The President Weighs-In on Net Neutrality
| published November 14, 2014 |

By R. Alan Clanton
Thursday Review editor

The question of controlled internet speeds—which is to say the establishment of fast lanes, slow lanes, and variable lane speeds in between—has been getting a lot of attention lately.

Destined perhaps to reach critical mass sometime in this decade, the debate came quickly to the forefront early in 2014 when several major mergers were announced, including Comcast’s mega-buyout of Time Warner, and AT&T’s huge marriage to DirecTV. Perhaps as a direct and logical outgrowth of those mergers, the biggest of the internet providers (Comcast, Time-Warner, AT&T, Verizon) each began implementing tiered-speed services for some of their biggest customers.

Netflix, for example, stopped wrangling with Comcast over delivery of its popular content and entered into a largely undisclosed agreement to pay a hefty fee for preferred access for its bandwidth-rich movies and programs—in essence guaranteeing that it has its own, high speed lanes along the ever-crowded broadband highway.

Critics of this variable-price business arrangement—generally supporters of the concept called Net Neutrality—cried foul. If the biggest companies can selectively, and arbitrarily, force small and medium sized companies to pay variable fees for access to the internet, how long before those same internet behemoths basically control all internet content—hampering or squelching those who pose a market challenge, suppressing unpopular or controversial content, and taking on the role of de facto censor and business gatekeeper. Start-ups, often underfunded, may never get their product or technology off of square one, and innovation would suffer.

Supporters of the tiered speed model say that companies who invest billions into building and maintaining the highway ought to be able to set pricing, especially where the always-valuable commodity of bandwidth is involved. If one thinks of the internet as an actual toll-road, multilane highway, then should not 16-wheel trucks and industrial vehicles pay more for access than someone in a Toyota Prius? Furthermore, the variable-pricing enables the biggest of the internet companies to derive capital from its biggest users—large access fees from Netflix, for examples, will greatly reduce the potential rate increases average Jane and Joe customers might have to pay when Verizon or Comcast make badly-needed upgrades and technological improvements.

Both sides in the debate say that business development, innovation, and technological advance will suffer if the other side prevails.

Now, even the Feds are at odds over how to shape policy. President Obama, previously silent on the topic, came down this week on the side of net neutrality. That places the President in a decidedly different position from his own FCC Chairman, Tom Wheeler, who had earlier this year ruled in favor of the big internet providers, and had been inclined to support only minimal regulation of the web.

“I am asking for an explicit ban on paid prioritization,” Obama said. The White House, bending somewhat to pressure from millions of internet users who have embraced net neutrality, chose to take sides on an issue of great importance to Verizon, Comcast, Time Warner and AT&T, four of the half dozen major companies who maintain nearly three quarters of all internet traffic in the United States. The President’s plan would forbid providers from blocking websites, prioritizing speeds or limiting access, and it would also discourage the big companies from entering into customized deals with third parties for preferred, faster delivery.

This places Obama at odds also with a Congress soon-to-be dominated by Republicans, many of whom support letting the big internet providers develop tiered-pricing. The GOP is sure to vet the issue in the House and possibly in the Senate. Mitch McConnell, likely the Senate’s top leader very soon, said that the FCC should reject the President’s plan. McConnell called it "more heavy-handed regulation that will stifle innovation."

The President’s position also raised the hackles the biggest cable lobbying firm, the National Cable & Telecommunications Association (NCTA), whose president just also happens to be a former FCC chairman, Michael Powell.

“We are stunned,” Powell said in a written statement, “[that] the President would abandon the longstanding, bipartisan policy of lightly regulating the internet.”

President Obama has proposed using a regulatory template similar to what is traditional for utility companies—that is an arrangement by which federal authorities can impose some degree of rate regulation. FCC chairman Wheeler, by contrast, has been inclined more toward a template in which federal authorities would have weaker regulatory power, including allowing internet companies to charge more for preferred content providers. Still other FCC commissioners are inclined toward a laissez fare approach, allowing Comcast, Time Warner, Verizon, AT&T and others to set whatever rate structure they choose based on simple supply-and-demand forces.

This divide within the federal position indicates not only the newly raised stakes for everyone involved, but also the byzantine nature of the issue. It also serves as a warning about the future of web innovation and technical development in an increasingly digitized world.

Indeed, Net Neutrality is a concept that’s far more complex and nuanced than it at first appears. At its heart it goes something like this: “neutrality,” in web terms, means that the providers of the broadband architecture—or plant, as it is sometimes referred to by old school folks in the cable and telephony world—neither impose nor induce any form of selective controls (speed-ups, slowdowns, fast lanes, slows lane, or blockages) to any content, website, or application, regardless of its nature. The term was first coined a decade ago by Tim Wu, a media law professor at Columbia University.

Internet neutrality (or the lack thereof) is not to be confused with parental controls or consumer options, such as programming out certain channels or setting passwords or PINS for adult content. Net neutrality is also different from the self-implementation of basic security measures most computer users at home or in the office have routine access to; Norton anti-virus software, for example. In this case, the concept simply means that companies like Comcast, AT&T, Verizon and others engage in no filtering or discrimination when it comes to the stuff that arrives at your home through that fiber optic thread or coaxial wire.

But, conversely, all content is not equal. In fact, content can be decidedly unequal. In the ever-expanding universe that is the web, high-value content like music, multimedia, video-gaming, and streaming video content consume far more bandwidth than anything we could have imagined just 12 or 15 years ago.

Indeed, as Steve Tobak recently pointed out in a decidedly pro-Comcast, pro-Verizon article on Fox Business, the equation is not as simple as the typical headline: Giant Mega-Corporation Comcast Attempts to Extort Little Consumer-Friendly Upstart Netflix. Indeed, it is easy to forget that not too long ago it was Netflix (not Comcast, Time Warner, or AT&T) that almost single-handedly put the once all-powerful multi-billion dollar empire known as Blockbuster out of business forever. Welcome to the digital age, and by the way, did you remember to rewind that VHS tape?

Netflix uses a vast swath of bandwidth for the delivery of its movies and original programs into homes. Earlier this year, after the court’s struck down some neutrality rules, Netflix has had to engage in street fights with ISPs—in some cases displaying screens that the blame interruptions and delays in streaming on the crowded networks of the ISP’s. AT&T and Verizon didn’t like that, and each shot back by blaming Netflix and its cobbled, mosaic approach to delivery—one designed to keep costs rock bottom. Threats were exchanged, nasty words traded, people’s mothers were insulted, and someone yelled “liar-liar, pants on fire.” Eventually most of the parties involved reached peaceable agreements, for now. Netflix reportedly pays its heftiest fees to cable giant Comcast, now the principal ISP for roughly one half of the U.S. Netflix apparently decided to play ball, grudgingly altering its rate schedule and pricing in order to gain access to the fast lane.

Still, Comcast rarely wins the people’s choice award in any street-level contest, and the general view out there among the thousands who weigh-in on these issues is that the tiered-pricing, tiered-speed content controls being slowly ushered-in will suppress innovation and snuff-out new technologies before they can unfurl from the cocoon stage into the next butterfly. If the guys working in your neighbor’s garage down the street don’t have the same open access to the highway that Google, Facebook and Twitter now have, they may never be able to invent the next big, transformative thing. Some libertarians also view the problem as one of censorship: why would we empower executives at Time Warner, Verizon, Comcast or AT&T to decide what kind of content we can access in our homes?

Perhaps predictably, the issue—once about as non-partisan as it could get back when the concept was first floated—has now split along party lines. Most Republicans, who now control both ends of the Capitol building—are opposed to the President’s template. Ted Cruz (R-Texas) called Obama’s reading of net neutrality “Obamacare for the internet.” Plenty of others in the GOP have lined up with this viewpoint as well, suggesting that the best way to foster innovation and fertilize technological advancement is to stay out of the way. Many—but not all—Democrats, have aligned themselves with Obama’s proposal. Ed Markey (D-Mass) called the President’s proposal “a game changer.”

Other major internet companies are threatening to fight back across a broad front. Verizon says the President’s plan may face “strong legal challenges” and would not stand up to legal scrutiny. Comcast, whose lobbying efforts in Washington are among the largest and best-funded, will surely mount its own campaign to push back against the President’s new invective.

In the meantime, the superheated Washington divide may make any sober, reasonable discussion difficult. The GOP will have a substantial hand in the outcome of any legislation going forward toward 2016, and Obama’s diametrically-opposed position on the issue of net neutrality will—like the instant resurgence of immigration as a hot-button issue—likely lead us into an even thornier debate about web access, speeds and the price consumers will pay.


Related Thursday Review articles:

Net Neutrality: Is Some Web Access More Neutral Than Others?; Thursday Review; July 11, 2014.

Do Recent Cable Mergers Signal Worse Customer Satisfaction?; Thursday Review; May 20, 2014.