Battle Lines on Fast Lanes, Interconnections, and Mergers Are Blurring

May 9th, 2014 by · 1 Comment

After the leak of Tom Wheeler’s proposed FCC net neutrality replacement and the commercially reasonable fast lanes it would supposedly allow, it was only a matter of time before the opposition overcame its initial stunned reaction.  It has become hard to separate the debates about interconnection/peering, the Comcast/TWC merger, and the proposed new rules.  The players overlap so much and it’s all the same infrastructure, so whatever the logical overlap the battlefield is becoming a shared one.

Along with Level 3’s blog post earlier this week, Cogent offered testimony before Congress yesterday and took aim at Comcast’s demands for payment for interconnection.  As usual, Cogent’s CEO Dave Schaeffer gave no ground at all, pointing out that Comcast isn’t a global backbone, isn’t Tier 1, and really ought to be the one paying. I don’t think he expects that last bit to happen, but hey.  Netflix’s traffic deal with Comcast isn’t a fast lane in the regulatory sense, it’s just that it’s a faster lane in practice which they happen to get paid for.

Meanwhile, a long list of internet companies of various types signed on to a letter sent to the FCC decrying the very idea of fast lanes. Along with a few service providers and Netflix, the likes of Amazon, Twitter, Google, Reddit, LinkedIn, Vonage, MicroSoft, Ebay, and Facebook were in on it, along with dozens more.  That content companies would be opposed to the idea of negotiated toll roads isn’t a big surprise of course. But there was at least one big tech/content name not on the list that should raise an eyebrow or two. Apple remains silent on the subject, perhaps lending some credence to those earlier reports they’ve been seeking a fast lane of their own.  Also missing are folks like Akamai, hmmm.

At least one FCC commissioner is ready to back off of the supposed plan that would allow commercially reasonable fast lanes. Jessica Rosenworcel, one of the other two Democrats on the panel, is looking for a delay in the possible rulemaking in the face of a “torrent of public response”.  Given that the FCC’s core competence is delaying its own actions, I’m guessing she will succeed.  At that point, the bell will ring and we can all go back to a corner to get ready for round 2.

I have a feeling all this is only going to get messier over the summer.  The fights may be domestic US ones right now, but they are being watched carefully around the world.  I wonder if anyone has considered the implications of government-blessed fastlanes as applied elsewhere in the world, especially in the wake of the NSA spying revelations.  Commercially reasonable can be defined differently, and just thinking of what it might mean in a place like China or Russia hurts my brain.  While fears of our own operators using such things to control the content we have at our fingertips seems a bit paranoid, elsewhere they definitely wouldn’t be.

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Categories: Government Regulations · Internet Traffic · Mergers and Acquisitions

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1 Comment, Add Yours!

  • Cost Causation Lover says:

    FINALLY the content community wakes up (although where the F*^K is AAPL?). For years I’ve been bemoaning the absence of any content community outrage over Eyeball Owning Network Operators’ (EONOs) boiled frog strategy of redefining the internet into a multi-party pay model where subscribers AND content providers pay EONOs.

    Amazingly, while EONOs have moved the dialog from Net Neutrality to (what I’ve called) a Switched Packet Access Regime or SPAR pay model, the content community has been silent with the exception of the JUDASian Netflix which, sadly, has lost almost all credibility by its private deal making with EONOs. (I can’t imagine any regulators could possibly take Netflix’s public statements about EONOs seriously after voluntarily entering into separate deals with CMCSA & VZ.)

    Perhaps that’s why the rest of the content community finally woke up. With Netflix’s credibility lost with regulators, the content community could no longer free ride Netflix’s regulatory efforts to maintain net neutrality.

    There is still one part of the content community that has yet to chime in and that’s probably b/c they don’t consider themselves part of the “content community” definition. This is the cable content community (e.g., Disney) that mostly provides their programming through the more traditional cable tv infrastructure.

    On the one hand, they may prefer the EONOs model of charging content streaming through the internet because they see this community as competition. However, as EONOs purchase traditional content assets (e.g. Comcast buying NBCU) and permit subscribers to stream them at no cost, these traditional content players will feel the pain when they try to stream their own content and incur SPAR fees.

    For the time being though I imagine traditional cable content providers like Disney will let the new content community players fight this battle in the same way new content providers let Netflix fight their battle.

    Changing gears a bit, I don’t see how Title II regulation (i.e., classifying EONOs as common carriers) is avoidable. The dilemma regulators face is that the circuit court essentially said that the only way to enforce net neutrality is through Title II regulation of EONOs.

    I think FCC Chairman Wheeler thought his Notice of Proposed Rulemaking or NPRM (which has now been delayed by at least a month) could achieve this nirvana state of net neutrality, fast lane pay options and no Title II regulation for EONOs. The above-referenced letter from the content community has drastically changed that outcome.

    This is now a full-blown battle. Tactically, the EONOs will try to pick-off one or some of the signatories of the content community letter by convincing them their different from the rest. In doing so, EONOs will demonstrate to regulators that Title II regulation is unnecessary and that privately negotiated deals can be achieved without declaring EONOs as common carriers.

    We’ll see how strong this alliance is, but I imagine one or more of these content community folks will get lured into the EONO’s lair.

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