At the Free State Foundation’s
Tenth Annual Telecom Policy Conference last week, the speakers discussed a wide
range of topics, including net neutrality, 5G and advanced fiber deployments,
spectrum policy, universal service and Lifeline, and more. We’re grateful that
C-SPAN-2 covered the conference from start to finish, and you can find the
entire C-SPAN broadcast here.
Over the next few weeks we will
be recounting some of what we learned at the conference. Here I want to
highlight some of the discussion relating to so-called paid prioritization,
what Comcast Senior Executive Vice
President David Cohen called the “third rail” of the net neutrality
controversy. Mr. Cohen said that he is amenable to considering a ban on paid
prioritization if there is a limited exception for provision of specialized
services. Harkening back to the FCC’s 2010 Open
Internet Order, he suggested that “something might come along that is not
anti-competitive, that is pro-consumer, and that is a specialized service that
is not available to every user of the Internet that would be in the public
interest.”
My longstanding position has
been that there should not be an absolute ban on paid prioritization
arrangements, but rather a presumption that such arrangements between Internet
service providers and Internet users should be deemed lawful absent convincing
evidence that a particular arrangement causes either consumer harm or is
anti-competitive. This position acknowledges the possibility that a particular
arrangement may be anti-competitive or harmful to consumers, but it places the
burden on those challenging the arrangement to demonstrate this. In my view, if
the burden is placed otherwise – or certainly if an absolute ban exists – there
is a substantial risk that experimentation by Internet service providers with
beneficial new services will be chilled and that investments that otherwise
would be made in modernizing broadband networks will be foregone. Neither
result benefits consumers.
Regardless of my own views, because
paid prioritization is such a key part of the net neutrality controversy, it is
worth considering the comments of a few of the other conference speakers.
Here’s Jeff Campbell, Cisco’s Vice President, The Americas of Global Affairs:
“Paid prioritization, or prioritization in general, is one of
the most misunderstood issues out there. I wish the press would stop writing
fast lanes, slow lanes. The Internet has no lanes. They do not exist! Traffic
either goes or it does not go. It moves at the speed of electrons, or the speed
of light. When there’s congestion, you either drop packets randomly or you drop
them intelligently by using some sort of prioritization scheme. Now I would
posit that there are a lot of benefits to intelligently deciding what traffic
has better quality of service than other things. I am going to give you two
examples - one which is crucial and one which is mundane but very important
too. The first is – I guarantee you that all the people who are against paid
prioritization are hugely in favor of paid prioritization the minute we start
having remote surgery occurring across electronic networks. You want those
packets to be prioritized. You want them to get through and you want everything
to work right. There’s a benefit to doing that. It’s not an inherently bad
thing. It’s good technology.”
“Rather than banning the technology, because that’s what a
ban on paid prioritization is - you’re essentially banning the use of this
technology, we should talk about whether the technology is being used for good
or for bad. If it’s being used anti-competitively, we can write rules or use
the existing law or both to address those situations. But there are a lot of
benefits that can come from the use of prioritization and quality of service
technology and I think that it would be a real mistake for our country to walk
away from that because the rest of the world isn’t walking away from it.”
Michelle Connolly, Duke University Professor of Economics and a Member
of FSF’s Board of Academic Advisors said this:
“And I don’t want [paid prioritization] to be swept under the
rug because simply people are so happy to be getting rid of Title II regulation
that they forget that paid prioritization is a very important thing about
keeping this market free and allowing people to have services - that they may
want to have certain quality of services and they are willing to pay for it.
They should have that right to do that. As an economist, this is about a market
and this is about intervention in a market and that should not be forgotten.”
And then Professor Connolly, as she had at last year’s conference, related
what she calls the “waterbed effect” to a ban on paid prioritization:
“Essentially this amounts to a subsidy that is paid to
certain types of content providers who want the quality of service but don’t
want to pay for paid prioritization. And so if we think about a waterbed, if
any of you in the 70s went on a waterbed, if you push down on one side – and
you say that the price is going to be lower here for something, it’s going to
go up somewhere else. So the idea was that in terms of the digital divide, the Open Internet Order of 2015, by creating
this inability to charge for something, was inherently pushing up the price of
the average service to the average consumer. And to the extent that we think
that their income is large component of when people are not adopting, you are
going to be exacerbating the digital divide when you have the no paid
prioritization.”
Immediately following this
statement by Professor Connolly, Christopher
Yoo, also a Member of FSF’s Board of Academic Advisors and Professor of Law at
the University of Pennsylvania suggested this regarding a paid
prioritization ban: “By reducing the ability to raise revenue, you’ve raised
the breakeven number of consumers, you’ve made it harder for them to be viable
and you’ll see fewer areas built out. It’s quite simple.”
Finally, when asked about paid
prioritization, Commissioner Michael
O’Rielly answered: “I don’t think there should be a ban on paid
prioritization. I disagreed with that point. I’ve testified to that fact that I
don’t think that it should be part of a legislative package that goes forward.
We’ll just see what the Congress does with that suggestion.”
As the ongoing net neutrality controversy
continues, with paid prioritization at or near the forefront, I hope this
recounting of some of the conference discussion is helpful. And over the years,
we’ve spilled an awful lot of ink – and worn out a lot of keyboards –
addressing paid prioritization. If you wish to explore the issue in more depth,
here are just two Perspectives from FSF
Scholars that are worth reading:
·
Theodore Bolema, Allow
Paid Prioritization on the Internet for More, Not Less, Capital Investment,
May 2017.
·
Daniel Lyons, Title
II Reclassification Is Rate Regulation, February 2015.
Don’t forget the C-SPAN video
is here.
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