Pai Demands Answers From Netflix About 'Fast Lanes'

A concern is Netflix’s Open Connect system, which allows the company to connect with ISPs closer to the customers, allowing it to provide better quality video streaming. The company has been pushing ISPs to connect to it, the letter said, while at the same time “Netflix has at times changed its streaming protocol … which impedes open caching software from correctly identifying and caching Netflix traffic.”

Not being able to cache forces ISPs to make a choice, a commission official said, between connecting with Open Connect or absorbing Netflix’s traffic, which the letter said makes up “a substantial percentage of streaming video traffic.”

Connecting with Open Connect directly gives Netflix an advantage over competitors that do not have the same capability, the letter said. “If ISPs were to install open caching appliances throughout their networks, all video-content providers -- including Netflix -- could compete on a level playing field,” the letter said. “If, however, ISPs were to install Netflix’s proprietary caching alliance instead, Netflix’s video would run the equivalent of a 100-yard dash while its competitors’ videos would have to run a marathon.”

Netflix hasn't joined the Streaming Video Alliance, created Nov. 14 to recommend best practices in streaming video, said an FCC official. The letter said the company has “chosen not to participate in efforts to develop open standards for streaming video.”

The letter did not explicitly state Pai’s position on net neutrality, saying only that “these allegations raise an apparent conflict with Netflix’s advocacy for strong net neutrality regulations.”

Title II

Communications Act Title II opponents praised the letter.

“Netflix may be subsidizing its own personal fast lane … while advocating against them for others,” emailed Geoffrey Manne, executive director of the International Center for Law and Economics. The American Cable Association, which has pushed for net neutrality rules to apply to content providers as well as broadband providers, reiterated its position Tuesday and cited Pai’s letter.

An FCC spokeswoman and aides to other commissioners would not say Tuesday if Pai had asked others to sign the letter. While it’s not unusual for the chairman to send letters, as FCC Chairman Tom Wheeler has this year, it's unusual for a commissioner to send one alone. Pai also sponsored his own net neutrality forum in Texas earlier this year, a cable industry official noted. Pai is certainly not the first commissioner in the minority to seek to influence outcomes on issues before they reach the eighth floor, the official said, but such efforts are usually limited to public speeches. Pai’s moves “are bigger and bolder steps than we’ve seen for a Commissioner," the official emailed. "He’s acting like a shadow chairman. We could be seeing the beginning of a different way for the commission to operate.”

Pai "zeroed in on some of the discrepancies between Netflix’s actions and the rhetoric it wraps its arguments in," said Doug Brake, telecom policy analyst at the Information Technology and Innovation Foundation. The calls for “strong net neutrality” rules, which ask for free, limitless interconnection, "certainly deserve a skeptical eye," he said. But people shouldn't be too worried about Netflix business practices, Brake said. The content delivery networks have been key in scaling broadband traffic, "and caching will continue to grow in importance, proprietary or not," he said. "The concern is where companies leverage popular, and popularly misunderstood, policy issues for private gain.”

“Playing gotcha might be a fun game, but all that Commissioner Pai's got here is innuendo and nonsense,” said Free Press Policy Director Matt Wood. “Commissioner Pai's charge amounts to a suggestion that ISPs should have total control over all Internet content -- and that parties like Netflix should not have any say in how their content is accessed,” he said. “With this clumsy attempt to paint Netflix as a hypocrite, Commissioner Pai just displays his own hypocrisy -- suggesting somehow that Netflix loses its right to complain about ISP bottlenecks and choke points unless the content provider accedes to every ISP demand.”

A Title II approach by the FCC on net neutrality would exacerbate partisanship on Capitol Hill and doom prospects for reforming the Communications Act, said former Rep. Rick Boucher, D-Va., honorary chairman of the Internet Innovation Alliance. Boucher was speaking on one of several panels at a Phoenix Center event Tuesday. A recent study about the federal and local tax impacts of reclassifying broadband (see 1412010035) would only add to the concern in Congress over a Title II approach, said former Sen. John Sununu, R-N.H., Broadband for America’s honorary co-chairman.

NCTA President Michael Powell held out hope Congress would settle the debate, clarifying the agency has Section 706 authority to impose net neutrality regulations to avoid “dumping this nation into seven years of legal cacophony” should Title II regulations be challenged in court. George Ford, Phoenix Center chief economist, said the commission finds itself “in a box" over how to proceed because of a number of tricky issues. The FCC, for instance, has traditionally shied away from forbearance unless there is competition, Ford said.