RSSDOJ: 'Net Neutrality' Precludes Broadband Investment, Threatens Free Markets
By Scott M. Fulton, III | Published September 6, 2007, 5:14 PM
In a filing before the US Federal Communications Commission this morning, the Dept. of Justice's Antitrust Division argued that proponents of "net neutrality" would stifle the natural course of free market innovation in Internet technologies, in the name of leveling the playing field for competitors. Creating different tiers of Internet service, Assistant Attorney General Thomas O. Barnett's team argued, is really no different than the Postal Service charging different rates for shipping varying classes of mail.
"Much of the conduct that some proponents of 'net neutrality' regulation are concerned about can be precompetitive," the ATR team wrote. "Differentiating service levels and pricing, for example, is a common and often efficient way of allocating scarce resources and meeting consumer preferences. The United States Postal Service, for example, allows consumers to send packages with a variety of different delivery guarantees and speeds, from bulk mail to overnight delivery. These differentiated products respond to market demand and expand consumer choice. No one challenges the benefits to society of these differentiated products; nor does anyone seriously propose that the United States Postal Service be banned from charging different fees for next-day delivery than for bulk mailers. Whether or not the same type of differentiated products and services will develop on the Internet should be determined by market forces, not regulatory intervention."
The argument is similar to one raised by a pair of university professors last January, in an op-ed piece for the Washington Post.
"When traffic surges beyond the ability of the network to carry it, something is going to be delayed," wrote Carnegie Mellon computer science professor David Farber and Berkeley economics professor Michael Katz. "When choosing what gets delayed, it makes sense to allow a network to favor traffic from, say, a patient's heart monitor over traffic delivering a music download. It also makes sense to allow network operators to restrict traffic that is downright harmful, such as viruses, worms and spam."
But the Postal Service is neither an information service nor a telecommunications service by their legal definitions, as the FCC has already become painfully aware. If the Internet is indeed a telecommunications service - and there's legal precedent establishing that it is - then its regulation falls under the guidelines of the Telecommunications Act. That law mandates that certain providers that have precedent over others by virtue of owning the communications mechanism, give way to others even if they're competitors.
If the Internet is an information service - and again, there's legal precedent there establishing that it is - then the FCC may not be the party to regulate it after all, but rather the Federal Trade Commission. While it would appear on the surface that information, by design, wants to "be free," an Internet fully under the regulation of the FTC might be free of those regulations that currently mandate fairness among service providers.
Last March, the FCC decided it would open that can of worms, dump it out on the table, and examine all the arguments therein, as nasty as they might be. What is the Internet, anyway, and should the FCC even be regulating it in the first place? The Justice Dept. would answer that last part of the question, no.
But the FCC has already ruled that wireless broadband does indeed fall under the protection of the Telecommunications act, which means it's under FCC jurisdiction. That could mean the DOJ's whole Postal Service argument might have come a bit too late.
Not so fast, though, says the ATR team. "Regulation should be avoided except in those rare instances of market failure (e.g., where competition cannot work because of a 'natural monopoly') or where regulation is necessary to protect a clearly defined and compelling public policy goal that cannot be achieved through competition," the team writes.
"There is neither a sound theoretical nor empirical basis for restricting broadband competition at this time. From a theoretical perspective, differentiated products and pricing can provide consumers (and content providers) a broader array of choices that meets service preferences more effectively and efficiently. Further, such practices can enable greater investment that will speed innovation and development."
Someone has to pay for all that innovation and development. If the FCC continues to be pro-regulation toward the Internet, the ATR division argues, not only will the services be spread out all over the net, but the costs as well. Inevitably, those costs would be passed on to consumers. And when consumers complain, it's the lawmakers who get to hear them...and that noise gets passed right back to the FCC.
"There is reason to believe that the type of regulatory restraints proposed by some commenters under the mantle of 'neutrality' could actually deter and delay investment and innovation," the team goes on, "and result in less choice and higher prices to consumers of Internet services. Proponents of 'net neutrality' regulation do not agree on a definition of what conduct should be prohibited, nor what networks would be regulated (wireline and/or wireless), or even the extent to which pieces of the Internet need to be regulated (just the last-mile or the Internet backbone). The mere fact that a definition of 'net neutrality' remains elusive should give the Commission great pause before imposing regulation."
The DOJ's ex parte filing this morning did not address the issue of whether premium tier service providers under a multi-tier, free enterprise, minimum regulation environment would be more or less willing to pass on their innovation and development costs directly to the consumers, rather than to their would-be competitors.
Last January, at a speech at CES, FCC Chairman Kevin Martin did open the door to the possibility of allowing some kind of tiered access for premium providers. InfoWorld quoted Martin as saying, "I think it's important to realize the operators themselves have an interest in potentially selling tiers of speed and service. If a consumer chooses to buy a lower tier and then tries to access content...and they can't access [it] because they haven't bought enough capacity, well, they're not being blocked from getting access to that."
Martin also said at that time that the absolute definition of "net neutrality" was not a certainty. The DOJ's allusion to Martin's comments are an indication that it isn't exactly barking up a tree, and that it may indeed find a receptive audience.
The DOJ tries to compare the internet to the postal system, stating that it is ok that there are different tiers of service (overnight mail, first class mail, fourth class mail, etc.). But their comparison is idiotic. When you send a package via overnight mail, it doesn't matter to whom you send it. Whether the recipient is General Electric or your Aunt Tillie. The package gets there tomorrow. Without "net neutrality", there's no guarantee you can even see "Aunt Tillie's website", if GE (for example) has paid your ISP to not allow your bandwidth to go there. Or if you haven't paid your ISP extra to reach certain sites. That is the issue, and it is VERY different than the different tiers for overall speed to ALL websites equally (dial up vs. DSL vs. Cable vs. Fiber Optic internet service), which I fully support.
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|Internet neutrality is completely out of the scope of authority and expertise of the US Justice Department. Why isn't anyone asking the question: "Who cares what the Justice Department thinks?" I'll tell you why. The big telephone companies who would benefit from this tier system have been bending over backwards to assist the Justice Department with illegal wiretapping and domestic spying without warrants. The Justice Department supporting such a tier system to benefit these telephone companies is payback for their assistance in illegally spying on U.S. citizens without a warrant.
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|FCC Chairman said "If a consumer chooses to buy
a lower tier and then tries to access content...
and they can't..." Uhh, that's why I dumped dial
up and now pay twice as much for DSL.
Now about network congestion. Would I pay extra
for getting my VOIP packets put to the front of
the queue? If I had to, but I expect they'd make
me pay always, instead of just during congested
times.
And I expect that if I did they would put a lot
less effort into improving bandwidth.
IMO, ICANN regulates the internet and the only
business the FCC has is making sure that wireless
connections don't do any jamming (like creating
dead spots where emergency services radios don't
work and making sure that WKRP doesn't try to
broadcast on the same frequency as WOXY).
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|I just realized something.
If Congress passes a law that says all data on
the internet has to be treated the same we are
are shrewed because that law will make spam
emails, trojans propagating, DOS attacks etc
legally the same as data packets from people
who are visiting Aunt Marin's bridal website
to RSVP or to check out her Bridal Registry.
IMO, that's how much they know.
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|Leave it up to toolie to cheer the destruction of equal access. How his brain works is a biogenetic mystery. The toolies of the world never educate themselves on any issue, so they come on here and other forums and spew and spurt and dribble their opinions until the rest of us gag with laughter. What toolie doesn't get is that technological prioritization and degradation are the same thing — that given limited room on the network, whoever isn't prioritized is by necessity degraded.
Gasbags like toolie (and his friends in the bush administration) would essentially designate one lane on every interstate highway as a "special GM-only lane." You wouldn't see better service, all you'd see is one massive corporate deal after another, all of which would access raise prices everywhere online. If toolie ever read a book, say by Adam Smith, he know that this issue was long dealt with. Should roads, canals, bridges, electric grids, trains be "special" in and of themselves? (In case you're wondering, the answer is no.)
Here's the deal. Network discrimination would be bad for everyone. Companies like Google, Viacom, or Wal-Mart might rush to make deals with every provider to the exclusion of Yahoo, Microsoft, et al. If they need more money (which they don't), just charge more for their service. Otherwise, users will migrate to service providers who do not discriminate.
Once again, toolie doesn't think it through. But then he never does.
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|Otherwise, users will migrate to service providers who do not discriminate.
Hey Genius! That's called Capitalism!
Guess what?
Net Neutrality *isn't*!
Net Neutrality is Government regulation of the market, and it *does not* provide any use other than to *force* an issue that could be easily worked out in in the market itself.
Because...as you said (the only intelligent part of your entire post), if they don't like it, they'll switch to providers that don't discriminate.
Duh??
As usual, your priority of making personal attacks takes precedence over actually *thinking* about what you are saying.
Use your brain, man.
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|Anyone who thinks that "multi tiered" service is going to save anyone any money is full of it. It's just another way of bilking people out of money. If there is really a bandwidth problem, then start charging users a flat fee by the gigabyte. There is absolutely no reason and no excuse to attempt to push small bandwidth websites onto a lower tier to make room for some stupid Paris Hilton video. And make no mistake, THAT is exactly what this is all about.
Paris Hilton will get priority over -insert name of threat to corporatocracy here- It is nothing more than a cynical attempt to dumb down internet users like they've dumbed down tv users. The facts speak for themselves. The track record of tv networks and cable companies over the last 30 years is self evident. If it weren't for CSPAN I wouldn't watch tv at all. Imagine the internet in 20 years if they get their way... It will be just like tv is now, a joke, a sick joke that leads to people being so dumb they cant even find the US on a globe.
Every bit of data that is sent across the web should have the same priority as every other bit. If they get away with this fascist scheme I guarantee this country will see a Holocaust within 5 years. The free internet is the only thing that has saved this country from repeating Germany 1938. You think I'm wrong? Maybe we'll find out...
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|then start charging users a flat fee by the gigabyte
That's one solution...
There is absolutely no reason and no excuse to attempt to push small bandwidth websites onto a lower tier to make room for some stupid Paris Hilton video.
Sure. Porn sites will do quite well. The market supports them. As will large corporations. Small websites? Not so much. Basic principles of Economics, my friend.
Every bit of data that is sent across the web should have the same priority as every other bit.
Right. Because Paris Hilton Vids are just as important as business email, VoIP, and VPN connections. Interesting...
If they get away with this fascist scheme I guarantee this country will see a Holocaust within 5 years. The free internet is the only thing that has saved this country from repeating Germany 1938. You think I'm wrong? Maybe we'll find out...
ROFLMAO!! That was *awesome*. I haven't seen an absurd over-reaction that amusing in quite some time. Thank you!
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|If Net Neutrality is struck down, and a "tiered" internet is created, then the practices of allowing "municipality monopoly" for anyone who provides internet access (like cable and DSL companies) should be abolished. If the FCC is making the argument that a tiered internet will foster competition, then how can you have "competition" if all a city is able to recieve is 1 DSL provider, 1 Cable provider and they both provide sub-par speeds?
As an example: In the suburb I live in, there is only 1 cable tv provider and they provide 1.5down/384up Cable internet. The DSL provider provides the exact same speed. Yet *one mile south* of my location at home, another cable provider gives out 10mbit down 1mbit up for the SAME PRICE, but they are prohibited from entering and competing in my suburb because of municipality monopoly rights.
How is Net Neutrality helping foster competition in my town, FCC?
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|If Net Neutrality is struck down, and a "tiered" internet is created, then the practices of allowing "municipality monopoly" for anyone who provides internet access (like cable and DSL companies) should be abolished.
IMO, this should happen regardless of the outcome of Net Neutrality.
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|As long the DOJ likes the post office analogy they need to acknowledge the privacy issue.
When the post office has more mail than it can deliver does it open your mail to see which letters are important enough to deliver right away and which letters can wait till tomorrow? NO that's against the law. Those letters belong to the people they are addressed to. It doesn't matter if they are in a post office or a mail truck they are not the property of the post office.
Just because my data packet is on a carrier's network should not give them the authority to open my packet, look at my data, and decide how fast it should it be delivered.
I expect my data to be kept private.
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|When the post office has more mail than it can deliver does it open your mail to see which letters are important enough to deliver right away and which letters can wait till tomorrow?
They're not opening your mail. They're charging for next-day delivery.
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|Today nobody is paying the carriers extra "to make sure nothing bad happens to your data" There will no demand for priority delivery if standard delivery is not degraded.
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|OK.
First, you're trying to imply they are purposefully going to alter/damage your data. This is patently absurd.
Second, no-one's paying for it because it isn't offered. Plenty of people, however, including my self, are paying a premium for higher bandwidth to support one or two services we use frequently that require the added bandwidth.
If someone were to offer the standard speeds in my area for basic traffic and prioritize my data for the services I need the bandwidth for, for less than I pay now, I see no harm in it.
Everyone seems to be under the impression that this can only be a bad thing.
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|Conversely, you only see this as a good thing. History has shown those with power will abuse it. The telcos have demonstrated this time and time again.
The only thing we can be certain of is the USA will continue falling behind in the telecommunications world and continue paying way more for worse service.
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|It's not that the telco's have abused it, it's that any proper business model for growth or innovation has been effectively hamstrung by the government regulation.
It's not much of a defense, to be sure, considering some of their gross failures to abide by agreements with the states (rural access), but...
Let the blame lie where most of it should: Government regulation of the market.
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|Read The Fine Article
"I think it's important to realize the operators themselves have an interest in potentially selling tiers of speed and service. If a consumer chooses to buy a lower tier and then tries to access content...and they can't access [it] because they haven't bought enough" -- FCC Chairman Kevin Martin
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|When somebody pays for an Internet connection that is exactly what they should get nothing more nothing less.
When companies try to sell you something that has been adulterated that is exactly when the government should step in and make sure it's citizens are getting the connection to the Internet they are paying for.
All the consumers and suppliers just want to buy bandwidth, faster slower what ever they need. Only the carriers see a need for some complicated tiered system based on the kind of data and type of services.
It is just an attempt to grab a piece of the action from the people who have made the Internet successful.
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|*laughs*
Hell, I'd jump at that if that is what was truly offered.
I pay, right now, for enormous amounts of "always on" bandwidth to my home that, due to the need for sleep and work, I rarely ever use.
If I was only required to pay for a bandwidth "allotment", I'd imagine my costs would drop considerably.
I already use several services that charge by amount of bandwidth used. I would *love* to see that model applied to internet access.
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|When somebody pays for an Internet connection that is exactly what they should get nothing more nothing less.
Sure. No problem. Let the market decide if that's the way to go. Pull off *all* government regulation and let the market truly decide if they want an unmanaged chaotic jumble, or managed, reliable, and dependable services.
But don't for one second try and tell me this is the way it *has* to be. That's ridiculous.
I'll take the options, any day.
When companies try to sell you something that has been adulterated that is exactly when the government should step in and make sure it's citizens are getting the connection to the Internet they are paying for.
When the market decides one method is better than another, or a business tries to introduce a new model of business, the Gov needs to step in and tell everyone how it should be?
That's rich.
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|"Liberty and justice for. . . all with control of the means of production."
Just another fine example of the current administrations unending crusade to urinate on the constitution.
Unfettered control of the lines of communications for the few that own most of the internet's pipe will be repaid someday by unfettered control of the information that flows through those pipes by those awarding that original control.
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|Yeah, I was re-reading the constitution and Net Neutrality is DEFINITELY in there! Those guys were soooo ahead of their time!
Once again, morons trying to regulate something that doesn't need regulation. It isn't broke, so don't try and fix it. Net neutrality has always been a sham.
It's nothing but a neo-socialist power grab. 'Cause it's all about the corporations taking away our "rights" man! Take off your Che Guevera t-s*** and trim your beard you filthy commie.
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|neo-socialist?
I thought neo-socialism was the emerging tendency for corporations to suck off the government teat once they had totally screwed up their business. I think Jim Cramer's recent performance, begging the Federal reserve to cut interest rates to bail out a bunch of crooked (or stupid) investors, is the latest good example.
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|Net Neutrality does not change the Internet, that's the way it works now. Recognizing the value of an non-discriminating network means we don't let the carriers break the Internet and then charge extra for bringing it back.
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|Bandwidth is a product. Products evolve, distribution methods change. The ability to buy the services you want and not pay for the services you won't ever use isn't "breaking the internet", it's simply offering an alternate method to obtain access tot he portions of it you want.
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|You are letting the carriers confuse you. There is a big difference between a faster connection and packet discrimination.
Nobody has a problem with paying more to get a faster connection.
What these carriers want to do is get people to pay more based on the kind and the source of data they receive.
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|What these carriers want to do is get people to pay more based on the kind and the source of data they receive.p
...and you imply this comes with no benefits to the end-user.
Have you ever used consumer (Not commercial) grade VoIP? It's utter crap.
Again, Why should I pay more for more bandwidth so that *hopefully* my home VoIP will get through when I can just pay to have that "service" (or data, or source, or whatever you want to call it) prioritized, thus allowing me to lower my bandwidth back to the standard (and thus my payments)?
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|The Internet does not care if a packet is VOIP, bittorrent, iTunes, or BetaNews. Adding packet discrimination does not increase the capacity or performance of Internet, just the number of things the carriers can try to bill for. Do you seriously think they will use it to lower your bill?
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|The Internet does not care if a packet is VOIP, bittorrent, iTunes, or BetaNews.
That's the problem. I Betanews packet getting held up is fine. I VoIP packet being dropped will cause many more problems.
Adding packet discrimination does not increase the capacity or performance of Internet,
Never said it did. But it will allow the "premium" packets greater priority on the network, thus improving the performance and reliability of whatever service they provide (eg: VoIP).
just the number of things the carriers can try to bill for.
It's all about the money. You can't even begin to consider having the notion to accept that there might be benefits to the end users. Kind of makes arguing with you pretty damned pointless.
Do you seriously think they will use it to lower your bill?
Example:
3 tiers currently exist in my area: 2mbit, 5mbit, and 10mbit. I don't need anyhting at home but the 2mbit. Unfortunately, because my VoIP got constantly interrupted, dropped, corrupted on the 2mbit plan, I upgraded...and then again to the 10mbit, where it actually performs somewhat decently. If they can provide QoS on VoIP traffic for a additional fee, I can then drop my plan back to 2mbit, thus saving about $100 a month.
I *highly* doubt the VoIP QoS fee is going to surpass $100.
So yes, I do see it lowering my bill.
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|"Someone has to pay for all that innovation and development."
LOL. So Comcast is making record profits for the past several quarters and they have no money? The telco monopolies are why the USA has such crappy internet service. They are why we pay such high prices for slow connections.
There is no innovation in the USA telco industry
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|No innovation? Checked your cable or phone bill recently?
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|True, they did something to make my bill go up faster than inflation.
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|First they give the telecoms and cable companies a monopoly, now they tell them that they can do whatever they want with it. I wonder how much more crap customers are going to take from these whiny billionaires?
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|Smoke some more crack...
The only thing NET NEUTRALITY will do is to ensure equal and fair access to all. What the hell are you guys smoking?
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