advocates.  Back in February 2010 when Google announced its intent to deploy one Gigabit Internet access service, it made clear its intention was “to incorporate the policies we’ve been advocating for in areas like network neutrality and privacy protection.”
If Google Fiber is to have any impact on incumbent broadband operators such as AT&T, Comcast, or Verizon, it may only be in forcing them to upgrade the speeds at which the incumbents provide high-speed access.  By incorporating net neutrality principles in its high-speed service, Google is merely following AT&T, Comcast, and Verizon’s model for complying with net neutrality; they’ve been following net neutrality principles without Google’s help.
I don’t see why the Federal Communications Commission would be moved by Google’s announcement of its position on net neutrality.  If anything the Commission should be asking Google what took you so long to verbalize your support.