The End of Network Neutrality?

Today, the FCC will adopt an order sanctioning Comcast for restricting BitTorrent peer-to-peer file-transfer traffic on its broadband network. It's a big victory for network neutrality advocates. Although the FCC adopted principles in 2005 and condemned a rural phone company for blocking voice-over-IP traffic, this is its first action against a major broadband provider for limiting Internet access. And it's coming under a Republican FCC Chairman, Kevin Martin, who pushed for deregulation of broadband operators.

So, why am I worried?

Today's FCC decision could be the end of the Network Neutrality war. I'm not sure the good guys won.

Let me preface this by stressing that I care deeply about preserving the open Internet. I've been arguing for broadband openness for almost ten years. I know that broadband deployment and competition in the US are limited. I respect the hard work -- both intellectual and in the trenches -- of Larry Lessig, Tim Wu, Susan Crawford, Gigi Sohn, David Reed, Marvin Ammori, and other friends who pushed the FCC to act. The technique Comcast employed, spoofing "RST" packets to terminate P2P transfers, is clumsy and problematic for a host of reasons; it belongs in the dustbin of data networking history. Having the FCC on record defending the freedom of Internet users and application providers is a powerful symbolic precedent. Nonetheless, I see serious problems with what the FCC is doing.

I think today's action is actually designed to kill network neutrality.

First, the order stands a high likelihood of being overturned in court. I believe the FCC does have the jurisdictional authority to adopt network neutrality rules. However, the courts have repeatedly rejected attempted by the Commission to shortcut the analytical and administrative process. Sanctioning a company for violating a policy statement that never went through the administrative rulemaking process, and expressly denied that it was enforceable, seems like an invitation for judicial reversal. Once the courts get involved, muddling through the legal issues can take years.

Second, the order seems designed to encourage broadband providers to shift bandwidth caps and metered pricing, as GigaOm, DSLReports, and others have noted. By acting in this way, the FCC could head off nascent industry collaboration efforts between P2P providers and broadband operators, such as the P4P standard. Rather than forcing a serious examination of the connection between what broadband operators are doing and the legitimate network management challenges they face, this order creates a safe harbor zone for practices that may be more damaging than Comcast's experimental "throttling."

Third, the order could undermine more stringent network neutrality actions next year. If Obama wins, both Congress and the FCC will be poised to adopt network neutrality rules in 2009. After today's FCC action, that's significantly less likely. Everyone will point to the Comcast decision as proof that the FCC can and will address these issues without further legislation. (At least, until the decision is overturned, by which time the legislative energy will probably have dissipated.) And the FCC will have a hard time mustering the support for a more thorough proceeding, now that it's on the course of time-consuming case-by-case adjudication.

Kevin Martin understands these dynamics. I think they are more central to his strategy than a personal dislike for the cable industry or a desire to woo liberal support for a future Congressional run. Remember the political masterstroke that vaulted him into the FCC Chairman's office: joining with the two Democratic Commissioners to undermine then-Chairman Michael Powell's plan for the 2003 "Triennial Review." He's making an eerily similar deal today. Back then, Martin gave the Democrats what they thought they wanted -- modest extension of "UNE-P" unbundling for voice telephone competition -- in return for what really mattered: DSL line-sharing and unbundling of fiber networks for broadband. The courts then gutted the pro-competitive parts of the order, to the surprise of no one who was paying attention. Five years later, we see the results. Compare broadband offerings in places that pushed forward with line-sharing, like France and Japan, with those in the US.

In hindsight, Martin's deal on UNE-P was a terrible loss for competition and innovation. I fear his deal on network neutrality will have the same impact. Advocates of an open Internet need to appreciate that, after today, the battleground has shifted... not entirely in a good way.

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[UPDATE] Susan Crawford shares some of my concerns, but has a more upbeat take on the order.

[UPDATE] Blair Levin of Stifel Nicolaus points out in his note (no link, sorry) that Comcast will have to assess whether a new Congress or FCC would adopt stricter rules after the courts overturn this decision.

[UPDATE] AP: "Verizon Communications Inc., AT&T Inc. and the U.S. Telecom Association all released statements saying the FCC action proved there was no need for federal network neutrality legislation." Expect to hear this a lot during the next year.

[UPDATE] Arbor Networks illustrates my point in its lessons learned from the FCC decision, by explaining how "tiered services for business and consumer broadband customers" with "maximum downstream and upstream bandwidth rates for specific application types, such as peer-to-peer file sharing" are now the way to go. Isn't that exactly what network neutrality was supposed to prevent?

[UPDATE] Valleywag thinks the FCC decision actually hurt BitTorrent, the company.

Posted by Kevin Werbach at 7:59 AM | Permalink | Comments (0)

July 30, 2008

McCain's Entrepreneurial "Supporters"

I was going to let former FCC Chairman Michael Powell's response to my critique of John McCain’s technology policies speak for itself. But I just discovered that he got some information wrong.

Powell didn't challenge my central argument -- that McCain sees no need for the President to address issues like Internet openness, broadband deployment, online privacy, and transparent government. On technology, the contrast between the two candidates isn't a disagreement over policies; it's a disagreement over whether to have policies.

Powell did specifically address my point that so many leading figures in the tech world support Obama. He listed a few CEOs in the McCain camp. Oddly, despite his emphasis on entrepreneurs as catalysts of innovation and growth, all but two are professional managers. The only company founders are Michael Dell, a longtime big Republican donor, and Marc Benioff, founder of Salesforce.com.

I know Marc Benioff. He has spoken at my annual Supernova conference. I was surprised to see him listed as a committed McCain supporter. Well, I checked, and he's not. He contributed money to both campaigns, and has not made a public endorsement.

I'm sure Powell didn't intentionally misrepresent Benioff's position. It was an honest mistake, but a telling one. This was the best list McCain's leading tech advisor could come up with. By contrast, Obama had the public support of dozens of leading tech entrepreneurs, executives, and scholars eight months ago. That was even before the primaries, so you can imagine the list now.

There are still those who remain convinced -- despite two decades of evidence to the contrary -- that Republicans are always good for business and Democrats are always bad. The Obama campaign is about putting aside such preconceptions. Look at what the candidates actually say and do. Decide who you think better appreciates the significance of our connected digital age. I think the choice is pretty clear.

Posted by Kevin Werbach at 11:39 AM | Permalink | Comments (0)

July 25, 2008

Response from Michael Powell on McCain's tech plan

Former FCC Chairman Michael Powell sent me this response to my criticism of John McCain's technology policies. Something is wrong with the comments function on this blog (I'm working on it), so I'm posting it directly.

Oh Kevin, I like you too.  Your usual intellectual honesty, however, seems to have gone missing in this post.  I guess that is what political swooning can do—blind the infatuated to the facts. John McCain has been a leader on tech policy for years and his record on creating the climate for innovation and entrepreneurial activity dwarfs that of the esteemed Senator Obama.  Maybe personal attacks on McCain and his supporters are calculated to mask that glaring gap. McCain understands that the President does not invent anything, patent anything, craft and fund a business model, or hire the skilled workforce necessary to bring inventive ideas to market.  Private entrepreneurs do that and they do care—as apparently you do not—about having access to global markets, tax policy that rewards risk and domestic investment, and access to skilled labor.   Many tech luminaries, including John Chambers, Meg Whitman, Michael Dell, and Marc Benioff, support his comprehensive approach to innovation.

When I was FCC Chairman and John McCain oversaw the Commission we re-directed a backward looking agency towards forward looking tech policies—more unlicensed and broadband spectrum, an expedited DTV transition, thoughtful consumer protection like Do Not Call, the Four Freedoms for internet consumers and an open network, and I pushed—with Senator McCain’s support—policies that stimulated fiber deployments and promoted concrete competition among different platform providers.  (And I supported the line sharing policy you cite favorably, which was blocked by the two Democrats on the FCC who likely will remain in an Obama administration).

Make no mistake. Innovation is the engine of our Age and critical to solving vexing problems facing our Nation and the world. These matters are so important I would only support a President that has experience with the issues and will use his office to lead.  That is John McCain.

-Michael Powell

Posted by Kevin Werbach at 6:23 PM | Permalink | Comments (0)

July 18, 2008

Note to John McCain: Technology Matters

One would think that, in 2008, the significance of the Internet and information technology would be universally acknowledged. That makes the recent news from the Presidential campaign a bit shocking. After ignoring technology issues for the past year, John McCain is poised to announce his great insight: tech policy isn't worthy of attention from the President of the United States.

This is what I draw from the announcement that former FCC Chairman Michael Powell is drafting a technology plan for McCain, to be released shortly. The McCain campaign will promote it as an overdue response to the comprehensive technology agenda that Obama unveiled eight months ago. I'm sure they will position long-standing Republican ideas like cutting the capital gains tax and promoting "market forces" to encourage broadband deployment as maverick proposals. What concerns me most is what the McCain plan apparently leaves out: strong views on the crucial issues that Obama's plan covers. Immigration reform and free trade are worthy goals. They aren't a technology agenda.

I like Michael Powell. I really do. He's extremely smart and open-minded, he was a dedicated public servant, and he did some wonderful things at the FCC, especially on spectrum policy. Yet Powell always had a curious blind spot about how FCC decisions affected the world outside the agency. His infamous quip comparing the Digital Divide to the "Mercedes divide" is a good example. Even when he had the policies right (as on requiring "line sharing" for broadband access), he couldn't always get them adopted, because the FCC doesn't operate in a sealed box. It's a component -- an important component -- of the larger policy and political apparatus of the federal government. With the McCain plan, Powell is making the same mistake.

In an interview last week, Powell asserts that issues like Network Neutrality in Obama's agenda are "in the weeds," because "[a] lot of the FCC’s issues aren’t ‘president of the United States’ issues." Nothing could be further from the truth. Reasonable minds can differ over the right policies to preserve the open Internet, promote next-generation broadband, safeguard online privacy, and create a connected digital democracy. Supporters of Obama (like me) can think he made a mistake in his handling of the FISA telecom immunity legislation (as I do). The absolute worst approach is to label these as insignificant technical matters that the President need not address. That's been the mindset, with disastrous results, the past eight years.

As chair of the Senate Commerce Committee, John McCain was exposed to a wide range of tech policy issues. On the other hand, he admits he's "computer illiterate." Ask yourself how you'd feel about working for a corporation where the CEO doesn't know how to use a computer. No matter how smart, someone who can't open a web page, type a letter on a word processor, or compose an email message, is going to be fundamentally out of touch with the daily experience of every member of the knowledge economy.

The only saving grace would be if McCain's technology advisors could overcome his personal ignorance. As I've been saying for a long time, no President can oversee the details of every important issue, so the people around him or her are critical. The roster of Obama's tech advisory group (which I'm proud to be part of) is nothing short of amazing. It includes a shockingly high percentage of the best academics, entrepreneurs, executives, and investors I've encountered during my 15 years in the tech world. And tech-oriented advisors are at the very heart of the campaign. McCain has supporters like Michael Powell and former HP CEO Carly Fiorina who understand these issues, but what's the point if their message is that technology doesn't matter? When the tech-savvy advisors reinforce the "do nothing" instincts of a tech-illiterate leader, the result is, well, what we got with the Bush Administration: the US falling behind other countries on both broadband deployment and competition, individual rights violated because the government hasn't established rules of the road, and the Internet's magnificent innovation engine in jeopardy.

Obama's tech policies aren't perfect, and McCain's wouldn't be all bad. Still, the choice matters. It matters a lot. The cynicism out there, even from those who agree with Obama on the issues, scares me more than anything. People think that politicians can't be trusted to do anything other than reward their cronies and contributors, and they think government's only effect in markets is to screw them up. Does anyone remember how eight years ago we had a trillion-dollar budget surplus, and the rest of the world looked in awe at the economic growth and innovation unleashed by our Internet industry? We can have that again, and much more, but only if we recognize how much technology matters in the global economy of the 21st century. Obama gets it; McCain doesn't.

Posted by Kevin Werbach at 9:09 AM | Permalink | Comments (0)