Fact vs. Fiction: Five Myths About Net Neutrality (click to read document)

A coalition of consumer groups, educators, and online activists have called on Canadian public utilities and municipalities to explore the construction and implementation of fiber optic networks to combat Canada’s deteriorating position in broadband service.

Steve Anderson, writing for The Tyee, opined in a Mediawatch column that “big telecom’s monopolistic control over the net is threatening to leave Canada with a last generation Internet.”

In the 2009 Federal budget, the Conservative government pledged to commit $225 million over the next three years for broadband to unserved communities.  By contrast, Australia, which has a similar geographic breakdown to Canada, is reportedly committing AU$4.7 billion to a similar initiative. Not only is the Conservative’s commitment relatively weak, it also does little to get Canadians hooked up to next generation networks.

Anderson complains the current competitive lock on broadband is unlikely to be broken by commercial providers, unwilling to compete for access.  Instead, Anderson suggests municipalities, community-non profits, and public utilities should fill the gap and provoke competition.

University of Toronto professor of Information Studies Andrew Clement points out that municipalities “have many critical assets, including significant financial resources, control over rights of way, as well as experience in developing and operating other complex, capital-intensive infrastructures, such as roads, waterworks, and transportation systems.” In fact, many municipalities own high-speed fiber networks that they can utilize relatively easily for Internet service provision.

There are successful public, municipal owned broadband networks now providing service in some cities in Canada.  Fredericton, New Brunswick’s award winning fiber and wi-fi network is a partnership co-op with the city government.  Wi-fi service is provided free of charge to all citizens, one of the reasons the city was congratulated for being one of the “communities or regions with a documented strategy for creating a local prosperity and inclusion using broadband and information technology to attract leading-edge businesses, stimulate job creation, build skills, generate economic growth, and improve the delivery of government services.”

Anderson criticizes Canadian broadband for being usage capped and throttled, a victim of lack of Net Neutrality protections.

A public interest organization SaveOurNet.ca is sponsoring a series of Open Internet Town Halls in Toronto, Ottawa, and Vancouver to engage citizens in discussions about the future of the Internet. Through live video streaming, the town halls will be available to a national audience on theREALnews.com, rabble.ca, TheTyee, Beyond Robson, SaveOurNet.ca, and other participating websites.

People from across Canada are encouraged to watch and engage with the first Open Internet Town Hall meeting at 7:30pm on Monday June 8th. The Canadian equivalent of the FCC, the CRTC, will be holding hearings on Net Neutrality issues on July 6th.

StoptheCap! will provide additional coverage of the SaveOurNet event Monday.  Americans can and should pay attention.  Canada’s abusive provider practices may very well be forthcoming in the States soon enough.

Politico published an article this week attempting to navigate the waters of the nation’s telecommunications regulatory policies, as seen in the eyes of the Federal Communications Commission.  As Stop the Cap! readers already know, Net Neutrality has a tendency to be defined in many different ways.  It’s the color-changing Magic Sprinkles of regulatory policy.  Everyone has a favorite color.

We define Net Neutrality as giving equal access and treatment to all data on broadband networks without favor or foe.  Usage caps indirectly impact on Net Neutrality because they can artificially limit consumption with the potential of exempting “preferred partner” content. Another example: “digital phone” products from the bandwidth provider that are excused from consumption meters violate Net Neutrality principles when the competition doesn’t get the free pass your own product does.

Obama’s appointments to the FCC claim to support Net Neutrality principles and state they will keep those in mind as they regulate telecommunications for at least the next four years.

“In the beginning of the storm, we were in this frenzy because of statements being made by the CEOs about charging websites and application providers for different levels of access to reach Internet users. That got policymakers engaged, and the president made it his No. 1 tech agenda item,” he said. “Now we have a brand-new government. The community is looking to see what is going to happen. If things don’t happen in a timely way, you will see the back end of that storm.”

Tom Tauke

Tom Tauke, executive vice president of public affairs, policy and communications at Verizon tried to put banana colored sprinkles on a watermelon flavored ice cream cone when he attempted to conflate the concept of Net Neutrality with wireless phone companies handing out free phones to victims of stalkers and domestic violence.  Huh?  Under Net Neutrality, the stalkers should also get phones?

Tauke also demonstrated either a fundamental misunderstanding of the concept, or deliberately tried to muddy the waters of Net Neutrality. Verizon has traditionally despised and has lobbied against Net Neutrality for years.

In Tauke’s eyes, Net Neutrality protections may somehow impact parents’ abilities to monitor and control their children’s access to the Internet, interfere with identify theft control measures, and force an end to protecting your wireless cell phone call from deterioration because too many kids at the mall are texting on the same network.

Bizarroworld definitions like that cheapen the reality that enforced Net Neutrality will go a long way to protect consumers from predatory practices of a different kind — greedy providers looking for another payday by demanding compensation to move your web page, video, or download along at a “reasonable” speed.  Those unfortunate enough to not pay may find the very definition of “broadband” redefined as well… “Internet access mildly faster than dial-up most of the time, except on weekends when ‘freeloaders’ have to wait until after 11pm.  Material owned, controlled or partnered with us are always exempt, of course.”

Meanwhile, the rest of Verizon thinks American broadband is highly competitive, fast, and that companies are implementing new pricing and service “options” to bring “greater value” (ie. mandated usage caps) to their customers. A preview of the remarks Verizon will make at today’s Free State Foundation panel on broadband was highlighted on Verizon’s Policy Blog:

Link Hoewing, V.P. for Internet and technology policy for Verizon, previews his discussion about the health of the U.S. broadband marketplace. The Capitol Hill panel he references is hosted by the Free State Foundation and will take place 6/5/09.

A lot of big companies have gotten big headaches dealing with the implications of a wired world.  Instead of embracing change and developing new business plans to win profits from online users, many see the net as the enemy or something that must be controlled.  When netizens out-think corporate efforts to protect fat profits and market control, an executive throwing a hissyfit sooner or later goes public.

That’s precisely what happened at one of those elite breakfasts with “important people” this past Thursday, according to Irin Carmon, reporting for WWD Media.  Sony Pictures Entertainment CEO Michael Lynton let loose in a mini-tirade against what the Internet had done to Sony Pictures:

“I’m a guy who doesn’t see anything good having come from the Internet… (The Internet) created this notion that anyone can have whatever they want at any given time. It’s as if the stores on Madison Avenue were open 24 hours a day. They feel entitled. They say, ‘Give it to me now,’ and if you don’t give it to them for free, they’ll steal it.”

At the breakfast, co-hosted by the S.I. Newhouse School of Public Communications at Syracuse University and The New Yorker, Lynton wasn’t alone in whining about the online revolution’s impact.  Co-panelist Nora Ephron wanted to share her pain about how the Internet in impacting the newspaper business:

The Internet has had a greater effect on “our beloved print than it’s had on the movie business.” But, she conceded, “We’re in the last days of copyright, if you want to be grim about it….  Stop it. I dare you.”

When Hollywood or the folks who work for the dead tree format feel threatened, demanding control and order usually comes next, which is really just code language to hand power over to the entities feeling threatened.  Lynton didn’t disappoint, complaining the Obama Administration’s plan to improve broadband without first obsessing about piracy control measures was the equivalent of building highways with no speed signs or licensed drivers.

Of course, Lynton’s world view would have companies like Sony serving as the DMV, mandating the same kinds of onerous, consumer-unfriendly digital rights management schemes, lock-outs on content, or ludicrous high pricing — the very things that fuel piracy in the first place.

The newspaper industry’s problems didn’t start with the Internet.  The merger and acquisition frenzy of the 1980s and 1990s in the newspaper business created enormous debt, resulting in inevitable “cost-cutting” measures, laying off the very journalists that made newspapers worth reading to begin with.  Today, many newspapers print a dozen or less locally written stories per day, often shallow in scope, with the rest being wire service copy, columns, and lots of ads.  Is it any surprise many people drop their subscriptions for a paper that increases in cost and decreases in quality?  When movie studios shovel junk to moviegoers who pay $10 or more per person, bombard them with ‘preview’ commercials, and require “easy credit financing” to afford the popcorn and soft drinks, why be surprised when people rely on Netflix or other rental services to watch for less?

Controlling the Internet isn’t just limited to big media companies or newspapers.  Most of those opposing net neutrality have a vested interest in protecting their brand or service from the online free-for-all.  Some new media companies manage to make enormous profits that other older companies wish they could still earn.  It’s not always an issue of price or piracy.  More often, it’s about developing a product or service that consumers want and charging a fair price for it.  Consumer Reports online represents a success story.  Many are willing to pay a yearly access fee for their online content because of its quality and trustworthiness.  Meanwhile, several online news sites experimenting with subscription models to monetize their content also want to hang onto profits from their littered-with-ads look, driving readers crazy with video ads, sales pitches taking over your screen, and the usual pop-ups and pop-unders.  You still get all of the irritation, but now you also have to pay for the right to be irritated.  No wonder web audiences simply move on.

Instead of learning lessons from customers that reject limits on things they’ve already paid for, denial of access for ‘business reasons,’ or trying to reduce the quality of a product while charging the same or more for it, cartel thinking takes over. Enormous sums are spent trying to impose limits or order on the net to protect themselves, even if it means shutting down the Internet’s own “model,” where a level playing field means success to those with the best ideas, not just to those with the best connections and influence.

Samuel Greenholtz, a retired manager from Verizon, offered this absolutely impenetrable thinking on why broadband providers needed to impose caps on customers and were forced to charge way too much for them:

While a tiered pricing structure may have been inevitable in the long run, if the corporate bashing horde stayed out of the way, the vast majority of users would have avoided paying more for additional capacity.  Time Warner Cable does give the politicians what they are looking for – more bandwidth availability for all of its subscribers.  Still, the lowest speed package is not going to be enough for most of the consumers – and so they will have to take the higher tier offerings — along with the new overage charges.  Had the MSOs been allowed to just cap excessive users, most of the subs would have continued to receive a reasonable amount of bandwidth at the same flat price.

Ironically, all of the illogic obsession with net neutrality will result in even more of a usage-based pricing scheme.  There will now be several layers of capping.  The anti-ISP crowd has actually created a more beneficial pricing system for these companies.  And there is certainly nothing unfair about this development.  But the clamoring for so-called equality resulted in an acceleration of the removal of the all-you-can-eat advantage for consumers.

What in the world is this man talking about, and why is he part of some so-called “expert network,” Gerson Lehrman Group?

Broadband Providers: How Low Can They Go?

The history of usage capping actually goes back into the earliest days of Internet service providers, providing both dial-up and broadband service in areas where network capacity simply didn’t allow customers to utilize unlimited bandwidth.  Some Time Warner customers in the midwest and central part of the country lived under “limits” for years, mostly due to lack of any viable competition.  The imposition of caps on customers has always been driven by the capacity argument, never by a more honest claim that lack of competition discourages significant upgrades, and allows a provider to limit usage to ensure a higher rate of return. Where competition exists offering similar types of service, caps and limits are much rarer, speeds are higher, and pricing is lower.  A provider that doesn’t regularly invest in upgrades to his network in a competitive marketplace will soon no longer be a part of that marketplace.

Today, a handful of major broadband providers are now colluding in a version of telecommunications limbo, with several watching each of the others “experiment,” to see how low a cap they can set before subscribers and public officials rebel.  Multichannel News columnist Todd Spangler literally wrote that “Time Warner is taking one for the team.”

The “corporate bashing horde” argument, which Greenholtz casually tosses out without any examples or proof, doesn’t hold water.  No group I am aware of has ever bashed the widespread deployment of broadband service from multiple providers.  Oh wait, there is one.  Those providers themselves when they attempt to squelch community cooperative broadband services or municipally-run wi-fi networks, run for the benefit of residents.

Greenholtz completely ignores the fact broadband service is almost entirely unregulated, and providers have always been free to set terms and prices.  Someone draw me a map where corporate critics have developed the leverage to force operators to impose usage caps and tiered pricing.

The net neutrality issue that comes into his argument stems from the Comcast controversy a few years ago, when the nation’s largest cable operator attempted to manage traffic on its network by “throttling,” or limiting the speed of customers using certain bandwidth intensive applications.  Comcast claimed they were primarily targeting peer-to-peer software, which allows users to exchange files with one another, during peak usage of their network.

But this came about at the same time several large corporate broadband providers were advocating for a new distribution system for the Internet, one that would potentially no longer provide an equal level of priority for data traveling across the Internet.  Opponents feared that broadband providers could discriminate or even throttle traffic that didn’t pay their asking price.  And then Comcast provided the net neutrality opponents with a real-world example of bandwidth throttling in action.

Comcast abandoned, at least for now, the bandwidth management approach that included throttling, and instead imposed a simple 250GB “limit” on residential accounts.  Those exceeding that amount of usage risked having service suspended.

Mr. Greenholtz fails to connect this event with any cogent argument or evidence that suggests multiple capped tiers were borne as a result of this controversy.  Indeed, until Time Warner “took one for the team,” other domestic broadband providers simply upgraded their networks to handle capacity issues and imposed no caps, or have simply asked residential users to limit their usage, mostly between 150-250GB per month.  Customers seeking more than that can purchase another account, move to a business plan, or switch to another provider, where available.  Curiously, the imposition and testing of lower limits has often been in areas where competitors either do not exist or cannot offer an equivalent level of service at the same price across an entire community.

But Greenholtz does say one thing that has been obvious to all of us: the Internet service provider is using this as an excuse to create a “more beneficial pricing system.”  Of course, it’s only beneficial to them, not to consumers.  The latter routinely object in overwhelming majorities to the concept of usage caps and the elimination of the existing flat rate pricing which has always been profitable for the broadband industry.  Any other connection, particularly with the absence of any evidence, is tenuous at best.

Yesterday, Stop the Cap! raised the issue of how exactly Frontier Communications can offer access to the various “extras” the company offers to broadband customers all while limiting them to 5GB of consumption.

A number of readers have shared exactly the same concerns, not only with us, but the company as well.

It is interesting watching our concerns here get answered with shifting policies and vague promises over there, both on the Frontier website and  in replies to customer inquiries.   Unfortunately, they keep digging the hole they’ve gotten themselves into deeper and deeper with every passing day.

Intentionally or not, Frontier has now stepped on the landmine of the Net Neutrality debate.

Stop the Cap! reader William received a reply from Frontier that was  remarkable for its less-than-certain tone, and the latest company line:

I can certainly understand your frustration and confusion on who’s
statement’s to follow.

Unfortunately at the present all we know is what we have been told about the situation and that is that we (Frontier) are reserving the right to charge or terminate service for those that exceed the cap.

Currently feedback such as yours is being recorded and passed on to those that are in charge of this proposed change.

The email your received is correct, we are not currently enforcing this policy and we have been informed that, at the present, the plan is to start the enforcement part of the policy in December or January. Again that is the current time table we have been made aware of.

I do know that we have been made aware that certain activities such as carbonite backup and other services we offer can be excluded from the bandwidth usage. I wish I could offer more information with regards to the plan, unfortunately what was/is published is what there is to know at the present. We are passing all feedback to higher levels and it is possible the plan may change before it goes live so to speak.

I know the above does not answer all your questions, unfortunately since the plan is not finalized I can only offer what information I know to be accurate at the present.

There are several points raised in this reply.

First, it’s clear that those contacting Frontier’s support team should recognize the support personnel  are absolutely not responsible for the corporate policy decisions being made by management in Connecticut.   It is patently obvious to a lot of readers who have heard back from Frontier that there is no great enthusiasm for a usage cap  among a lot of folks working for the company.   We have always tried to draw a strong line between those responsible for these usage caps – upper management, and the employees who are stuck having to implement them.   We have nothing but good things to say about the support people who are in a tough position on this issue.

Second, our own sources have confirmed the timetable outlined in this reply from Frontier’s support personnel.   And again, that is entirely a management decision.

Frontier Steps on Net Neutrality Landmine As It Digs the PR Hole Deeper and Deeper Over a 5GB Usage Cap. (Slowpoke used by permission, copyright 2006, Jen Sorensen - Visit http://www.slowpokecomics.com.)

Third, Frontier’s newest acknowledgement that they are considering excluding their preferred partners from the usage cap now opens the can of worms over the Net Neutrality issue.

Certain telecommunications companies have been attempting to change the Internet as we know it today.   Currently, every online service has an equal shot on the network.   But some companies want to change the playing field, by offering selected partners “enhanced” access to customers, faster data networks, and more prominent placement, either by paying a higher fee or entering into a partnership with an Internet Service Provider (ISP).

A “preferred partner” quickly becomes the cream rising to the top, not based on their merits, but rather by their deep pockets and willingness to pay their way to  number one.   Better yet, such partnerships allow both companies to reap the  rewards  gained from driving  more  subscribers to the content they wish to promote, and enjoying the enhanced  advertising revenue which often accompanies such services.

More alarming are efforts to manipulate customers by penalizing them for accessing non-preferred content, and a  usage cap or bandwidth limitation on those services that lack  a  preferred partner  agreement is a great way to accomplish that.

This doesn’t just manipulate the playing field, it destroys it, giving enormous advantages to a select few.

Such agreements will  devastate a lot of start-up companies that have brought the most creative and revolutionary new services to the Net.   Virtually all of these companies would not exist without reaching out to  investors for initial financing.   In a world without Net Neutrality, inevitably one of the questions that will be asked is whether or not that start-up has any “preferred relationship” with a bandwidth provider.   If that company does not, questions will be raised about the viability of that venture, especially if usage caps and bandwidth limits are widespread.   And once an agreement is made, how does someone new break through?   Under these conditions, expect a number of investors to simply take a walk.

Stop the Cap! has  previously raised questions about ISP’s making an end run around Net Neutrality by imposing  caps but exempting content  or services accessed from that provider’s  web portal.   That has always been our  prediction, but until today, there has not been a real world example of that practice in action or imminent.

Now, Frontier Communications is poised to prove us right once again by potentially giving cap-free, preferential treatment to their partners, but sticking it to  every other video content provider or  online backup service where the 5GB cap will apply.

Ask yourself: Would you use an online service that consumed significant bandwidth that was subject to a usage cap or one that was exempted from it?   Is this what you are paying for every month – to be told what services and sites to visit and effectively penalizing you for choosing to make up your own mind?

It’s just one more reason why usage caps are an incredibly bad idea, and one that actually invites government scrutiny, if not direct oversight.   It’s an issue we intend to raise with our elected officials.   I’m certain Frontier Communications had no intention of being a poster child for the issue of Net Neutrality, but as we’ve seen time and time again in the short time Stop the Cap! has been online, there is a fundamental disconnect by upper management in understanding the implications and consequences of what they thought would simply be a great way to enhance profits and reduce “excessive usage.”