Net Neutrality Is A Sham: Is All About Capitalism and Politics

With the proposal by the FCC to repeal the 2015 Open Internet Order, the topic of net neutrality is once again in the spotlight. I spent almost a year writing about the subject leading up to the bill order being passed, dealing with ISPs, content owners, regulators and being given access to network data and pricing the public hasn’t seen. I was invited to speak on the topic of net neutrality and interconnects by Congress and The Senate and I have never revealed, until now, that for a short time, I was privately negotiating (for free) a settlement between executives at Netflix and Comcast. Both companies initially agreed to terms, in theory, that would have been made public and would have set guidelines other content owners and ISPs could follow. Essentially a blueprint for how everyone could benefit, including consumers, without the government having to get involved, but obviously the deal fell apart.

When it comes right down to it, I can’t say it any simpler than this. Net neutrality is a an incredibly complex set of problems that people keep trying to simplify and politicians try to turn into sound bytes. Many think I have a problem with the idea of net neutrality, which is wrong. One of the main issues I have is that net neutrality is an idea, it’s not a plan. It’s a high-level argument on how traffic on the internet should be managed without any real details and proposals on how exactly it should work between networks, the pros and cons to consumers, and the costs to all parties involved.

Politicians and policy lawyers want to use net neutrality for their own agenda, without any transparency. Content owners like Netflix and the ISPs are also guilty as they have released very limited data to the public, that can’t really be reviewed without a lot of supporting documentation, which we don’t have, and is needed so we can see the bigger picture. Any company can slice off a portion of their overall data and make it look positive for their agenda, which is what’s been done. [New Data Questions Netflix’s Assertion That ISPs Are At Fault For Poor Quality] Netflix is the company that really fought for net neutrality principles and yet they have turned down every request by Congress and The Senate to speak about the topic in public. They have never set forth a proposal on how the want it to work, the costs they pay, or the impact it has on consumer’s quality of service. [New Study From M-Lab Sheds Light On Widespread Harm Caused By Netflix Routing Decisions] Data that has been shared with regulators and myself is always done so privately, which then can’t be released to the public. If proponents of net neutrality really want a “free and open internet” why aren’t they demanding that content owners and ISPs detail what’s actually taking place on these networks with supporting data that we can all review? That should be the call to action.

The internet has and always will be about interconnecting networks, a point that is completely lost in this discussion. Many say they don’t want ISPs to interfere with content owner’s traffic, yet ISPs are just one of the many companies that make up the internet. The law, as written, does not take into account any one company other than ISPs. So when Cogent, a transit provider that sits in the middle of content owners and ISPs was caught prioritizing Netflix’s traffic into Comcast, why weren’t proponents of net neutrality up in arms? Why weren’t they calling on the FCC to do something? [Cogent Now Admits They Slowed Down Netflix’s Traffic, Creating A Fast Lane & Slow Lane]

The reason is simple. Most have no idea how the internet works and many in the media don’t even know what a transit provider is. It goes back to the wrong idea that ISPs are the only one’s that control the quality of the content that we consume on our devices. Most are simply uninformed on this topic and haven’t taken the time to really learn how traffic gets delivered from say Netflix to Comcast. [Here’s How The Comcast & Netflix Deal Is Structured, With Data & Numbers]

And this is exactly what I have a problem with when people demand a bill to protect them, without knowing that the bill, as written, doesn’t apply to a company like Cogent. Cogent directly impacted the quality of the Netflix video consumers were receiving, in a negative way, and suffered no consequences, since the FCC doesn’t classify Cogent as a last-mile provider. [Cogent’s Favoring Of Packets Disregards FCC Rules] Many want to point to the fact that as consumers, they don’t have as many choices as they like when it comes to who they use for their internet service. But net neutrality rules does nothing to solve this! If you want to complain about the lack of ISP choices in your area, then do so. But don’t do it under the umbrella of net neutrality, because the lack of the net neutrality bill is not stopping a new company from building out an ISP related service.

There has never been any rule or understanding that certain networks must carry traffic for free. A lot of networks engage in settlement free peering, but that is purely at their option, as a business decision. It’s easy for some to throw around terms like Title II and create wish lists of how regulation should happen without scratching the surface of what it really means to broadband companies and the entire internet ecosystem. What’s the impact, both positive and negative, for everyone involved? And then we get to the idea that all bits should be created equal. That’s not only an illogical idea, it’s simple dangerous. Some bits should be given priority and traffic management on networks is still allowed under net neutrality. In a completely “neutral” internet, low-value content could crowd out premium quality services because the demand for premium services would decrease if the quality of the service cannot be maintained due to compression. Network engineers, limited by law, would have less ability to improve latency and jitter issues for video if all bits had to be treated the same.

People assume that because of the net neutrality law the quality of content would improve, which is a big assumption. When Netflix did their paid interconnection deal with Comcast, they got three SLAs from Comcast. An install SLA, packet loss SLA and latency SLA. If ISPs had to provide access to their networks for free, which is what Netflix was proposing, where is there any language under Title II that says what the quality of that access has to be? Free access to their networks would be done on a “best effort” approach. If you look at the SLAs at some of the ISPs, it has language like “service is provided on a best efforts basis and cannot be guaranteed”. So while the topic of access and interconnects keeps coming up, no one is discussing or suggesting what QoS metrics need to be tied to that. Quantity means nothing without quality!

But more importantly in this whole discussion is the impact of a two-sided market. Netflix and the ISPs need each other and both companies have strong incentives to improve their services and spend the money to do so. The idea that an ISP is going to purposely slow down or degrade the experience of their user by harming Netflix, Amazon, or Apple’s content is ludicrous. It doesn’t benefit them in any way to do this and if they are dumb enough to, people would revolt and investors would panic and their stocks would get crushed. It’s simply bad business and they know it. Do they make some dumb mistakes sometimes that impact consumers, yes. But so has Netflix, choosing to make decisions based on cost, over quality. [Netflix’s Streaming Quality Is Based On Business Decisions by Netflix & ISPs, Not Net Neutrality]

It’s nearly impossible to have a conversation about this topic as people bring their emotions into it, disguise their opinions as facts and for many, have absolutely no idea from a technical level how the internet works, the many companies involved, or the costs to build and maintain the networks. Many writing about the topic don’t even know the difference between “speed” and “bandwidth” and spew out terms having no idea what they mean.

The bottom line is that there is a cost to get the content we want, at a level of quality we want. Operating and maintaining a network is expensive and capacity limitations do exist. Many ISPs have gone under and even Google has pulled back with their fiber deployments. Net neutrality doesn’t change the fact that the underlying infrastructure of the internet is expensive. And that is what this debate should really come down to; how that cost is shared amongst all the parties involved, businesses and consumers.

The net neutrality debate is not going to be solved anytime soon because the companies involved are not being transparent, all the meetings with regulators happen behind closed doors, network data on quality and costs are not shared with the public, and people want to bring their political views into the conversation. Many don’t want to discuss the actual merits of the debate because they are ignorant on the topic and would rather combat me by saying I work for a telecom provider, even though I never have. And that shows the problem with trying to have an intelligent conversation with many on this topic because they can’t remove their emotions from the discussion.

The majority aren’t demanding and forcing any of this to change. And yet somehow, even though the topic of net neutrality has been going on for nearly 15 years now, video quality improves each year, because capitalism always wins. Companies always find a way to work together because it benefits both of their bottom lines and they have shareholders and boards to report to. And that’s all that this net neutrality debate is really about, company’s own P&L and politics.

  • Undercurrent Labs

    One of the best light shed on this abused and politicized I’ve read…thanks Dan

  • Greg Weidenhammer

    Net neutrality does not forbid paid peering agreements. The Netflix agreement is perfectly legal under the current law.

  • PeterTx52

    “I spent almost a year writing about the subject leading up to the bill being passed,” there was no bill but rather a regulation. please don’t confuse people. The key to net neutrality is the 1996 Telecom bill which said that the internet should be free of federal and state regulation.. the FCC was not mandated by law to come up with a “net neutrality” regulation, they did it because of pressure from the Obama administration

    • danrayburn

      you are correct, i should of said order, not bill. thanks for the catch.

  • mjgraves

    The newly emerged technical realities are not being addressed by any of the current debate. People like Martin Geddes are taking new approaches that go beyond simply bigger pipes. They point to the fallacy of NN as a concept, and need to consider paying for managed quality of experience. https://www.vuc.me/2017/vuc644-quality-assured-voice-and-video-over-commodity-broadband/

  • morecowbelle

    The following statement was posted after giving only one example of a proponent of NN, that being the multi billion dollar concern NetFlix > “If proponents of net neutrality really want a “free and open internet” why aren’t they demanding that content owners and ISPs detail what’s actually taking place on these networks with supporting data that we can all review?”
    I haven’t finished the article yet so perhaps the author will expand on just who the assumed to be hypocritical proponents are.

    • morecowbelle

      And this > “When Netflix did their paid interconnection deal with Comcast, they got three SLAs from Comcast. An install SLA, packet loss SLA and latency SLA.” For those of us, the bewildered herd, it would be nice to know what an SLA is.

      • Jim McGovern

        SLA = Service Level Agreement. Typically an SLA is an addendum to a contract and will detail required service levels (which could relate to almost anything quantifiable, such as speed, capacity, turnaround time, quality, latency, uptime, etc.) and will specify monetary penalties if actual performance falls short of the SLA commitment.

  • morecowbelle

    “…because capitalism always wins!” And there we have it.

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  • Finally, I understand what all the fuss is about. Never, knew it was such a complicated issue.

    To be honest, I was also in the net-neutrality-should-win/ all-bits-should-be-equal-camp. It seem liked the right thing to say (don’t ask me why!). But, it would seem the solution to this whole problem is much more complicated.

  • toddhoff

    Dan, certainly “operating and maintaining a network is expensive,” but there’s nothing indicating forgoing NN would expand capacity or improve service or lower prices. Precisely because there’s no competition the most logical scenario is to increase profits by raising prices without improving the infrastructure. That’s what monopolies tend to do. So I’m confused about what the conclusion is here.

    • Andrew Mackenzie

      We’ve had these same monopolies since the inception of the internet and yet capacity has improved consistently and prices have fallen (a point that Dan makes in the article). That’s because while the ISP market is quite consolidated, there is still plenty of competition via wireless networks and local providers, and the ISPs have to be accountable to the state & local governments that implicitly or explicitly granted them the monopolies in the first place in return for bringing service to their areas. So the ISP “monopolies” are not absolute by any stretch, the ISPs are not immune to public opinion and action, and the idea that ISPs will just jack up prices and allow quality to stagnate in the absense of NN simply isn’t backed up by history. Either ISPs are acting illogically by improving service, or your “most logical scenario” is, in fact, not the most logical scenario.

      • toddhoff

        Compared to much of the rest of the world we in the US have substandard internet connections. And when Google moved into various locations we did see movement by the monopolies to improve their service. Capacity has improved at a glacial pace and there’s no reason to expect it to get better without competition. What we’ll see is an increase in profit taking, not any kind of bandwidth renaissance.