Tuesday, January 09, 2018

Paid Prioritization Arrangements Improve Telemedicine Prospects

Telemedicine is an emerging Internet application that requires a very high level of end-to-end reliability. It includes telesurgery, which now allows specialized surgeons in one location to operate on patients in completely different locations. Telemedicine can offer patients in small hospitals or remote areas access to highly-skilled specialists who otherwise would not serve those areas. Telesurgery, as well as certain other telemedicine applications, can only become viable if the providers have access to extremely reliable, high-speed Internet connections.
In contrast, many other Internet uses do not require the same level of reliability or speed. Email traffic, most file downloading, and many other uses lose little of their value if their transmission is delayed somewhat, although too long a delay could diminish their value. These types of Internet applications simply do not require the same type of highly reliable, high-speed access that telemedicine and other applications require.
Telemedicine is an example of an Internet application that could benefit from receiving a prioritization arrangement. Prioritization arrangements are agreements between broadband providers and providers of content over the Internet that allow the content provider to receive priority access in a so-called “fast lane” to avoid congestion on the Internet. As FCC Commissioner Michael O’Rielly pointed out in April 2017: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.”
The 2015 Open Internet Order contained a “bright-line” ban on paid prioritization arrangements, which was eliminated when the FCC adopted the December 2017 Restoring Internet Freedom Order (RIF Order). Free State Foundation scholars have argued that the new 2017 Order will lead to more capital investment, making better and more reliable Internet connections available to more Americans, and will also allow for innovative prioritizations and other arrangements that can have significant economic benefits. Telemedicine, with its need for highly reliable, high-speed Internet access, is likely to be one of the applications that benefits most from this increased investment and potential for more flexibility in access arrangements.
Some, however, have suggested that the 2017 RIF Order may threaten the future development of telemedicine. For example, Mei Wa Kwong, Interim Executive Director and Policy Advisor for the Center for Connected Health Policy, wrote:
At the December 14, 2017, open commission meeting of the Federal Communications Commission (FCC), commissioners will vote on whether to repeal current net neutrality rules. Such action may have wide-reaching impacts on the use of telehealth. Community health clinics, such as federally qualified health centers (FQHCs) and rural health centers (RHCs), could see higher rates for connectivity that may reduce, eliminate, or discourage them from using telehealth to deliver health care services, especially in rural areas. Additionally, telehealth in the home could be severely curtailed as consumers may face higher prices for connectivity that would be sufficient for a telehealth interaction. To allow practitioners and patients to provide and access care anywhere would require reliable and adequate connectivity that could be priced out of the users' range with removal of net neutrality. 
The concerns described above are entirely, even by their own terms, conjectural, and are unlikely to occur in any way that is harmful to the development of telemedicine. Paid prioritization was not prohibited before the 2015 Order, and in any event such arrangements were never implemented in any significant way. More importantly, however, experience with paid prioritization arrangements in other markets provides strong evidence that Internet providers will not have the incentives to engage in conduct likely to harm the emerging telemedicine market.
In my May 2017 Perspectives from FSF Scholars, I described how paid prioritization arrangements are very common throughout the economy. For example, the U.S. Post Office has long offered priority delivery, airlines make priority boarding available to customers, grocery stores allow for priority placement of certain products, and highways all offer priority toll lanes to drivers. In all of these various markets where paid prioritization arrangements have regularly been used, the result is more capital investment and more benefits for consumers. When such arrangements are put in place, the result is not to price the priority service out of the range of the users with the greatest need, but rather, to price in such a way that both the priority and non-priority customers are served, usually with both groups better off than they otherwise would have been.
Indeed, Virginia Governor Terry McAuliffe last year explained how the current I-395 expansion project in Alexandria, Virginia, is using an optional toll system to attract private investment for highway construction that would not have otherwise occurred. As McAuliffe correctly pointed out, this toll system will relieve congestion and improve access for all travelers, not just the ones who choose to pay the toll to be in the fast lane.
We can expect the same with telemedicine following the 2017 Restoring Internet Freedom Order. FCC Chairman Ajit Pai recently explained how the RIF Order will help, not harm, the prospects for telemedicine in rural areas by promoting more investment and allowing for more flexibility in priority arrangements for services like telemedicine:
One of the biggest drags on investment in faster, better, cheaper broadband has been the FCC’s 2015 decision to scrap the tried-and-true, light-touch regulation of the Internet and replace it with heavyhanded micromanagement. In two weeks, we’ll vote on a plan to restore Internet freedom and bring back the same legal framework that was governing the Internet three years ago today and that has governed the Internet for most of its existence. This will result in increased investment in infrastructure and more digital opportunity for seniors, especially in rural and low-income urban areas.
One aspect of this proposal I think is worth highlighting here is the flexibility it would give for prioritizing services that could make meaningful differences in the delivery of healthcare. By ending the outright ban on paid prioritization, we hope to make it easier for consumers to benefit from services that need prioritization—such as latency-sensitive telemedicine. Now, we can’t predict exactly which innovations entrepreneurs will come up with. But by replacing an outright ban with a robust transparency requirement and FTC-led consumer protection, we will enable these services to come into being and help seniors.
As Commissioner O’Rielly summarized in his statement supporting the Restoring Internet Freedom Order:
Clearly, there are cases today and many more that will develop in time in which the option of a paid prioritization offering would be a necessity based on either technology needs or consumer welfare. I, for one, see great value in the prioritization of telemedicine and autonomous car technology over cat videos. 

In sum, the real threat to the emergence of telemedicine is not, as Mei Wa Kwong suggests, the removal of the ban on paid prioritization. Rather, the threat to telemedicine is from prohibiting innovative access arrangements and suppressing capital investment that would otherwise increase capacity, allow greater access, and improve reliability of Internet connections. Telemedicine is likely to benefit from an acceleration in capital investment and from allowing more flexible arrangements that make priority access available where it is needed the most. And, to be sure, there are other emerging innovative Internet applications that will as well.