The initial round of comments in the FCC’s Broadband Industry Practices proceeding has just concluded.  I have not looked in detail at every one of the filings (there were over 10,000 comments submitted but the vast majority were short emails rather than more detailed comments), but I can draw some conclusions based on what I’ve read so far.

First, there are few actual examples of traffic blocking or degradation, or discriminatory conduct that are cited by those supporting regulation.  The examples submitted tend to be the exceptions we’ve seen before – Madison River, Telus (Canadian example), and statements by industry officials.   These are about the only examples and they certainly don’t suggest any sort of widespread problem exists.

Second, many Net Regulation supporters admit that no hard and fast examples of discrimination or signal degradation are occurring but they go on to make the claim that (1) This is not surprising given that some companies are subject to NN merger conditions, and that many providers are being “good actors” since the issue has been subject to such intense scrutiny by regulators and the Congress; and (2) Discrimination may already be occurring, but only the provider may know it is happening.

 

With regard to the first matter, I have long made the point that in a competitive market, many forces exist that help protect consumers.  These include public exposure in the media, oversight by government and the give and take of dialog on the blogs, web sites and so on.   These are all a part of healthy market so to suggest that attention and scrutiny is somehow unusual in competitive markets is to misunderstand how they operate.   Many companies have found out the hard way that bad press, word of mouth over the Internet and blog swarms can have a profound effect on their business.  A company's reputation matters to consumers and companies know it.

 

On the second point, I find this one really hard to swallow.   The Internet’s operating characteristics make it nearly impossible to somehow “hide” how you are managing your network, at least not for very long.  It makes it hard for applications providers to “hide” what their policies are regarding consumers who visit their sites.  And it makes it hard to "silently" change software protocols for operating systems, browsers and service providers.  The Internet is a network of networks – thousands if not hundreds of thousands of them.  It is highly competitive – but also based on a cooperative framework of agreements, protocols and operating procedures that all must work with.  There are so many smart people – engineers, academics, geeks – at so many levels on the Internet that “hiding” actions that affect consumers, competitors or other networks will not work for long.

 

So, rather than providing concrete examples of “bad actors”, many of the commenters focus on the broadband terms of service of the telephone, wireless and cable companies, arguing that current business practices are already discriminatory, anticompetitive, and anti-consumer.  In addition to citing pricing related concerns, such as the imposition of minimum periods and termination liabilities, commenters point to the restrictions wireless companies impose on their 3G services and raise concerns about the general terms of service for DSL, FiOS and cable modem services. 

 

But these too are not evidence of any problems in the market place.   Wireless networks simply do not have the capacity in each cell site to allow consumers to use bandwidth intensively and on a static basis, for example video streaming for long periods of time.  The spectrum in each cell is shared so the actions of one consumer using massive amounts of capacity for long periods of time affect others.  We have to be able to manage these kinds of situations and the list of exceptions provides consumers with an idea of what is not acceptable.  Standard web browsing, email access, and use of applications like Instant Messaging are all fine.  More spectrum and the move to 4G services may help alleviate some of these limitations over time.

 

What I found especially interesting in this proceeding however, is that over 50 groups – including a diverse set of organizations representing various minorities, rural organizations, and seniors and women – filed comments urging the FCC in many cases not to impose net regulations.  Collectively, these groups represent millions of members. Next week, I will go through some of those comments to highlight key points.