Companies Like Etsy Can’t Afford Paying for an Internet Fast Lane, Speaker Says

"The reality that we all face in building public policy is how do you develop a set of equities that allow everybody to work together to find a solution that works,” Wheeler said. Industry needs to “find common solutions, not just retreat into our corners,” he said.

Paid prioritization is inherently harmful to companies like Etsy, which charges its customers just 20 cents to list an item for sale through its website and collects 3 1/2 percent of every transaction, said Althea Erickson, Etsy policy director. “We're pretty confident we couldn’t afford to pay for priority deals and that means that we would end up in the so-called slow lane,” she said. “Speed matters” for companies that depend on the Internet, Erickson said. “If websites are slow to load, we are quick to click away,” she said.

"Allowing blocking, discrimination and access fees would be a radical departure from the way the Internet has operated for the past 30 years,” said Barbara van Schewick, professor of law at Stanford University. In Europe, the rules have specifically allowed blocking and discrimination as long as they're disclosed, she said. “In the presence of these rules, there has been widespread blocking and discrimination."

Van Schewick said numerous comments filed at the FCC offer the same conclusion: “Access fees would crush startup innovation.” She also urged the FCC to reclassify broadband under Title II of the Communications Act: “There is a lot at stake, basically the future of our economy.”

Heavy-Handed Rules

Other speakers warned of the dangers of “heavy-handed” regulation of the Internet. “I still fail to see where the harm lies and what remedy we're trying to craft,” said CEA Vice President Julie Kearney. CEA would be quick to complain if paid prioritization deals were harmful to competition, Kearney said. “The system is working.”

Given the present state of competition and lack of evidence of any consumer harms caused by ISPs, the cost of net neutrality regulation “almost certainly would exceed its benefits,” said Free State Foundation President Randolph May. The broadband market is “effectively competitive,” May said. “Competitive forces almost certainly will maintain Internet openness that benefits consumers."

On a panel on the scope of rules, Jeff Campbell, Cisco vice president-Americas, said the FCC should drop any tendency to view the Internet as a “highway.” “It is not a road; It is an electronic communications network,” he said. “There’s a lot of discussion that uses analogies that just do not reflect the reality of how traffic moves on the Internet today,” Campbell said. “Packets are routed from point A to point B and they go through a bunch of routers and switches along the way."

Connections move “at the speed of light,” unless there’s congestion, Campbell said. If there is congestion, there are two options, he said. ISPs can drop packets randomly or “choose intelligently, based upon the kind of applications or what the consumer wants, to figure out whether or not the service is going to be impacted,” he said. “We need to be expansive in what we allow to happen rather than restrictive."

Many argue that Title II regulation is automatically “heavy handed,” but that isn’t true, said Free Press Policy Director Matt Wood. “We actually live with many Title II services today.” Noting that one panelist said “he lived in a Title II regime,” Wood said, “Well, we all still do.” There has “been no harm to investment or deployment,” said Wood.

"You got it right, so don’t spoil it,” said Daniel Pataki, executive director of the European Telecommunications Network Operators’ Association. Former president of Hungary’s National Communications Authority, Pataki said the FCC should focus on “the problem, what needs to be fixed and look for evidence of what is the real consumer harm.” In Europe, the emerging consensus is that ISPs should have to be completely transparent with customers, but there’s also a consensus against rules prohibiting paid peering, Pataki said.

The FCC should not prevent ISPs from charging more for better connections, said Jon Peha, professor-engineering and public policy at Carnegie Mellon University and former FCC chief technologist. “There is value in having different quality of service available to those applications that might want that different quality of service.” If rules prohibit charging for improved connections, they're “not going to happen,” he said.

Transparency Probed

A third panel also was held, as many were filing replies to the net neutrality NPRM. (See separate report in this issue.) That panel examined proposals for enhancing transparency as part of revised rules. The transparency rules were the only ones to survive the U.S. Court of Appeals for the D.C. Circuit’s Jan. 14 decision rejecting the agency’s 2010 net neutrality regulations.

The industry “is very onboard with transparency,” said Jonathan Banks, USTelecom senior vice president-law and policy. “The industry supports the current rules. We all comply with them.” Companies have chosen a wide variety of ways of disclosing connection information, simplifying it where possible, Banks said.

Everyone thinks of disclosure as something that does not carry any costs, “so there’s kind of no need to justify it,” said Geoffrey Manne, executive director of the International Center for Law & Economics. “That’s not really true either by law or by logic.” Agencies need some basis for imposing regulations “even if they cost less than other regulations might,” he said.

There are numerous potential complications, Manne said. For example, how would the FCC give consumers more information about pricing, he asked. “Are we looking at accounting data or economic numbers? How are we expecting those numbers to be calculated?” How would the FCC assure comparability between ISPs, he asked. If the FCC requires ISPs to disclose “lots and lots” of detailed price information, it raises inevitable antitrust and anticompetitive concerns, he said. “One risk is of tacit collusion from publication of prices and contract terms.”