Cable Isn’t Planning to Create Fast Lane, Powell Says

An ISP that tries to charge a Web company for delivering its content to customers would likely find itself in a retransmission consent style conflict with the Web company, Powell said. He said a cable operator that tried to charge Google for a fast lane would likely find Google demanding the cable operator pay to make its content available. In broadcast retrans, those “blackout scenarios” haven’t worked out well for cable companies, he said. “I don’t think it makes economic sense.” To do a fast lane, an ISP would have to find enough companies willing to pay for the faster speeds to offset the “degradation” caused by leaving everyone else in the “slow lane,” he said. Most users don’t take up the kind of bandwidth that would require an Internet fast lane, Powell said.

The over-the-top video providers with users who account for a lot of bandwidth are in a symbiotic relationship with cable companies, Powell said. The content used by companies like Hulu and Netflix wouldn’t be possible without the money created by showing it on cable, he said. “The two things need each other.” Hulu’s owners include NBCUniversal, part of NCTA’s largest member Comcast.

Powell castigated Netflix for trying to incorporate peering into the FCC net neutrality proceeding, in a Thursday NCTA blog post (http://bit.ly/1hU0p3f). Slower interconnections to Netflix are caused by it “choosing to send large portions of its traffic down routes that were ill-equipped to handle the load,” he wrote. “Fixing these performance problems did not require Netflix to do a deal with Verizon or Comcast.” The FCC shouldn’t mix the net neutrality discussion with peering, Powell said. “Netflix’s peering gambit is primarily about improving their own economics and says more about Netflix’s power than about any ISP’s.” The FCC has looked at the recent peering agreements between companies like Netflix and ISPs. (See separate report above in this issue.)

Characterizing FCC Chairman Tom Wheeler’s net neutrality proposal as authorizing fast lanes is a “distortion,” Powell said. Wheeler’s plan is the toughest open Internet rule the FCC can mandate within the boundaries of the law, Powell said. The Title II proposal supported instead by many public interest groups would be a “sledgehammer” or a “bulldozer” that would damage the cable business and hurt consumers, Powell said. “We shouldn’t accept that because something is important it equals a public utility."

If the Internet were treated as a Title II service, customer rates would rise to account for the taxes required to be charged on that sort of service, Powell said. Consumers would also be open to fraud and privacy violations, because the FTC doesn’t have jurisdiction over utilities, he said. Since Title II services are more heavily regulated, ISPs would have to hire more lawyers and spend money on compliance, a cost that would cut directly into investment in broadband infrastructure, he said. The “overhang” of Title II would depress capital growth and stock prices, he said.

The increased regulation may not be limited just to ISPs, Powell said. The rules could extend to anything that combines an Internet connection with content, such as Kindle e-readers, Microsoft’s Xbox Live or Skype, Powell said. With so many complications and likely court battles, reclassifying the Internet as Title II could “easily take a decade” and “set this country back in the information age,” he said. “The country would regret it.”