Has the FCC Created a Stone Too Heavy for It to Lift?

After five years of bickering, the FCC passed an Open Internet Report & Order on a partisan 3-2 vote this week. The order is meant to guarantee that the Internet of the future will be just as free and open as the Internet of the past. Its success depends on how fast the Commission can transform itself from an old school telecom regulator wired to resist change into an innovation stimulator embracing opportunity. One thing we can be sure about is that the order hasn’t tamped down the hyperbole that’s fueled the fight to control the Internet’s constituent parts for all these years.

Advocates of net neutrality professed deep disappointment that the FCC’s rules weren’t more proscriptive and severe. Free Press called the order “fake net neutrality,” Public Knowledge said it “fell far short,” Media Access Project called it “inadequate and riddled with loopholes,” and New America Foundation accused the FCC of “caving to telecom lobbyists.” These were their official statements to the press; their Tweets were even harsher.

Free marketers were almost as angry: Cato denounced the order as “speech control,” Washington Policy Center said it “fundamentally changes many aspects of the infrastructure of the Internet,” and the Reason Foundation said it will lead to “quagmire after quagmire of technicalities, which as they add up will have a toll on investment, service and development.”

Republican Congressional leaders made no secret of their displeasure with the FCC’s disregard for their will: Rep. Fred Upton (R, Michigan,) the incoming Commerce Committee Chairman called it a “hostile action against innovation that can’t be allowed to stand,” Rep. Greg Walden (R, Oregon,) incoming Chairman of the Subcommittee on Communications and Technology called it a “power grab,” and vowed to hold hearings to overturn it, while Sen. Kay Bailey Hutchison (R, Texas,) Ranking Member of the Senate Commerce, Science, and Transportation Committee said the order “threatens the future economic growth of the Internet.” Setting Internet policy is indeed a Congressional prerogative rather than an agency matter, so the longer-term solution must come from the Hill, and sooner would be better than later.

Contrary to this criticism and to snarky blogger claims, not everyone was upset with the FCC’s action, coming as it did after a year-long proceeding on Internet regulation meant to fulfill an Obama campaign pledge to advance net neutrality. The President himself declared the FCC action an important part of his strategy to “advance American innovation, economic growth, and job creation,” and Senator John Kerry (D, Massachusetts) applauded the FCC for reaching consensus.

Technology industry reaction ranged from positive to resigned: Information Technology Industry Council President and CEO Dean Garfield declared the measure “ensures continued innovation and investment in the Internet,” TechNet supported it, and National Cable and Telecommunications Association head Kyle McSlarrow said it could have been much worse. At the Information Technology and Innovation Foundation, we were pleased by the promises of a relatively humble set of the rules, less so with the final details; we remain encouraged by the robust process the FCC intends to create for judging complaints, one that puts technical people on the front lines. In the end, the order got the support of the only majority that counts, three FCC commissioners.

Most of us who reacted favorably acknowledged the FCC’s order wasn’t exactly as we would have written it, but accepted it as a pragmatic political compromise that produces more positives than negatives. The hoped-for closing of the raucous debate will have immense benefits on its own, as simply bringing this distracting chapter in the Internet’s story to an end will allow more time for sober discussion about the directions we’d like the Internet to take in its future development. There is no shortage of policy issues that have been cramped by the tendency to view net neutrality as the one great magic wand with the power to solve all the Internet’s problems: The FCC has work to do on freeing up spectrum for mobile networking, the Universal Service Fund needs to be reformed, and the National Broadband Plan needs to be implemented.

If the FCC’s approach proves sound, it might well be exported to other countries, forming the basis of a consistent international approach to the oversight of an international network developed on consistent standards of its own. Such an outcome would have positive consequences for the Internet standards community, which has its own backlog of unfinished business such as scalable routing, congestion management, security, and the domestication of peer-to-peer file sharing and content delivery networks to resolve. This outcome is far from inevitable; last minute rule changes make it less likely than it might have been.

The most important thing the FCC can do in implementing its system of Internet oversight is to elevate process over proscriptive rules. The traditional approach to telecom regulation is to develop a thick sheath of regulations that govern everything from the insignias on the telephone repair person’s uniform to the colors of the insulators on RJ11 cables and apply them in top-down, command-and-control fashion. Many of those on the pro-net neutrality side are steeped in telecom tradition, and they expected such an approach from the FCC for the Internet; theirs are the angry reactions.

But the Internet isn’t a telecom network, and a foot-high stack of regulations certainly would produce the negative consequences for innovation and progress the FCC’s critics have forecast. The appropriate way to address Internet regulation as to follow the model that the Internet has developed for itself, based on a small number of abstract but meaningful principles (each of which is subject to change for good reason) applied by a broad-based community of experts in a collaborative, consultative setting. Internet standards are not devised in an adversarial setting populated by angels and devils locked into mortal combat; they come from a process that values “rough consensus and running code.”

The specifics of the FCC’s order nevertheless give pause to those well-schooled in networking. A few hours before the Commission’s vote, Commissioner Copps persuaded Chairman Genachowski to reverse the Waxman Bill’s presumption regarding the premium transport services that enable Internet TV and video conferencing to enjoy the same level of quality as cable TV. Where the early drafts permitted these services as long as they were offered for sale on a non-discriminatory basis, the final rule arbitrarily presumes them harmful.

The order makes hash of the relationship of the content accelerators provided by Akamai and others to the presumptively impermissible communication accelerators that ISPs might provide one day in order to enable HD group video conferencing and similar emerging applications. The Commission majority fears that allowing network operators to offer premium transport to leading edge apps will put the squeeze on generic transport, but fails to consider that such potential downsides of well-accepted technical practices for Quality of Service can be prevented by applying a simple quota limit on the percentage of a pipe that can be sold as “premium.” This fact, which is obvious to skilled protocol engineers, goes unmentioned in the order.

The poor reasoning for this rule casts doubt on the FCC’s ability to enforce it effectively without outside expertise. By rejecting Internet standards such as RFC 2475 and IEEE standards such as 802.1Q that don’t conform to the telecom activists’ nostalgic, “all packets are equal” vision of the Internet, the FCC chose to blind itself to one of the central points in Tim Wu’s “Network Neutrality, Broadband Discrimination” paper that started the fight: A neutral Internet favors content applications, as a class, over communication applications and is therefore not truly an open network. The only way to make a network neutral among all applications is to differentiate loss and delay among applications; preferably, this is done by user-controlled means. That’s not always possible, so other means are sometimes necessary as well.

All in all, the Commission has built a stone too heavy for it to lift all by itself. The rules have just enough flexibility that the outside technical advisory groups that will examine complaints may be able to correct the order’s errors, but to be effective, the advisors need much deeper technical knowledge than the FCC staffers who wrote the order can provide.

It’s difficult to ask the FCC – an institution with its own 75 year tradition in which it has served as the battleground for bitter disputes between monopolists and public interest warriors – to turn on a dime and embrace a new spirit of collaboration, but without such a far-reaching institutional transformation its Internet regulation project will not be successful. Those of us who work with the FCC are required to take a leap of faith to the effect that the Commission is committed to transforming itself from a hidebound analog regulator into a digital age shepherd of innovation. Now that the Open Internet Report & Order has passed, we have no choice but to put our shoulders to the rock to help push it along. There’s no turning back now.

[cross-posted from the Innovation Policy Blog]

Speaking today in DC

This event will be webcast today:

ITIF: Events

ITIF Event: Designed for Change: End-to-End Arguments, Internet Innovation, and the Net Neutrality Debate

Many advocates of strict net neutrality regulation argue that the Internet has always been a “dumb pipe” and that Congress should require that it remains so. A new report by ITIF Research Fellow Richard Bennett reviews the historical development of the Internet architecture and finds that contrary to such claims, an extraordinarily high degree of intelligence is embedded in the network core. Indeed, the fact that the Internet was originally built to serve the needs of the network research community but has grown into a global platform of commerce and communications was only made possible by continuous and innovative Internet engineering. In the new ITIF report “End-to-End Arguments, Internet Innovation, and the Net Neutrality Debate,” Bennett traces the development of the Internet architecture from the CYCLADES network in France to the present, highlighting developments that have implications for Internet policy. This review will help both engineers and policy makers separate the essentials from the incidentals, identify challenges to continued evolution, and develop appropriate policy frameworks.

See you there.

New Broadband Czar

Trusted sources tell me Blair Levin is headed back to the FCC to be the Commissar of the People’s Glorious Five Year Plan for the Production of Bandwidth. He’d be a wonderful choice, of course, because he’s a bright and humorous fellow with no particular delusions about what he knows and what he doesn’t know.

I haven’t been enthusiastic about this National Broadband Plan business myself, but if we’re going to have one, we’re going to have one, and it should be the best one on the planet. And no, that doesn’t mean that the object of the exercise is for America’s broadband users to have big foam number 1 fingers, it means we do something sensible with the people’s tax dollars.

The plan should figure out a meaningful way to measure progress, and it should fund some of the efforts to create the next-generation network that will one day supersede the TCP/IP Internet. We all love TCP/IP, mind you, but it’s a 35-year-old solution to a problem we understand a lot better today than we did in 1974. We’ll get a chance to see just how much vision the New FCC has by their reaction to this proposal.

UPDATE: Press reports are dribbling out about the appointment.

Finally, nominees for the FCC

Amy Schatz of the WSJ reports that a deal has been struck to move the new nominees into the FCC:

Work has slowed to a crawl at the Federal Communications Commission, since President Barack Obama’s pick to be chairman, Julius Genachowski, is still awaiting Senate confirmation.

But the logjam could be broken soon: Republicans appear to have settled on two people to fill the GOP seats on the five-member board, paving the way for a confirmation hearing in June. Senate Republicans have agreed on former Commerce Department official Meredith Attwell Baker and current FCC Commissioner Robert McDowell, officials close to the process say.

This is good news. McDowell has been the best of the FCC commissioners since his appointment, and allowing him a second term is a very bright move. Uncertainty over McDowell’s future was the cause of the slowdown in confirmation hearings, since these things go forward with the whole slate of nominees. So the new FCC is going to look this this:

Chairman Genachowski, new blood
Dem Copps, old hand
Dem Mignon Clyburn, new blood
Rep McDowell
Rep Meredith Baker, new blood

It’s interesting that Baker and Clyburn are both nepotism candidates, as Clyburn is the daughter of powerful Congressman James Clyburn and Baker is the daughter-in-law of the Bush family’s consigliere, James Baker. That’s not necessarily a bad thing, as the best Chairman of recent times was Colin Powell’s son, and neither of the daughters is particularly unqualified. But if you want to get a laugh out of Blair Levin, the former “sixth commissioner” who wasn’t nominated, tell him you understand that he’s not qualified to serve on the FCC because his daddy’s not in politics. You won’t get a laugh exactly, more like a moan.

The first item of business for the nominees, once they’re confirmed, will be the list of 120 questions Copps put to the world. Good luck to the Commission with that.

FCC Comments due in National Broadband Plan

See IEEE Spectrum for a few observations on the FCC’s request for comments on the National Broadband Plan:

Comments are due Monday, June 8, at the FCC on the National Broadband Plan (NBP.) The Notice of Inquiry lists some 120 questions that the Commission would like filers to address, running the gamut from goals and benchmarks to open access to privacy to entrepreneurial activity to job creation. Anyone who compiles a list of so many questions clearly hasn’t given much thought to the problem under discussion, so it’s clear upon reading the NOI that we’re many years away from a good NBP, although we may have some vague and probably counter-productive guidelines much sooner: the FCC is supposed to report a plan to Congress by next February. Bear in mind that it took the US 20 years to convert from analog to digital TV, and we’re not even there yet.

There’s more.

Interlocking Directorates

The New York Times reports that regulators have an interest in the structure of the Apple and Google boards of directors:

The Federal Trade Commission has begun an inquiry into whether the close ties between the boards of two of technology’s most prominent companies, Apple and Google, amount to a violation of antitrust laws, according to several people briefed on the inquiry.

I doubt this will go very far, as the interlocking directors (Eric Schmidt and former Genentech CEO Arthur Levinson,) will simply resign before any enforcement action is imminent, but it does raise some interesting questions about the market for mobile phone operating systems, currently split between Apple, Google, Microsoft, Palm, and a few others. These systems are rife with limitations, each of which could be considered a network neutrality violation when viewed in just the right way.

I imagine Apple itself might wish to give Dr. Schmidt his walking papers before he becomes an anti-trust problem, which he actually isn’t at this point. The FTC’s interest in this obscure situation is probably a signal that the Administration wants to be viewed as an anti-trust hawk without doing anything substantial.

But this is what the law calls an “occasion of sin.” Dear me.

Google’s Sweet Book Deal

If you read books, you’ll want to know what Robert Darnton has to say about the pending Google book deal, in Google & the Future of Books – The New York Review of Books. Here’s a teaser:

As an unintended consequence, Google will enjoy what can only be called a monopoly—a monopoly of a new kind, not of railroads or steel but of access to information. Google has no serious competitors. Microsoft dropped its major program to digitize books several months ago, and other enterprises like the Open Knowledge Commons (formerly the Open Content Alliance) and the Internet Archive are minute and ineffective in comparison with Google. Google alone has the wealth to digitize on a massive scale. And having settled with the authors and publishers, it can exploit its financial power from within a protective legal barrier; for the class action suit covers the entire class of authors and publishers. No new entrepreneurs will be able to digitize books within that fenced-off territory, even if they could afford it, because they would have to fight the copyright battles all over again. If the settlement is upheld by the court, only Google will be protected from copyright liability.

A policy change of this magnitude should not be negotiated behind closed doors to the detriment of all purveyors of information but Google.

At long last, Genachowski

The long-awaited nomination of Julius Genachowski to the FCC chair finally came to pass yesterday, raising questions about the delay. If everybody with an interest in telecom and Internet regulation knew he was the choice months ago, why did the official announcement take so long? I have no inside information, so I’ll leave it to those who do to enlighten us on that question. Perhaps the Administration was just being extra-cautious after the debacles around a Commerce Secretary and others.

Neutralists are excited about the choice, naturally, as they view Genachowski as one of their own. And indeed, if network neutrality were actually a coherent policy and not just a rag-tag collection of Christmas wishes, they would have cause to be exhilarated. But given the range of restrictions that the movement seeks, it’s less than clear that any particular raft of regulations would satisfy them and leave broadband networks the ability to function, so we’ll see how this pans out. We’re already hearing runblings from Boucher that there may not be any Congressional action on network neutrality this year in any case.

Genachowski brings an interesting (and potentially very dangerous) set of qualifications to the job. A college buddy of the President, he’s an inner circle member with the power to wield enormous influence. As a former FCC staffer, he’s imbued with the Agency’s culture, and as a former venture capitalist funding fluffy applications software, he’s something of a tech buff. But he resembles Kevin Martin in most of the important respects: he’s a Harvard lawyer who’s worked inside the regulatory system for most of his life, and he has strong alliances to an industry that seeks to exercise control over the nation’s network infrastructure for its own purposes. Whether those purposes resemble the public interest remains to be seen.

The largest problem with the FCC and similar agencies is the knowledge gap between regulators and the modern broadband networks that are the subject of their regulatory power. Martin didn’t have the training to appreciate the effect that his orders would have on the infrastructure, and neither does Genachowski. So the new Chairman is just as likely as the old chairman to make things worse while trying to make them better.

In a perfect world, the commissioners would be able to rely on the expert judgment of the Chief Technologist to stay out of trouble, but the current occupant of that job, Jon Peha, has a penchant for playing politics that renders him ineffective. The bizarre, quixotic inquiry the FCC made recently into the quality of service variations between Comcast’s voice service and over-the-top VoIP is an example. This isn’t a serious line of inquiry for a serious Commission, and Peha never should have let it happen. But it did, and that fact should remind us that the FCC is more a creature of politics than of technology.

Court protects the right to bluff

In a rare move, the DC Circuit has upheld an FCC decision

The cable industry has won a big legal victory in the fiercely competitive phone services market. An appeals court has supported the Federal Communications Commission in its ruling that phone carriers—in this case Verizon—can’t try to lure back customers after they’ve initiated a service switch but before their number has been transferred.

The FCC rarely prevails in court, of course, so this may be a sign that we’re living in the End Times. But we can take some comfort from the fact that it wasn’t totally unpredictable, given that Kevin Martin was on the losing side.

The case involved Verizon’s efforts to win back customers when notified by the new carrier that they had to release the phone number. Verizon took this as an occasion to offer sweeter deals, which the court ruled an unlawful violation of the customer’s privacy, despite the fact that Google’s entire business is based on this kind of snooping.

It’s a win for consumers because it preserves the right to bluff. In today’s economy, consumers can frequently get better deals on subscription services merely by threatening to cancel, whether we’re serious or not. As it happens, I got lower prices from Sports Illustrated and Illy Coffee by calling up to cancel my subscriptions, and in both cases they were substantial. DirecTV refused to offer me a sweetner last year when I was tired of their crappy DVR, so they lost my TV business to Comcast. It’s not entirely clear to the business whether any of these threats are serious, of course, so it’s in their interest to err on the side of caution and offer the customer a better deal when they have the chance. Efforts to win back a customer who’s already made a switch have to be harder to pull off.

But the Verizon deal stacked the cards a little too far in the company’s favor, because it allowed them to play hardball until it was absolutely clear that the customer wasn’t bluffing. They only get a switchover for phone service when you’ve made a deal and scheduled a hookup date.

No deal, we all have the right to bluff and the company is going to have to guess just like any other poker player. That’s a good deal for the consumer.

Internet Myths

Among my missions in this life is the chore of explaining networking in general and the Internet in particular to policy makers and other citizens who don’t build network technology for a living. This is enjoyable because it combines so many of the things that make me feel good: gadgetry, technology, public policy, writing, talking, and education. It’s not easy, of course, because there are a lot of things to know and many ways to frame the issues. But it’s possible to simplify the subject matter in a way that doesn’t do too much violence to the truth.

As I see it, the Internet is different from the other networks that we’re accustomed to in a couple of important ways: for one, it allows a machine to connect simultaneously to a number of other machines. This is useful for web surfing, because it makes it possible to build a web page that draws information from other sources. So a blog can reference pictures, video streams, and even text from around the Internet and put it in one place where it can be updated in more-or-less real time. It enables aggregation, in other words. Another thing that’s unique about the Internet is that the underlying transport system can deliver information at very high speed for short periods of time. The connection between a machine and the Internet’s infrastructure is idle most of the time, but when it’s active it can get its information transferred very, very quickly. This is a big contrast to the telephone network, where information is constrained by call setup delays and a very narrow pipe.
Continue reading “Internet Myths”