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Reflecting on the FCC's decision to begin discriminatory routing

-- By RohanGeorge1 - 22 Dec 2017

Introduction

It is easy to be misled by the FCC’s recent announcement that is will be restoring internet freedom. Apparently, this new policy direction will lead to rapid Internet growth, openness, and freedom. In class, one thing I learned was how the proposed destruction of network neutrality should really be better understood as allowing discriminatory routing because it more accurately describes the problem with a non-neutral internet.

Our class discussion on carriage regulation of the FCC’s announcement also prompted me to reconsider the reasons why I believe in non-discriminatory routing. This essay will consider three of the most common arguments made in favor of the FCC’s position, and attempt a rebuttal and defense of non-discriminatory routing.

Considering the FCC's arguments

Incentivizing network investment

The main slated benefit arising out of the FCC’s decision is “restoring a favorable climate for network investment”. This argument is premised on the idea that the prior structure with its ‘utility–like’ rules did not sufficiently encourage investment into upgrading the network infrastructure. Now, buoyed by the potential to monetize the pipes and switches in ways broadband providers could never do before, as the argument goes, they have every incentive to invest in the network: to improve bandwidth, reach and speed.

Improving access

A further ancillary benefit to this anticipated investment is “closing the digital divide”. This argument is based on the logic that further investment into network architecture will improve access to the internet, particularly in rural areas. In such areas, broadband providers cannot improve its service offering because of limited growth in demand for internet connectivity, as compared to urban areas where more investment has landed. The access argument had particular persuasiveness in India, during the time Free Basic Internet was proposed, because of the talk of some 800 million people potentially getting connected to some form of the internet.

Increasing innovation

A third anticipated positive outcome from the FCC’s decision is “spurring competition and innovation that benefits consumers”. The logic underpinning this argument is that having more freedom with respect to pricing and service provision terms will lead broadband providers to develop innovative solutions: for example, a more efficient way to move 4K video data packets, if they can charge more for such provision. Hence, the end result might leave consumers with greater optionality.

Rebutting the FCC

Like many, I too can see the potential for broad-based positive change when the FCC frames its decision in such rosy terms. In reality, however, there are many problems related to discriminatory routing practices that will now be considered.

Rebutting the investment argument

Addressing the inducement of investment, I think fact that the FCC needed to essentially lay down a red carpet to the ISPs to make network investment speaks volumes about the existing market structure and condition of regulatory capture. Firstly, it is surprising that given the essential nature of internet services in today’s world, investment to improve its provision or quality is so hard to come by. When firms lack incentives to invest, often it is a sign of lack of competition in the market. The broadband provision market is in exactly that predicament – with last mile provision being essentially a collection of local monopolies. Secondly, the fact that the FCC commissioners are essentially promoting the ISPs interestslink text with this decision suggests regulatory capture, where the regulators are functionally in bed with the companies they are obligated to regulate. The real problem, a lack of sufficient network investment, therefore shouldn’t be solved by essentially paying the ISPs to invest; perhaps the cost of investment in network architecture should be subsidized by the government, or entirely funded by them, similar to funding for road or transport infrastructure investment.

Rebutting the access argument

Regarding access, again while the slated network investments could theoretically improve access in poorly connected areas, in reality, improving access is far from the real aim of discriminatory routing. If anything, the access gains are incidental to the real motive: monetizing the browsing patterns of internet users. It is interesting that major platform companies are also against the FCC’s decision because it seems a potential challenger to the current dominance by Google and Facebook of the online advertising industry.

Rebutting the innovation argument

The underlying motive of monetizing browsing patterns also explains why ditching network neutrality will crush innovation. We usually perceive innovators or disruptors to an industry to be new market entrants, who have figured out radically new ways to perform a task or provide a service. Under these new rules, companies in this mold will face an almighty task of breaking into the platform company market or any ‘e-commerce’ sector which has an incumbent already. They will be forced to pay for play under paid prioritization schemes; preferential arrangements between huge market incumbents and ISPs will effectively price out competitors who cannot afford these premiums. As the CEO of Reddit said, “If we don’t have net neutrality protections that enforce tenets of fairness online, you give internet service providers the ability to choose winners and losers” in every sector of the market online.

A 'principled' approach to ISP routing practices

Having rebutted the clearly misrepresented benefits of discriminatory routing, it is important to provide an alternative. The fact remains that, as the reason for abandoning the term of net neutrality demonstrates, there is already non-neutral service provision, because ISPs already do traffic management. In order to ensure Quality of Service, ISPs frequently alter the route of packets. The practices that should not be allowed is “discrimination in favor of particular apps, sites or services”. In other words, what we really need is certain principles to guide ISPs routing practices. For example, I think ISPs should be prohibited from conducting behavioral advertising based on users browsing patterns. This is because unlike Google or Facebook, it is incredibly hard to work around the ISP and avoid that data collection. Whatever you do online, your gateway to internet access is still based on access to a network, which is controlled by a small number of ISPs. Murray and Audiebert describe a ‘principled approach’ to network neutrality, whereby ideas like respecting privacy and freedom of expression are the guiding principles of traffic management, not maximizing profit through fast lanes.

Another important principle that should guide ISPs routing practices is transparency. In this regard, the FCC seems absolutely right to focus on that principle. But transparency should supplement not replace rules banning discriminatory routing. We should know how traffic management is being done so that for example there are no chilling effects to freedom of expression based on people’s right to consume certain content being affected by paid prioritization.

In a way, this process of reflection for me re-iterates the class discussions about how network neutrality debates are about allocating power, and it is clear the deck has been stacked against internet users. My conclusion of this short reflection is an invigorated sense of disgust that I left class with, that somehow the FCC made a huge mistake in prioritizing who it protects, a mistake other regulators like TRAI in India, did not make. And while they may clothe the wolf in sheep’s clothing, the dangers of the FCC’s action are no longer lost on me.

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