Thursday, August 10, 2017

Priority Communications Services for Governments: Lessons for Private Prioritization

The Federal Communication Commission’s 2015 Open Internet Order contains a ban on “paid prioritization,” or agreements that allow a content provider to pay an Internet service provider for priority treatment in a “fast lane” to jump around congestion on the Internet. I described in a May 2017 FSF Perspectives how paid prioritization arrangements are very common in many markets and usually lead to pro-consumer benefits.

While the Open Internet Order prohibits Internet Service Providers (ISPs) from charging for prioritization, other FCC policies encourage prioritization arrangements, so long as other government agencies are the ones given access to the fast lane. There is a lesson here for the government that it ought to recognize with regard to private sector prioritization arrangements on the Internet.

Prioritization arrangements can have benefits for consumers and the general public, and it is entirely appropriate for the FCC to provide for favorable access for government emergency and disaster responders. But the same logic applies to at least some private services on the Internet, which are likely to be delayed or deterred so long as the rigid prohibition against paid prioritization remains in place.

The FCC majority in the 2015 Open Internet Order argued that having a fast lane for those willing to pay for it would place their competitors in the “slow” lane at a disadvantage. Moreover, they asserted that without this ban, ISPs would have the incentive to make the slow lane even less attractive by avoiding investing in it, so that firms in the slow lane would eventually be forced to pay to move to the fast lane. Thus, the 2015 FCC adopted the following prohibition:

No Paid Prioritization. Paid prioritization occurs when a broadband provider accepts payment (monetary or otherwise) to manage its network in a way that benefits particular content, applications, services, or devices. To protect against “fast lanes,” this Order adopts a rule that establishes that:

A person engaged in the provision of broadband Internet access service, insofar as such person is so engaged, shall not engage in paid prioritization. “Paid prioritization” refers to the management of a broadband provider’s network to directly or indirectly favor some traffic over other traffic, including through use of techniques such as traffic shaping, prioritization, resource reservation, or other forms of preferential traffic management, either (a) in exchange for consideration (monetary or otherwise) from a third party, or (b) to benefit an affiliated entity.

As then-Commissioner Ajit Pai pointed out  at the time, the FCC adopted this blanket ban on paid prioritization even though ISPs had not adopted paid prioritization in any meaningful way. The effect on capital investment of the 2015 order, which included the paid prioritization ban, has been the opposite of what the 2015 FCC majority predicted, because broadband investment is down significantly since the Open Internet Order was implemented. Indeed, Free State Foundation Research Associate Michael Horney has estimated that in 2015 and 2016 investment declined by $5.6 billion.

On a page titled “Priority Telecommunications Services,” the FCC website explains how it views the importance of certain prioritization programs:

Often times, it is necessary to either prioritize the provisioning of new communications services or prioritize the restoration of services that have been damaged or otherwise are not functioning. This is especially true in disaster situations when numerous outages may occur at once or systems become overloaded by demand. This topic introduces three major priority service programs that have been established by the Federal government in order to provide prioritized system access for designated users or to allow for prioritized installation/restoration of services. The Federal government administers these priority communications services that are provided by the wireline and wireless telecommunications carriers and are necessary to promote the nation's security and emergency preparedness (NS/EP) functions.

One of the three programs described above by the FCC is the Telecommunications Service Priority (TSP) program, which is authorized by the FCC and administered by the Department of Homeland Security (DHS) Office of Emergency Communications. The TSP program is a paid prioritization arrangement. According to DHS:

TSP is a fee-based program and organizations pay their telecommunications vendor for the services. TSP set-up and recurring costs vary depending on 1) the type of service requested (provisioning or restoration), 2) the telecommunications vendor providing the service (e.g. AT&T, CenturyLink, Sprint, Verizon, etc.), and 3) the geographic location requested for the provisioning or restoration service.

Prioritization arrangements can have benefits for consumers and the general public, and nothing herein is intended to be criticism of the current FCC policies giving favorable access to government emergency and disaster responders. As emergency services and public safety evolve, government agencies may want to have even greater access to paid prioritization available to them for government functions such as Amber alerts, severe weather alerts, and Homeland Security warnings.

But the same logic applies to at least some other services on the Internet, which are less likely to be widely available so long as the rigid prohibition against paid prioritization remains in place.

For example, telemedicine is an emerging private application that may require prioritization in order to become widely available and accepted as reliable. Telesurgery now allows specialized surgeons in one location to operate on patients in completely different locations. The emerging market for telesurgery can give patients in small hospitals or remote areas access to highly-skilled specialists who otherwise would not serve those areas. According to a recent medical journal article:

The ultimate goal of telerobotic surgery is to replicate the normal process of surgery from a distance. The success of telesurgery (or any aspect of telemedicine for that matter) depends largely on how faithfully and without incident remote activities duplicate their on-site equivalents. Because of its direct impact on surgeon performance, a frequent metric in real-time telesurgery research is that of system delay (citations omitted).

Autonomous vehicles and interactive e-learning are other examples of applications in their early stages of development that require a high level of end-to-end reliability. Investors may be unwilling to take the risk of investing in these applications if they cannot be assured of reliable prioritized broadband connections. The FCC’s prohibition against charging for paid prioritization may well prevent these services from developing, as well as other new applications that no one is yet anticipating.

As FCC Commissioner Michael O’Rielly recently stated, “Even ardent supporters of net neutrality recognize, as I've said before, that some amount of traffic differentiation or ‘prioritization’ must be allowed or even encouraged.” Moreover, to the extent the Open Internet Order is suppressing capital investment broadband infrastructure, that is infrastructure that is not available for government first responder needs. 

Whatever policy the FCC adopts as part of its present proceeding, it should not be a rigid ban against paid priority arrangements for private Internet uses, which precludes arrangements that offer tremendous potential health, safety, and economic benefits. The government actually authorizes priority arrangements, and recognizes their value, in various emergency, public safety and related contexts. It should not adopt a blanket ban on such arrangements that would prevent their development in other contexts that would prove valuable to consumers.