A Rebuttal to BroadbandforAmerica’s letter to the FCC regarding Regulation for the Internet:
For more than a decade, America’s broadband companies (including companies that depend on the broadband ecosystem) have worked to ensure that their customers can enjoy access to world- class broadband services consistent with the Commission’s clearly articulated core Internet freedoms.
As a result, the US is ranked 28th of 211 in the world in percentage of population with Internet access, 24th of 193 in Internet broadband subscriptions, and has dropped in place in these tables every year since the year 2000.
An open Internet is central to how America’s broadband providers operate their networks, and the undersigned broadband providers remain fully committed to openness going forward. We are equally committed to working with the Commission to find a sustainable path to a lawful regulatory framework for protecting the open Internet during the course of the rulemaking you are launching this week. That framework must promote investment and opportunity across the Internet economy, from network providers to app developers, for the benefit of American consumers.
The Internet providers are conflating different topics, perhaps in an effort to show that only they understand the subject well enough, and that it is too complicated for others to understand. This would be convenient for their argument, but unfortunately for them, it’s not true. Let’s take their conflation apart, and look at the items one by one.
Some definitions are required here; firstly, let’s restrict the conversation to the actual physical network of networks that makes up the Internet. Our definition is that those providing IP routing services are routing providers (AT&T, Time Warner, etc), and that the routing should be subject to Title II of the Telecommunications Act. We’d expect the routing providers to expand the capacity and reach from their own revenues, and not from external investors. To reach the last mile providers, the ISPs should be included as regulated under Title II also.
Regulation is required because the market is not vigorous enough to be self-policing. At best, there is a duopoly of providers, neither of whom are involved in vigorous competition; indeed, the telcos provide mostly low-speed Internet to homes and businesses, while the cablecos provide high-speed Internet. In this market, there is little true competition, as evidenced by the recent request by one provider to abandon its twisted-pair cable plant.
Verizon in its Title II serving areas does supply fiber optic based connections to the Internet, which are capable of great speeds. Our experience is Verizon erects every objection possible to providing FIOS service to a commercial unit in a strip mall, even when other businesses in a strip mall are already served by FIOS.
Time Warner refused to run cable to the same unit, even though the unit next door was served by Time Warner Cable TV.
We propose no regulation for application providers such as Google and Facebook, which is the most rapidly expanding and dynamic arena in the Internet today. It is not the applications that need to be regulated. It is the physical network.
In recent days, we have witnessed a concerted publicity campaign by some advocacy groups seeking sweeping government regulation that conflates the need for an open Internet with the purported need to reclassify broadband Internet access services as Title II telecommunications services subject to common carrier regulation. As demonstrated repeatedly, the future of the open Internet has nothing to do with Title II regulation, and Title II has nothing to do with the open Internet. As it did in 2010, the Commission should categorically reject efforts to equate the two once and for all.
We disagree with this blanket assertion,. The Open Internet has everything to do with regulating the routing providers under Title II.
The high stakes of this debate have already been demonstrated. Today’s regulatory framework helps support nearly 11 million jobs annually in the U.S. and has unleashed over $1.2 trillion dollars of investment in advanced wired and wireless broadband networks, as well as an entirely new apps economy. We see an average of over $60 billion poured into cable, fiber, fixed and mobile wireless, phone, and satellite broadband networks each and every year. And broadband gets better every year: the average broadband speeds jumped 25 percent in 2013 alone, highlighting there are no slow lanes in today’s Internet.
We don’t understand why regulation would affect this. The routing providers are at such a point in their deployment cycle where while, they will increase capacity and reach, their focus must shift from initial deployment to cost control and cost containment, because their business is mature. We are not proposing the regulation of the most dynamic area of the Internet, the application providers. We believe that regulation needs to be applied at layer 3 of the OSI network model. It is neither practical nor necessary to regulate above layer 3. Applications are in layer 7 of the model.
Yet even the potential threat of Title II had an investment-chilling effect by erasing approximately ten percent of some ISPs’ market cap in the days immediately surrounding the Title II announcement in 2009/10. Today, Title II backers fail to explain where the next hundreds of billions of dollars of risk capital will come from to improve and expand today’s networks under a Title II regime. They too soon forget that a decade ago we saw billions newly invested in the latest broadband networks and advancements once the Commission affirmed that Title II does not apply to broadband networks.
That was when the Internet was not the network it is today. The routing companies have been extraordinarily successful in displacing their old TDM technologies with IP technologies, so much so that IP is the base network protocol for much traffic today, and is set to become the dominant network traffic for the foreseeable future. Because we want the fundamental network for the US to be stable financially, we believe the guaranteed return from being regulated monopolies is the best mechanism to assure stability of the country’s communication network.
Reclassification of broadband Internet access offerings as Title II ? telecommunications services would impose great costs, allowing unprecedented government micromanagement of all aspects of the Internet economy. It is a vision under which the FCC has plenary authority to regulate rates, terms and conditions, mandate wholesale access to broadband networks and intrude into the business of content delivery networks, transit providers, and connected devices. Indeed, groups pushing the Title II approach fail to acknowledge that their path forward is in fact a slippery slope that would provide the Commission sweeping authority to regulate all Internet- based companies and offerings. In defending their approach, Title II proponents now argue that reclassification is necessary to prohibit ?paid prioritization, even though Title II does not discourage—let alone outlaw— paid prioritization models. Dominant carriers operating under Title II have for generations been permitted to offer different pricing and different service quality to customers.
What cost would be imposed? How many more network technicians, engineers and installers are required? And their assertion about providing different quality of service to customers, if they mean under Title II, is simply untrue. EVERYONE received the same QUALITY of service; people or businesses that wanted MORE telecommunications were able to buy more, whether it was an extra phone line, or a T-1 span which could carry 24 phone conversations (or the equivalent, in data). The phone companies were required to ensure that all telephone subscribers received the same quality of telephone call and service.
We do not suggest regulating “all Internet based companies and offerings.” We recommend regulating IP routing, the basis for the transmission network to be regulated. Their assertion is overbroad and we believe both inaccurate and a form of deflection from the issues at hand. We note that the overreaching language of this paragraph may indicate a desire to conflate regulation to include application developers, when that is neither necessary nor desirable. It is interesting to see these network providers seeking to broaden their argument to include groups for which regulation is not needed, perhaps to increase their support group, and almost certainly to scare regulators in an effort to prevent being declared Title II suppliers. If regulation can be made to appear too complicated to be feasible, they win. Unfortunately for them, regulation at level 3 of the OSI network layer is not only feasible – it has been done before, in the case of monopoly telephone suppliers – and it worked well, to the benefit of all!
Not only is it questionable that the Commission could defensibly reclassify broadband service under Title II, but also such an action would greatly distort the future development of, and investment in, tomorrow’s broadband networks and services. America’s economic future, as envisioned by President Obama and congressional leaders on both sides of the aisle, critically depends on continued investment and innovation in our broadband infrastructure and app economy to drive improvements in health care, education and energy. Under Title II, new service offerings, options, and features would be delayed or altogether foregone. Consumers would face less choice, and a less adaptive and responsive Internet. An era of differentiation, innovation, and experimentation would be replaced with a series of ?Government may I? requests from American entrepreneurs. That cannot be, and must not become, the U.S. Internet of tomorrow.
Again, the authors and signatories conflate application and routing. The application space is vibrant and evolving. The routing area was very dynamic 10 years go, but is much more mature now. Regulation needs to be done at the NETWORK LAYER of the OSI model, which involves telcos, cablecos, and ISPs. It does NOT include the application layer of the OSI model, level 7. Again, we assert that it is neither practical nor desirable to regulate at any layer above the physical network. Regulation should be limited to the physical network layer (layer 3) and below (layers 1 & 2).
We should seek out a path forward together. All affected stakeholders need and want certainty and an end to a decade of legal and political wrangling. All parts of the Internet community should be focused on working together to develop next-generation networks, applications, and services that will be critical to our global competitiveness and enhance opportunities for all Americans. Yet, those demanding the Title II common carrier approach are effectively compelling years—if not decades—of endless litigation and debate. The issues at stake would include not simply regulating the Internet under Title II, but also which specific provisions of the monopoly-era statute apply to modern broadband networks. Collectively, we would face years more of uncertainty and, as a result, an economy deprived of the stable regulatory framework needed to promote future investment, innovation and consumer choice.
We should look forward to universal and equal access, with Internet routing priced by use, for example: Netflix needs to pay for the bandwidth they use, especially if their success requires capital investment by the routing carriers. They should not be creating an externality which they want other network providers to fund.
As it begins its rulemaking process, the Commission should reaffirm its commitment to the light- touch approach that has ensured America’s leadership throughout the Internet ecosystem, from networks to services, from applications to devices. The U.S. experience was not a foregone conclusion. It was the result of courageous and bipartisan leadership that rejected old regulatory mandates in favor of a new, nimble paradigm of government oversight. We urge you to continue down that path at this critical juncture.
This juncture is critical. The routing portion of the Internet needs to achieve the same coverage and universality as envisioned by the telephone network in 1934. The mechanisms and public guidance provided to the telephone carriers at that time should be applied to Internet routing carriers of today. Just in case the carriers desire to claim that the regulations are out of date, we remind you that the regulations were updated in 1996, and can be applied perfectly well to the physical network that is replacing the telephone network – the Internet.
Image by DonkeyHotey released under a Creative Commons license.