A Post Net Neutrality World Order

Yesterday, as expected, the Federal Communications Commission repealed 2015’s Open Internet Rules, also known as ‘net neutrality’. Much ink has been spilled (or keys tapped) on this issue, including my own Techpinions piece two weeks ago, arguing about the paradoxy of repealing Network Neutrality, while at the same time blocking AT&T’s acquisition of Time Warner.

I see credence on both sides of the Network Neutrality argument, and I tend to agree with Jon Leibowitz’s Wall Street Journal op-ed yesterday that the sky didn’t fall when Title II was imposed in 2015, nor will it now that it has been repealed.

So, as this continues to be litigated over the coming months, it might be a good time to think about the best protections from anticompetitive practices, while recognizing the rapid changes occurring in content, digital media, and communications. In this “Post Net Neutrality World Order”, I urge the major actors in the game—service providers, content providers, regulators—to adopt the following Code of Conduct.

1. Task 1: Read and adopt the words of AT&T’s Senior Vice President Bob Quinn, who pledged in a November blog post that “We Will not block websites, degrade internet traffic based on content, [or] unfairly discriminate in our treatment of Internet traffic”. This, in principle, is now in the remit of the Federal Trade Commission, which in the past has been fair and balanced on this issue.
2. Positive Practices Are More Permissible Than Negative Practices. It’s not that big a deal if AT&T zero-rates content DTV content for its wireless subscribers, or offers some attractive bundles. It’s more concerning if engage in a practice to slow down services for subscribers that are competitive with DTV. Similarly, on the B2B side of the equation, there’s a good case for ‘fast lanes’ in some instances. ‘Slow lanes’ will be harder to justify.
3. Refrain From Practices Clearly Impinge On the Idea of the Open Internet. Some of the biggest concerns have to do with the potential for service providers to take a “cable” approach to the Internet, such as charging for access to specific sites. It will take only one or two airline-esque practices like this to set us back.
4. Recognize that Wireless Is different than Fixed. I’ve long argued that the FCC should look at wireless through a different lens, when compared to broadband. Wireless services will forever be capacity constrained, even in a 5G world. That’s why ‘unlimited’ plans always come with an asterisk. There have been practices such as throttling and zero rating, where regulators, even in a Title II world, treaded lightly. New services such as LAA, and the concept of network slicing will introduce more opportunities to offer tiers of service.
5. There’s Nothing Wrong With Tiers of Service. It’s 2020, and Nintendo introduces a new, multi-player online virtual reality game requiring faster speeds and lower latencies. So they pay some sort of ‘fast lane’ surcharge to a service provider, some of which gets passed on to the consumer. I don’t see anything wrong with that. Even though more and more households might be able to get 1 GB services, they might not necessarily need Or need them all the time.
6. DOJ meet FCC, FCC Meet DOJ. We have to work toward a broader policy framework. As I argued in an earlier column, repealing network neutrality and blocking AT&T-Time Warner don’t seem to be coming from the same thought process (yes, I recognize that these are handled by different agencies). That said, we’ve seen more practices in the content business that have been detrimental to consumers—DISH standoffs with networks, Amazon-Google—than any violations of Open Internet rules.
7. Be Transparent. There are going to be situations where some of the practices that have been the focus of those in favor of greater regulation make sense, given business realities or this changed landscape. This is where the FTC could step in if the service providers are not more proactive themselves.

More broadly, the tectonic changes occurring in our communications, digital media, and content landscape beg for a broader strategic review of our policy framework. This is one of the reasons there’s been a call for Congress to legislate this, rather than have it be in the hands of the FCC, whose philosophy could change every four years. The 1996 Telecom Act seems increasingly outmoded, as it fails to properly account or adjust for, the emergence of wireless broadband (LTE, 5G), smartphones, the rise of OTT and streaming, and consolidation in the content landscape (Comcast-NBC Universal, AT&T-Time Warner, Disney-Fox). It seems like right now, we’re dealing with all of these changes on a deal-by-deal basis: impose NN and then repeal it; allow Comcast-NBC/Universal but block AT&T-Time Warner; allow Internet companies to do things that telecom companies can’t. In this giant Venn diagram of telecom and the Internet, you’ve got AT&T and Verizon owning important content assets, while Google and Facebook provide broadband services and OTT communications and messaging services.

The other thing this all points to is that we need more competition in broadband. Currently, only 50% of households have access to more than one decent broadband provider. A more competitive broadband market would more naturally prevent some of the practices we’re now trying to legislate our way out of. There’s the potential for some change here with the approach of 5G and fixed wireless. A 2020 Telecom Act might, for example, revisit the rules around network resale, which has led to more robust broadband competition in other countries.