Posts Tagged ‘Net Neutrality’

A Dutch [Wireless] Treat?

Tuesday, May 10th, 2011

I’ve written before about the paramount importance of the mobile broadband net neutrality debate.  The FCC (correctly, in the view of many) left the bulk of the mobile wireless net neutrality issues open in its first stab at net neutrality rules last December.  That order makes clear that, while the FCC is prepared to revisit the scope of wireless net neutrality obligations, it hopes not to have to do so for years.  That’s not likely.  If recent developments in the Netherlands are emulated by U.S. carriers, the wireless debate may be back on the FCC’s front burner sooner rather than later.

Dutch mobile operator KPN has announced plans to begin billing its customers based on the types of applications they are using.  This is not usage-based billing.  Rather, KPN intends to impose an extra charge for using Skype, Google Voice and other applications that compete with KPN’s own lucrative voice and SMS services.  It’s not clear whether KPN will also try to create a two-sided market in unaffiliated content and services on its network by imposing extra charges on customers using services that compete with the services of “partners” with whom KPN has entered into contractual arrangements.  For example, will Disney movies be accessible only for an extra fee, while no fee will be charged for films from Canal+?  How can KPN identify the offending customer transmissions?  Why, through deep packet inspection technology, of course.  That’s another can of worms the FCC is hoping to avoid opening for a while.

Could a KPN-type plan be tried in the U.S.?  Possibly.  Broadband Reports quotes an FCC spokesman as saying that the agency’s net neutrality rules would prohibit this type of application-based pricing.  But when I look at the specific provisions of the FCC order the spokesman cited, I have to conclude the answer is murky.

It’s not likely that AT&T Wireless, which needs FCC approval of its pending T-Mobile acquisition, will follow KPN’s lead.  Verizon Wireless couldn’t adopt such a plan network-wide without violating the licensing conditions of the 700 MHz spectrum it purchased at auction in 2008.  But one of the smaller carriers may want to take a flyer.  KPN’s approach is not that different from the walled garden, low bandwidth cap plan introduced by Metro PCS in January.  The FCC hasn’t acted on the complaint filed by Free Press and others about that Metro PCS plan, so maybe it’s waiting to see how the market develops.  Stay tuned.

 

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Whither net neutrality in 2011?

Tuesday, May 3rd, 2011

Net neutrality is certainly the issue that dominated the FCC’s agenda over the last 18 months. A lot has been written pro and con about the scope and jurisdictional underpinnings of the FCC’s new net neutrality rules. I may analyze the rules and the arguments in a future post, but now I want to address three points.

First, the net neutrality debate will be the defining economic battle of the next decade, affecting not just the telecom industry but also large swaths of the U.S. economy.  The new FCC rules – whether they survive court review or not – are merely the latest skirmish in a war that began before the Telecommunications Act of 1996 and has accelerated and broadened every year since.  In fact, the net neutrality debate affects the market for any product or service that can be digitized and distributed over an electronic network.

Second, the U.S. net neutrality battlegrounds are shifting in 2011.  The FCC hopes it is out of the hot seat for now, but the intemperate (or perhaps finely calibrated) actions of carriers have already led to complaints and may force the FCC to act.  The Comcast/ Level 3 dispute will not go away and the wireless providers, having been given freer rein under the new rules than wireless carriers, are eager to test the limits of their freedom.  Metro PCS’s new “Internet Lite” offering is already the subject of an informal complaint to the FCC.  If other wireless carriers follow suit, the FCC may find itself revisiting the issue of wireless net neutrality much sooner than it hoped.

Now that the FCC has enacted its rules, the courts and Congress will have their turn at bat.  Don’t expect much from Congress.  Despite the bluster from a few members of the House of Representatives, Congress is unlikely to actually legislate on net neutrality, much less rewrite the Communications Act for the 21st century. To mix sports metaphors, Congress will punt.  So that leaves the issue to the courts.  Don’t expect a final decision from the Supreme Court until 2013 at the earliest.  So we’ll be living with the FCC rules.

Finally, the internationalization of the net neutrality debate is not getting as much attention as it deserves.  As late as 2008, net neutrality was mainly a U.S. issue.  Since then, the UK,  Japan, Norway, Canada and a number of other countries have issued orders, consultations, guidelines or reports addressing aspects of net neutrality. The EU issued a report suggesting that nothing needs to be done now.  But just two weeks ago EU digital agenda commissioner Neelie Kroes called for BEREC, the umbrella group for European electronic communications regulators, to look further into issues related to net neutrality.  They’ll be investigating and issuing a new report at the end of the year.  No doubt their view will be influenced by developments like Dutch carrier KPN’s recent announcement that starting this summer it will be blocking some competitors’ chat, VOIP and streaming services unless mobile customers pay an extra fee.

A surprising feature of this internationalization is the degree to which national regulators explicitly acknowledge that they are looking at what their colleagues in other countries are doing.  This trend will continue as more governments recognize the key role that broadband networks play in development and innovation throughout all industry sectors.  The eventual national outcomes will depend on the political, economic, and social factors in each country – and particularly on the degree of facilities-based broadband competition.

 

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The Wireless Net Neutrality Clash: The Only Band That Matters

Sunday, September 20th, 2009

Maybe this FCC does get it. First, the FCC announced at its last open meeting that it was starting inquiries into various facets of the mobile phone industry.  Now the rumors are flying that on Monday FCC Chairman Genachowski will outline a new approach to network neutrality that will codify the existing “four Internet freedoms” and add a fifth principle – non-discrimination (apparently bounded by reasonable network management practices).  More importantly, he is expected to announce that for the first time the FCC will apply the concepts to wireless networks.

For now, the combination of FCC developments seems like a good springboard to begin a dialogue about something I’ve been thinking about for many years - how much net neutrality regulation do we want or need? And can someone please come up with a better shorthand than “net neutrality”?

It may be heretical in some quarters, but I’m not sure we need much broad net neutrality regulation. To muddle the old CBS Records sales pitch, wireless is the only band that matters in the net neutrality clash. Don’t be confused. The debate is not about big pipes for big businesses – large customers will get the big, dumb pipes they want and need.  The net neutrality fight is about the consumer-SOHO-SMB customer segment (“CSS” for short).

CSS is going wireless.  You can see it in the data (pun intended) – whether it’s the startling growth of households dumping their landlines, the growth of netbook sales or Verizon’s CEO announcing that he’s not worried about staggering landline losses because VZ is a video company.

So the key issue in the short and medium term is whether broadband wireless is an open platform.  If it is, the wireline telcos and the cable companies will have to keep their fiber/DSL/cable platforms open in any geographic areas where they compete.  A good example is Montgomery County, Maryland, where I live and work.  Most of the county has at least four competing broadband providers (and at least three different technologies – cable, DSL, and 3G wireless (both Sprint/Verizon EVDO and AT&T ), plus a large smattering of Verizon FIOS). If the 3G wireless networks (and the Clearwire 4G network that is supposed to be in operation here by the middle of next year) are open, it will be impossible for the cable/telco wireline providers to compete unless their networks, too, are open. Openness is contagious, spreading like Ice Nine in Kurt Vonnegut’s Cat’s Cradle. As a political matter, the chances are zero that regulators or politicians are going to allow broadband providers to provide open networks in competitive areas such as Montgomery County, but to close those networks and limit CSS choice in rural or less affluent areas that have only one or two broadband options.

So what does that mean? Don’t be surprised if in this area the FCC borrows from some of the concepts in the bestseller “Nudge,” whose co-author Cass Sunstein is the OMB regulator overseeing, among other things, new FCC regulations.  If I’m an FCC regulator constrained by the Brand X and other Martin-era deregulatory decisions on cable and telco broadband, I wouldn’t be looking to pick a fight with the D.C. Circuit by immediately revisiting those decisions.  I’d be looking to focus on wireless and on relatively short term goals. Announce that the five freedoms apply to wireless and wireline networks alike. Start a lengthy rulemaking to determine what reasonable network management is on a wireless network.  Work with the FTC to put strict disclosure rules in place ASAP requiring wireless and wireline carriers alike to make public disclosure of their real (not theoretical maximum) upload and download speeds, their monthly usage caps and overage charges, and their application blocking and degrading practices. Wait a couple years and see what happens. Most of these steps take years and are virtually appeal-proof, even before the D.C. Circuit.  Delay is now the friend of net neutrality proponents.

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