Bandwidth Caps’ Role in Net Neutrality Debate Considered by FCC
The controversial net neutrality proposal, approved Thursday by a 3-2 party line vote (CD May 16 p1), specifically asks about how bandwidth caps might relate to net neutrality concerns. That’s a pleasant surprise to Harold Feld, whose organization Public Knowledge has spent nearly four years asking the FCC to specifically solicit comment on bandwidth caps. But Phoenix Center economist George Ford noted upon reading the NPRM, “it’s clear that the economists have left the building."
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The NPRM (http://bit.ly/1k9914w) seeks comment on “what economic tools broadband providers utilize to manage traffic on their networks,” such as “pricing for different levels of throughput or through the use of ‘data caps.'” To what extent, the NPRM asks, do broadband providers use such tools to manage traffic, such as by excluding certain content from such an end user data cap? “Might these tools be used to exploit market power or reduce competition?”
Should the FCC require disclosure of specific ISP network practices, such as the use of data caps? The FCC asked that and other questions about how it might beef up its transparency requirements -- the one section of the 2010 Open Internet order not thrown out by the U.S. Court of Appeals for the D.C. Circuit in January (CD Jan 15 p1). “We are particularly interested in whether there are network practices, performance characteristics, or commercial terms relating to broadband service that are particularly essential but not easily discoverable by end users absent effective disclosure,” the NPRM said.
"With respect to data caps, should we require disclosures that permit end users to identify application-specific usage or to distinguish which user or device contributed to which part of the total data usage?” the NPRM asked. “Should we require disclosure of any type of traffic exempted from any data caps, and how end users can find their current consumption levels?"
"I want to stress that the FCC made no tentative conclusion about this whatsoever, but, given their extreme reluctance to ask about this issue in the past, it is good to see them solicit comment,” said Feld, the senior vice president of Public Knowledge. In August, PK asked the FCC to take action against Comcast’s use of data caps in test markets and start monitoring usage-based pricing (CD Aug 23 p1). PK has argued that, by creating a “special lane” for affiliated content, data caps could negatively affect long-term growth of the Internet. “While transparency is not a substitute for net neutrality, it is an important consumer protection in its own right,” Feld said.
Feld “sees net neutrality as a stalking horse for treating ISPs as common carriers,” so he implies that caps equal non-neutrality, said Geoffrey Manne, executive director of the International Center for Law & Economics. “There is no inherent non-neutrality in bandwidth caps or usage-based pricing,” he said. Manne pointed to FedEx: It’s a common carrier, yet offers faster shipping at higher prices, charges for some services based on weight, and caps the weight of letters shipped using its basic service. That’s equivalent to paid prioritization, usage-based pricing, and a usage cap, he said. “The logic that implies a neutrality problem with caps or usage-based billing is at least (if not more) likely to apply to flat-rate billing,” Manne told us by email. “It is disingenuous to single out caps/usage-based billing, when prohibiting or regulating them would mean flatter rates and arguably less neutrality,” as it would give an advantage of those sending heavier packages while hamstringing senders of lighter packages, he said.
In his dissent, Republican Commissioner Ajit Pai called for a series of economic studies to determine the impact of the agency’s proposed regulations. In Pai’s proposal, each commissioner would get to choose two “distinguished economists,” and the 10 total economists could conduct economic studies. The studies should be peer reviewed, and there should be a “series of hearings where commissioners could question the authors of the studies,” and the economists could “discuss their differences.” Pai noted that the agency commissioned economic studies in past media-ownership proceedings. “Surely the future of the Internet is no less important than media ownership,” he said. But if Pai had his way, the unelected commissioners wouldn’t be the ones making this decision at all. “Such a fundamental choice should be made by the people’s elected representatives in Congress,” he told us.