FTC Hears Debate over Net Neutrality

Published April 1, 2007

The debate over network neutrality further intensified in February as the Federal Trade Commission (FTC) held a two-day workshop on whether to regulate the way U.S. phone and cable companies handle the transmission of Internet data as it crosses their networks.

Network neutrality would prohibit Internet service providers such as Verizon and Comcast from charging companies like Google, eBay, and Sony–which seek to use the Web to provide content-rich, bandwidth-intensive applications–higher fees to boost the quality and reliability their services are likely to require.

Over the course of the two-day workshop, many net neutrality advocates conceded that some degree of prioritization and quality of service (QoS) will be required as Internet services evolve. Discussion centered on whether the wireline service providers have a level of market power sufficient to exercise control over the speed and performance of applications–in effect picking winners and losers among other players in the information supply chain.

Gigi Sohn, president of Public Knowledge, an Internet users advocacy group, was among the strongest supporters of net neutrality, arguing there is not nearly enough broadband competition in the marketplace. She called Federal Communications Commission competition data “flawed,” as it defines as broadband speeds as low 200 kilobytes/second (kb/s).

No Interest in Blocking

J. Gregory Sidak, a visiting professor at Georgetown University Law Center, countered Sohn’s position, stating there is plenty of competition in the marketplace, evidenced by skyrocketing broadband usage and falling prices. He said network providers don’t have an interest in blocking content, and that network neutrality regulation is unnecessary.

Google’s Washington policy counsel, Alan Davidson, said prioritization in the last mile creates real concern. “We are concerned that prioritization through router-based discrimination in the last mile degrades services and creates incentives to relegate some of those competing services to the slow lane.”

Davidson acknowledged, however, that not all network management is anti-competitive. Prioritization and charging businesses or consumers for more bandwidth is not a problem, nor is providing caching services or creating dedicated IP channels for television service–all methods commonly used by Internet content and applications providers today to boost quality and performance.

‘Fans of the Market’

Service providers, however, urged the FTC to step back from regulation and allow business models to develop in the marketplace. “Given the choice between regulation to solve a problem and allowing the marketplace to solve the problem, we’re fans of the market,” said John Ryan, senior vice president and assistant general counsel for Level 3 Communications.

Walter McCormick, president and CEO of the U.S. Telecommunications Association, said the debate is about whether the government can dictate what kinds of services can and cannot be offered and how broadband networks can and cannot be engineered and operated. But the social benefits of the future Internet require policies that understand how the Internet works and reflect the importance of network management, quality of service, and prioritization. “A better Internet doesn’t simply come by adding capacity,” he said.

FTC Commissioner Jon Liebowitz may have summed up the agency’s position when he noted, “many of us are looking for a third way.” He suggested the neutrality deal AT&T struck with the FCC to win approval of its acquisition of BellSouth as a “jumping off point.”

Coerced Deal?

That deal, however, drew criticism from network neutrality opponents, who felt it was coerced, vague, and counterproductive. The agreement calls for AT&T to maintain network neutrality for two years, although wireless and video services would be exempt.

The AT&T-BellSouth merger condition is “way overstepping,” said Robert Pepper, senior managing director for global advanced technology at Cisco Systems. “They essentially had no choice if they wanted their deal done, but it’s actually very anti-consumer.”

Addressing anti-competitive behavior “case by case” is better than writing fixed controls because a rapidly changing technology environment could mean “overly broad regulations,” Pepper said. There’s no need for new rules but “there is an important role for monitoring and oversight.”

Steven Titch ([email protected]) is senior fellow for IT and telecom policy at The Heartland Institute and managing editor of IT&T News. Information for this article was compiled from AP, Communications Daily, GigaOm, and reports from sources who attended the workshop.