FCC Must Better Understand Interconnection Between ISPs, Milkman Says
Interconnection between ISPs “has not always been seamless” and the FCC under Chairman Tom Wheeler will ask a series of questions to better understand how peering works or doesn’t work, FCC Chief of Staff Ruth Milkman said Tuesday at an event hosted by the Progressive Policy Institute. The question of how networks exchange traffic, such as through peering, is key as the FCC takes comment on net neutrality rules, Milkman said.
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"The FCC has received a number of points of view on the manner in which the current traffic exchange regimes are or are not working,” Milkman said. “One question ... are these disputes just business negotiations that can be resolved adequately in the marketplace or are they a warning sign of a breakdown of the functioning marketplace of interconnection and traffic exchange on the Internet? We don’t know the answer."
The FCC does recognize “we need to learn more about how the marketplace is or is not functioning,” Milkman said. Like the 2010 rules, the rules proposed by the net neutrality NPRM would not address interconnection issues, she said (CD May 16 p1). But “we're seeking comment ... in order to hear from those who may disagree with the suggested treatment of peering and traffic exchange and we'll learn from those comments,” Milkman said. “At the moment, we have many more questions than answers.”
Milkman said interconnection has always been a source of concern for policymakers, in everything from the railroads to the electric grid to the early phone networks. Interconnection is key to all successful networks, she said. “A network by definition connects. First, a network connects component parts to one another and that forms a whole and interconnection takes this to the next level. ... Disconnected networks do not serve the public interest.”
AT&T’s “failure to interconnect” with competitors like MCI “triggered the Justice Department investigation that in turn led to the Bell System breakup,” Milkman said. Interconnection is key for wireless as well, with the FCC mandating that carriers strike roaming agreements first for voice and then data, she said. Milkman’s speech was followed by a panel discussion.
"It’s a false dichotomy” to view the mostly unregulated Internet as separate from more heavily regulated telecom sector, said Kevin Werbach, professor of legal studies and business ethics at the University of Pennsylvania’s Wharton School and a former member of the Obama administration’s FCC transition team. “Those worlds are converging. We all know that. We're going through a transition where the public switched telephone network is converging into an IP network.” Interconnection is essential and regulators have a role to play, he said.
"The FCC should not micromanage the process -- for the most part it shouldn’t be setting prices,” Werbach said. “But I think it’s important to have an FCC public policy backstop. ... The FCC never said, ‘We're never going to have anything to do with Internet interconnection.’ What they said was, ‘We believe traditionally this is a competitive market that we don’t need to get involved in.’ That was a factual determination. The world is changing.”
There have never been many Internet interconnection disputes, said Hal Singer, a senior fellow at PPI. “In fact what [has] struck me was how few there were relative to how many could have occurred,” he said. Singer said by his count there have only been six interconnection disputes and only three of those led to service disruptions. Interconnection requirements can lead to a decision by companies not to invest in networks, Singer said. PPI released a paper by Singer at the event -- “Mandatory Interconnection: Should the FCC Serve as Internet Traffic Cop?” (http://bit.ly/1tjAYHZ).
"My question is what works,” said Gerry Faulhaber, professor emeritus of Business Economics and Public Policy at Wharton. Distribution agreements are a fact of life in most industries, he said. “In competitive markets, we almost never have any trouble,” he said. “Do we want to regulate this? For Lord’s sake, why? This is working. Distributing peas through supermarkets works. Nobody is calling for regulation of supermarkets. Why are we are calling for regulation of Internet access?” The FCC “has a pretty terrible reputation as an adjudicator,” Faulhaber said. “Why is that in any sense going to improve matters?” Rather than regulating interconnection, the government should use antitrust laws if problems occur, he said: “I think that’s the appropriate place to take action.”
Panelists said state regulators have little role to play. “If I don’t even want the feds involved, I certainly don’t want the state guys,” Faulhaber said. States traditionally have a role to play in consumer protection since they are closer to the end user, Werbach said. “I think in terms of the overall interconnection regime for the Internet ... there’s no reason to say that has to go through 50 state commissions.”
The Internet is effectively global, said Anna-Maria Kovacs, visiting scholar at Georgetown University’s Center for Business and Public Policy. A company “could find itself fighting in 50 different state arenas and a whole bunch of courts,” she said. “That just doesn’t make a lot of sense.”