FTC Workshop Sharpens Net Neutrality Debate

Published May 1, 2007

The debate over network neutrality intensified further as the Federal Trade Commission (FTC) held a two-day workshop in Washington, DC in February 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 such as 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 some degree of prioritization and quality of service (QoS) tiering will be required as Internet services evolve.

Their concession represented major progress in the debate. Only a few months ago net neutrality proponents were insisting there would never be any role for management and prioritization in the transport layer–the part of the information supply chain where the service provider operations fall.

Concerns over ‘Last Mile’

Alan Davidson, Washington policy counsel for Google, said at the workshop not all network management is anticompetitive. Prioritization and charging businesses or consumers for more bandwidth is not a problem, he said, nor is providing server-based Web site caching services or creating dedicated IP channels for television service. All of these are common methods currently used by Internet content and applications providers to boost quality and performance.

But Davidson did say 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,” he said.

Much of the discussion instead centered on whether wireline service providers have sufficient market power to exercise control over the speed and performance of applications–in effect picking winners and losers among other players in the information supply chain. This would take the issue back under the FTC’s purview, which predominantly deals with antitrust and market domination issues.

‘Fans of the Market’

Service providers at the workshop 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 be offered and how broadband networks can be engineered and operated. He argued 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,” McCormick said.

Third Way?

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.”

But that agreement itself raised eyebrows on both sides of the debate because it exempts from the neutrality mandate video services and services delivered by wireless. Video files, because of their size and error sensitivity, and wireless, because of its more limited bandwidth, are often cited as reasons why network neutrality would be a bad policy.

The FCC, in short, mandated AT&T abide by the neutrality rule only in cases where neutrality would not degrade the function of an application. In addition, the AT&T neutrality rule expires in two years, about the time many analysts believe the amount of video on the Internet will begin to create congestion problems. Network-based management techniques, which net neutrality laws would limit, might prove to be a solution.

As federal debate intensifies, states are drafting network neutrality legislation of their own.

To date California, Maine, Maryland, Massachusetts, and Michigan have proposed neutrality rules. (See article on page 12.) Only Michigan’s resolution has come to the floor of the legislature, where it was defeated as an amendment to the state’s video franchise reform bill in December.

Steven Titch ([email protected]) is senior fellow for IT and telecom policy at The Heartland Institute and managing editor of IT&T News.