Recently I’ve been more concerned about the debate over Net Neutrality, something I think I share with many people who use the Internet. The current debate has many people confused and I think the problem arises because both sides support values that Americans hold dear: "freedom of speech," "non-discrimination," "free market competition," and "consumer choice" are all values almost every American would claim to support. And yet, the first two are the pillars of Pro-net neutrality, while the latter two are the tenants of Anti-net neutrality. How can they be reconciled?
My proposal is a solution to this problem.
I believe it is the best solution for the issue of net neutrality because it allows for all four of those key values to be respected – thus pleasing both sides and making it an easy solution for Americans to get behind.
I call it "Opt-out Net Neutrality." It’s a compromise, for sure, but a compromise that I think will allow Broadband Service Providers (BSPs) to invest in next-generation infrastructure while ensuring that the Internet remains a place for free speech for speakers both rich and poor. It would allow BSPs to charge different fees for different levels of service, while enabling users to access any Internet site.
(sorry this is so long! I've added headings and bolded key phrases in an attempt to make it more readable. Hopefully that's more helpful than annoying.)
I) Introduction
The proposal, "Opt-out Net Neutrality" in one paragraph:
The government would legislate net neutrality in a form similar to the bills currently before Congress but with one big caveat: broadband service providers (BSPs) would be able to opt-out from the neutrality provisions. When they opt-out, the BSPs would be able to do everything that non-neutral Internet access involves (discriminating between bits, charging customers for different web sites, throttling certain application, etc.) However, in return, those BSPs that opted-out would have to allow for competition over their lines (i.e., they’d agree to become common carriers for Internet access).
I will explain why I believe this proposal will work, and why it can please both sides. But first, I need to give a little bit of background.
II) Background.
BSPs were not always in support of competition. In fact, a few years ago they were pressuring the FCC to eliminate competition. Internet access started out over telecommunications systems that were regulated as common carriers because of the long history of the nationwide phone system. The history of that isn’t so important – but what is important is that the Internet first started to thrive when ISPs provided access over common carrier wires (this was before broadband Internet access, when everything was through dial up).
For those who don’t remember the dial up days, this is how it would work: In your home or apartment you would pay a phone company for phone service. To get Internet access you’d plug your modem into the phone jack as if it were a normal land-line phone, and set the modem to dial the number of a local ISP. In those days there were thousands of ISPs, ranging from national ones like AOL, Easystreet, or even NetZero, to small local ISPs who might have only a few hundred subscribers. Switching ISPs was easy: send your monthly check to a different address, and instruct your modem to dial a different number. Simple. Because the phone lines were regulated as common carriers, the phone company had to allow any ISP to provider access over their phone lines.
At first when Internet access moved to broadband speeds, the regulatory structure remained the same. Because DSL (one of the first broadband technologies) was offered through the phone lines, the lines were still treated the medium of common carriers, and any ISP could offer DSL Internet service through the local phone company’s wires (sounds strange now, doesn’t it?).
But cable broadband Internet access was different because of the history of cable regulation. While telephone service had traditionally been regulated as a common carrier (as mentioned above), cable service had not (cable providers were seen as having more editorial control over which channels they provided customers). Small ISPs argued that when cable operators started providing Internet access they moved from providing entertainment services to communications services, and therefore should be regulated as common carriers, just like the phone companies. But the FCC said no. And this was the issue at stake in the (famous?) case of Brand X. The Supreme Court heard the case in 2005, and sided with the FCC and cable providers: cable Internet access providers did not have to be regulated as common carriers.
The cable and phone companies all wanted to be able to offer broadband Internet access without having competition. They wanted to be able to use their high-speed wires to sell Internet service without having competing ISPs over Internet service over the wires. In other words, they wanted monopolies over their wires. Monopolies, of course, get monopoly profits (profits that are greater than the company would get in a competitive market). The BSPs were arguing that these monopoly profits were needed to pay for the infrastructure improvements.
The phone companies argued that, in the wake of Brand X, it was unfair for cable BSPs to be able to offer Internet access and not be treated as common carriers, while phone BSPs offering DSL Internet access were treated as such. Later that year, in 2005, the FCC agreed and moved DSL BSPs the same framework. After that, no broadband internet access provider had to open their wires up for competition. This created monopolies and duopolies in Internet Access, and made it next to impossible for upstart ISPs to be able to provide competing service because the market entry cost was prohibitively expensive.
That’s the background. Where it left us was with BSPs successfully arguing that the only way Americans could get high-speed Internet access is if, contrary to two-way telecommunications history, the owners of the wires received a monopoly in Internet service over those wires.
III) The Current Discussion
Safe with their government-insured monopolies over Internet access, BSPs now extol the benefits of competition. During discussions of Net Neutrality, those same broadband service providers now cannot praise enough the wonders of "the market" and how the market effects of letting ISPs engage in bit discrimination will bring higher-speed and lower-cost Internet access to American consumers.
Their argument is that letting market rates differentiate between connection speeds and guaranteed levels of service will let consumers who demand top-level service pay for that service while consumers who do not require the same level of service to pay lower rates.
This argument could be true (if we assume that rates won’t just go up for everyone). But why do BSPs only favor competition now? Why did they not favor it before when ISPs were willing to provide competition? I cannot be sure of the reason, but it could be because the competition they want is not competition between BSPs for better quality Internet access. The competition they support is between websites to determine how a BSP gets paid. But that competition still leaves the consumer without much of a choice in which company will be their ISP. Without consumer choice, it strains the definition of a free market. And with BSPs having FCC-ordained monopolies on Internet access through their wires, consumers have little choice.
It seems, at least to this observer, that the broadband service providers are pro-competition only when that stance will help them make more money.
IV) The Solution
Because one type of competition helps consumers and one type of competition helps BSPs, this is the perfect situation for a middle-ground compromise. The government should offer the BSPs a deal: if you want competition and the benefit of the market in one aspect of broadband Internet access, you have to allow competition for Internet access as well (i.e., must allow both types of competition.)
Here’s how it would work:
- The foundation would be legislated network neutrality
- Any BSP can opt-out of the neutrality provisions (and, thus, gain the fiscal advantage of being able to charge customers more for certain websites or data plans). But, in return for being able to opt-out, the BSP must agree to open up its wires on a common carrier basis for Internet access (thus allowing third party ISPs to offer Internet service to the BSPs customers without the customer having to install any new wires).
Of course, some details would have to be worked out:
- A BSP would have to opt-out for a set minimum length of time, because if it could go in and out of being a common carrier every month no local ISP could afford to purchase the equipment necessary to provide access. Maybe a choice to opt-out could be for a minimum of 3 years.
- Also, the details of the initial legislated net neutrality would have to be discussed.
But those are details for Congress that aren’t pertinent here. The important aspect of this proposal is that by combining both types of Internet access competition, I believe both sides of the divisive net neutrality debate can be satisfied. It will please most of the proponents of net neutrality while also giving broadband service providers the opportunity to provide the prioritization of bits that they claim customers want.
Why "opt out net neutrality" is good for both sides:
It is good for the BSPs:
- They are given the opportunity to opt-out of the net neutrality provisions that they claim would stifle their business plans.
- Once out, they are able to offer their customers multiple rate plans that favor websites the BSP has deals with.
- Once out, they can provide the extra dedicated pipe for the streaming videos that they say they won’t be able to provide to their customers without discriminating between bits. They can delay e-mails while favoring streaming media. While they will have to put up with competition from other ISPs if they choose to opt-out, the other ISPs will still have to pay to access the wires, and therefore their investment in new broadband infrastructure will still be paying off at the same rate.
It is good for proponents of network neutrality:
- First, if a BSP chooses not to opt-out, proponents will get the fair and non-discriminatory Internet access that they claim to want. They will be guaranteed that their data will be sent through regardless of where it originated on the Internet.
- But if a BSP chooses to opt-out, the net neutrality proponents should still be happy. Because the BSP will have to act as a common carrier, a local ISP can step in and provide the "non-discriminatory" Internet access that the BSP chose not to provide. There are enough proponents of network neutrality that many ISPs might find that it is good business to be known as the "net neutrality" ISP, even if service might be a little slower because of a lack of prioritization.
The distinction between a BSP discriminating between bits now, and a BSP discriminating between bits when they are acting as a common carrier is an important one. One of the biggest problems with not having net neutrality legislation is that many BSPs are local monopolies (or duopolies with another large conglomerate), and the cost of entering the public utility market is so high as to deter competition. Because of this, consumers have no choice but to get their Internet access through the BSP. But if the BSP acted as a common carrier, the cost of entry into the high-speed ISP market would be much lower (because a new ISP wouldn’t need to install any wires). There would be more ISPs offering broadband access, and true competition would exist.
I have no problem with an ISP prioritizing bits, as long as there is an easy way for a user to switch to a competing service. Under this opt-out proposal, there is a very easy way.
V) The question this always raises: does sharing pipes work?
A proposal for cable Internet providers to act as common carriers always seems to bring up the question of if the cable infrastructure can support that function without slowing down the access speeds of other users. To start with, many BSPs don’t use cable but DSL or wireless instead. Also, the increasing use of fiber optic cables to the home will likely reduce the number of customers who get their Internet access through cable. But regardless, this proposal would still likely result in many cable BSPs acting as common carriers.
As many people know, unlike phone lines which are often physically separate, the cable infrastructure uses a lot of shared bandwidth, especially between houses on the same street or apartments in the same building. Because cable started out as a one-way communication medium, this made a lot of sense since if every house on the street is at least getting basic cable, it would be a waste to duplicate that signal many times over.
So would that infrastructure work for common carrier Internet access? In other words, if cable Internet access is being provider by the same BSP to houses A, B, and C on a street, could house B switch to another ISP over the same cables and not degrade the access for houses A & C?
I believe that it could. Internet users today, even if they are using the same cable BSP, are downloading different content. Houses sharing the same street cable are able to download and upload files without a problem. The only issue, I believe, arises when a cable BSP customer gets better than normal download speeds because his or her neighbors aren’t using the Internet. For example, because all the houses on a street are sharing the same pipe, each user’s service downgrades when every house is using the Internet. But, if only a few houses are online then the shared pipe works out to the users’ advantage: their data can occupy the entire pipe and they get faster than normal downloading speeds.
Clearly, this sharing of space wouldn’t work when a common carrier needs to give access to the infrastructure to a competing ISP on a non-discriminatory basis. However, I do not see that as a big problem. A user can get a certain percentage of the pipe for their access to use. Users will still get the downloading and uploading speeds as advertised. Users can still pay more for faster downloading times. And if users want their bandwidth prioritized so more streaming video can get through, their non-neutral BSP will be able to do that for them.
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In conclusion, I think this proposal has the opportunity to help the net neutrality debate by giving both sides what they want: broadband service providers the ability to differentiate between bits and charge websites for providing their customers with better access to their websites; and consumers the ability to know that they can get their data free of censorship and discrimination.
I’d be interested in hearing your reactions to this idea – do you think it would work? Do you think both sides would be satisfied by the compromise? Are there any current proposals before Congress that are similar?
If you have any further questions or want more details on the idea, send me an e-mail.
ADJ