Just last week, while I was attending a technology event in New York, the guests were asked to provide a video message for Chairman Pai of the FCC. The cameraman fully encouraged profanity, and so, in full Bostonian style, I looked at the camera and said, “Tell him he has his head up his ass.”
In all fairness to Mr. Pai, he is certainly not alone in his anal-cranial inversion. Having played on the Internet since the mid-1980s, I find that the hysteria surrounding this ruling reeks of nonsense from both idealists in the free-market camp, as well as the free-internet crowd.
Perhaps it’s finally time to unpack this issue in a more dispassionate way by just looking at the facts and asking the really tough questions.
No Fast Lanes, Just Toll Roads
The telecom crowd has been breathless about “fast lanes” since the 90s, when the IETF started specifying “differentiated services” and IP-TOS (Type Of Service) into the base protocols that run the Internet. Caught in a race-to-zero commoditization curve, the prices of Internet bandwidth were going down year after year, and these guys envisioned they would be able to give some customers better service in exchange for more profitable pricing, rather than have to constantly upgrade their services to stay competitive.
Twenty odd years later, these differentiated services have been a bust. They will continue to be a bust, no matter how much deregulation you apply to the industry. They are just a bad idea.
There are at least several very big reasons for this:
- First, the cost of bandwidth continues to go down. At any given point, it is easier, better, and more cost effective to get a faster pipe rather than pay extra for premium service at lower speeds. Hence, the only sustainable way to charge a premium is to sell higher bandwidth.
- Second, if you need really good service, the barriers to build your own better network are surprisingly low. Numerous companies have come in to offer low latency backbones and CDN technologies that make more financial sense than 90s-era “fast lanes.” This means that those who need a fast lane will build it themselves.
- Finally, the cost structures put in place by the very same telcos that complain about regulation make this an even easier choice. The cost of a private link at Gigabit speeds is a fraction of the cost of Gigabit public IP transit. This is largely because customers can avoid the peering fees (e.g., exorbitant profits) that are embedded in Internet access in the U.S. At the same time, private connections give you fantastic performance and optimal latency that can’t be delivered on public transit.
The end result is that if you are a telco exec hoping you can dust off your diff-serv business plan from 1999, you really need some fresh air. Similarly, it’s not worth contorting yourselves out of fear and anger for Internet “Fast Lanes.” As long as raw bandwidth prices continue to drop and applications continue to be developed that need the higher speed, it’s very hard to see how this idea can catch on.
It Sucks to Be a Courtesan When Content Is King
Two decades after the commercialization of the Internet, no one is more anachronistic than the media business. Their desired strategy is the same as it was in the Eisenhower era: They own the bandwidth, they own the content, they extract rent from consumers and advertisers by giving them access. Except the world doesn’t work that way anymore. The bandwidth is decoupled from the content on the Internet. Facebook comes along and captures all the eyeballs, as does Google. Amazon and eBay become dominant exchanges for goods. YouTube and Netflix deliver video whenever the customer wants, rather than on rigid schedules. Perhaps it isn’t surprising then that Comcast and Verizon are mad that all they get is a lousy $19.99 per month.
It’s hard to look at this FCC ruling and not see the machinations of a bunch of over-the-hill James Bond villains who want to bring back the good old days. The telco business has basically taken out every single independent media outlet in preparation for the day when they can more profitably extract rents from media properties. Shouldn’t Comcast be able to stream you higher resolution video of Saturday Night Live if you are on Comcast wires? Well, if Netflix can do it, why not Comcast?
This is all fine in principle, except that the telecom industry has done nothing but misbehave in this area at every opportunity over the last 20 years. Time and time again, they have shown a preference for shutting down content and technology providers on their networks to advance their product agenda.
The examples are endless:
- In 2005, the FCC fined Madison River Telecom for blocking Vonage’s Internet voice service.
- In 2012, AT&T blocked Apple’s FaceTime and only backed off when the FCC was going to intervene.
- In the early 2000’s Cox and AT&T were blocking VPNs and threatening federal prosecution to those who had the temerity to put up a WiFi access point in their homes.
The evidence of nefarious intent is overwhelming. When Chairman Pai and his shills tell you that the ruling is about a free and open Internet, they are either being disingenuous or they have their heads up their asses.
Which brings us to the real problem with this ruling: It is obvious that the folks in Washington wish to abdicate responsibility for regulating public IP networking to the courts. Note that these are the same people who chafe at judges who issue rulings that indirectly “legislate” from the bench on certain social issues. Legislation via lawsuit is highly suboptimal, and yet this is where we are heading unless Congress writes laws that govern behavior.
If you believe that the Internet should continue to be a platform for innovation in media and technology, then you need to push your lawmakers to legislate the rules of the road. Given the importance of this issue, I don’t see the current state of affairs continuing for very long.
That said, now is the time for a little activism.
What do you think? Tweet me @LazVek.