The FCC puts the Internet on life support

The magic of the Internet has been that anybody with the skills can make a service that looks and works just as well as a large company.

Are you a good writer? Your blog can compete with the New York Times because the platform is the same. Good at video? You can deliver it to a worldwide audience right alongside Hollywood. Talent and promotional acumen become more critical deciding factors than wealth.

What the FCC seems to be considering would change that. New entrants to a market would face a cost barrier. A Netflix or a YouTube will be fine, because they can’t be outright blocked under this proposal and they can afford to pay for the smooth access their product needs.

This is a solution designed to make sure big businesses get a fair break. Not you.

A new video company that wants to compete with Netflix? Now they need to gather even more venture capital. The cost of innovation gets higher, meaning fewer attempts at innovation, meaning a greater trend towards oligopoly and a resulting stagnation.

The FCC seems to be constructing their approach to look for immediate harm, which they will not find. You can’t prove that a company that never entered the market because it was too expensive was harmed. This is insidiously dangerous whether it is intentional or not.

This isn’t about “neutrality” or packet prioritization or even peering. Small innovators don’t start out big enough to need peering agreements like Netflix does. When they get that big, they can afford to negotiate them, like Netflix is.

However what seems to be on the table is allowing ISPs to charge for traffic coming to the individual consumer as well as charging that consumer to access it. That would be fine if customers could make a choice. If a competing ISP could market themselves as an open Internet provider where ALL sites perform well not just the big ones. Since we do not have ISP competition in the US, that won’t happen. ISPs can do what they want, with no market recourse for the consumer.

And that’s what gives the lie to Chairman Wheeler’s statement.

He writes, “The Notice does not change the underlying goals of transparency.” However transparency is almost useless when you have no choice of provider.

He also writes, “behavior harmful to consumers or competition by limiting the openness of the Internet will not be permitted.” That seems to be aimed at content providers, but wouldn’t it be great if that applied to ISPs? Except there is almost no competition on the ISP level, which hurts consumers and the FCC does nothing about that fundamental root problem.

This entire procedure of developing Open Internet Guidelines seems to be a practice in misdirection. Rather than treat the problem, lack of ISP choice, the commission, and the public are arguing over the symptoms.

If the Internet was a patient and the FCC its doctor, that doctor would seem to be saying, “We will not allow this nose to get unreasonably runny and we will let you know every symptom of the illness. But we won’t worry about trying to cure the disease. No lobbyist has paid for that.”

5 thoughts on “The FCC puts the Internet on life support

  1. There is ISP competition in almost every location in the US. There is both DSL (slow) and Cable/Dish (fast) everywhere. People have a choice on what to pay (low or high) and get service accordingly. If the market supports the cost of installation, fiber is available in some locations (at an even higher cost), giving at least three choices.

    Your argument seems to be that we need at least two equal speed connections (one open and one closed). Yet, you propose no way to pay the extra costs of redundant systems. (Twice the last mile to the house costs.) The consumer always pays, and the consumer who is happy with his current supplier will end up paying more because said supplier will have fewer customers to spread fixed costs across.

    1. I disagree that there is any kind of meaningful competition. Saying you can pay for a slow connection or a fast connection, even if that were the real choice for most people, is not competition in my opinion.

      What would be competition is closer to what we have in mobile in the US. 3-4 national providers with a handful of minor players. I don’t want two providers, one open one closed at all. I want 5 or 6 providers all doing whatever they want and the consumer chooses the winner based on the one that works best. Maybe that ends up being some kind of closed system, but I doubt it.

      I agree that the consumer always pays but when the choice is absent the consumer pays more for less.

      But you did hit on the pertinent question. How do we overcome the cost barrier to last mile infrastructure. Lots of ways to address that and I don’t know which one is right. But THAT should be what we’re debating not what half-baked regulation the FCC should be placing on the limited number of entrants in order to protect them from further competition.

  2. Beating on the FCC at this point seems absurd. They have already been shut down by the courts (on fundamental authority).

    I think the problem now lies with Congress or State legislatures to eliminate monopolies local cable systems have in delivering Internet service

    1. They actually have been told by the court EXPLICITLY that they have fundamental authority if they choose to take it. One way was to regulate under the ‘commercially reasonable’ rubric that Wheeler is choosing. The other way is reclassify Internet as a communication service rather than an information service.

  3. It kind of feels like the FCC tried to say only “unreasonable content” could be restricted and got tripped up in court because that sounds like they wanted to treat ISPs like common carriers, yet didn’t designate them that way. So rather than turn ISPs into common carriers, which would be politically difficult (or at least uncomfortable), they tried to modify their position to “commercially unreasonable” to make it sound more business oriented. Of course, making it more business oriented is part of the problem. They should be more consumer oriented.

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